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BMJ - H1N1 May Cost Economy Billions

sharon sanders

Editor-in-Chief & President
Published 19 November 2009, doi:10.1136/bmj.b4571
Cite this as: BMJ 2009;339:b4571
Research

The economy-wide impact of pandemic influenza on the UK: a computable general equilibrium modelling experiment

Richard D Smith, professor of health system economics<sup>1</sup>, Marcus R Keogh-Brown, research fellow in economic modelling<sup>1</sup>, Tony Barnett, professorial research fellow and honorary professor<sup>1</sup><sup>,2</sup>, Joyce Tait, professor and scientific adviser<sup>3</sup>

<sup>1</sup> Health Policy Unit, Department of Public Health and Policy, London School of Hygiene and Tropical Medicine, London WC1E 7HT, <sup>2</sup> London School of Economics and Political Science, London WC2A 2AE, <sup>3</sup> ESRC Innogen Centre, University of Edinburgh, Edinburgh EH1 1LZ
Correspondence to: R D Smith richard.smith@lshtm.ac.uk<script type="text/javascript"><!-- var u = "richard.smith", d = "lshtm.ac.uk"; document.getElementById("em0").innerHTML = '<a href="mailto:' + u + '@' + d + '">' + u + '@' + d + '<\/a>'//--></script>

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Abstract
Introduction
Methods
Results
Discussion
References

<!-- end of navigation --> Objectives To estimate the potential economic impact of pandemic<sup> </sup>influenza, associated behavioural responses, school closures,<sup> </sup>and vaccination on the United Kingdom.<sup> </sup>

Design
A computable general equilibrium model of the UK economy<sup> </sup>was specified for various combinations of mortality and morbidity<sup> </sup>from pandemic influenza, vaccine efficacy, school closures,<sup> </sup>and prophylactic absenteeism using published data.<sup> </sup>

Setting
The 2004 UK economy (the most up to date available with<sup> </sup>suitable economic data).<sup> </sup>

Main outcome measures
The economic impact of various scenarios<sup> </sup>with different pandemic severity, vaccination, school closure,<sup> </sup>and prophylactic absenteeism specified in terms of gross domestic<sup> </sup>product, output from different economic sectors, and equivalent<sup> </sup>variation.<sup> </sup>

Results
The costs related to illness alone ranged between 0.5%<sup> </sup>and 1.0% of gross domestic product (?8.4bn to ?16.8bn)<sup> </sup>for low fatality scenarios, 3.3% and 4.3% (?55.5bn to<sup> </sup>?72.3bn) for high fatality scenarios, and larger still<sup> </sup>for an extreme pandemic. School closure increases the economic<sup> </sup>impact, particularly for mild pandemics. If widespread behavioural<sup> </sup>change takes place and there is large scale prophylactic absence<sup> </sup>from work, the economic impact would be notably increased with<sup> </sup>few health benefits. Vaccination with a pre-pandemic vaccine<sup> </sup>could save 0.13% to 2.3% of gross domestic product (?2.2bn<sup> </sup>to ?38.6bn); a single dose of a matched vaccine could<sup> </sup>save 0.3% to 4.3% (?5.0bn to ?72.3bn); and two doses<sup> </sup>of a matched vaccine could limit the overall economic impact<sup> </sup>to about 1% of gross domestic product for all disease scenarios.<sup> </sup>

Conclusion
Balancing school closure against "business as usual"<sup> </sup>and obtaining sufficient stocks of effective vaccine are more<sup> </sup>important factors in determining the economic impact of an influenza<sup> </sup>pandemic than is the disease itself. Prophylactic absence from<sup> </sup>work in response to fear of infection can add considerably to<sup> </sup>the economic impact.<sup> </sup>

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Introduction

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Introduction
Methods
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<!-- end of navigation --> In the past century there were three major influenza pandemics<sup> </sup>(1918, 1957, and 1968-9).<sup>1</sup> This century has seen an outbreak<sup> </sup>of severe acute respiratory syndrome (2003), H1N1 subtype of<sup> </sup>the influenza A virus (2009), and sporadic outbreaks of H5N1<sup> </sup>influenza subtype.<sup>2</sup> In addition to the direct health impacts<sup> </sup>of a serious outbreak, we should be concerned about the economic<sup> </sup>impact; especially at a time of global recession.<sup>3</sup> Preparedness<sup> </sup>planning for a pandemic must therefore balance two key policy<sup> </sup>strands?maintaining "business as usual" to minimise the<sup> </sup>economic impact of a pandemic, and encouraging "social distancing"<sup> </sup>to minimise the health related impact of a pandemic<sup>4</sup>?as<sup> </sup>well using resources such as antivirals and vaccinations.<sup> </sup> This paper considers the tension inherent in these two policy<sup> </sup>strands. It provides evidence of the economy-wide impact of<sup> </sup>each approach, as well as the impact that vaccine development<sup> </sup>may have in reconciling the two objectives of minimising both<sup> </sup>the health and economic effects of a pandemic. A key consideration<sup> </sup>in this analysis is the role of public perception and confidence,<sup> </sup>expressed by "prophylactic absenteeism," where healthy people<sup> </sup>avoid social contact, including going to work. This response<sup> </sup>is likely to emerge at higher case fatality rates and to be<sup> </sup>moderated by the availability of effective vaccines (the current<sup> </sup>strain of H1N1 influenza seems to be highly infectious but not<sup> </sup>very deadly, and this may explain its limited economic impact<sup> </sup>to date).<sup> </sup>
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Methods

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Introduction
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Methods
Results
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References

<!-- end of navigation --> The analysis is based on a computable general equilibrium model<sup> </sup>of the UK<sup>5</sup> over one year. The economy is specified in terms<sup> </sup>of several agents, including households, producers, and government,<sup> </sup>and based on data (in the form of a social accounting matrix,<sup> </sup>which represents income and expenditure in the economy by sector)<sup> </sup>for 2004 taken from the Global Trade Analysis Database<sup>6</sup> and<sup> </sup>national statistics.<sup>7</sup> <sup>8</sup> Computable general equilibrium modelling<sup> </sup>is described in further detail by Dervis et al.<sup>9</sup><sup> </sup> The economic impact of influenza in our model is assumed to<sup> </sup>occur through the labour supply, since illness and death cause<sup> </sup>both a reduction in the availability of labour and in its quality.<sup> </sup>Mitigation actions can also affect the labour supply by (a)<sup> </sup>reducing labour when people are kept away from the workplace<sup> </sup>to avoid infection or (b) by increasing labour supply compared<sup> </sup>with non-mitigated pandemic scenarios by reducing the number<sup> </sup>of infections and deaths<sup>10</sup> and reducing the extent to which<sup> </sup>people feel the need to engage in prophylactic absenteeism.<sup> </sup>


<center><table width="95%" border="1" cellpadding="0" cellspacing="0"><tbody><tr bgcolor="#e1e1e1"><td><table width="100%" cellpadding="2" cellspacing="2"><tbody><tr bgcolor="#e1e1e1"><td width="400" align="LEFT" bgcolor="#ffffff" valign="TOP"><!--style2-->Glossary of terms
<dl><dd>Computable general equilibrium model?A<sup> </sup>mathematical model of the whole economy that includes the cost<sup> </sup>minimising and profit maximising behaviour of producers, the<sup> </sup>consumption and saving behaviour of households and government,<sup> </sup>taxation mechanisms, and the use of labour, capital, and other<sup> </sup>factors in order to produce goods for investment or consumption.<sup> </sup>The model produces a benchmark solution which is then compared<sup> </sup>with alternative solutions incorporating policy change or other<sup> </sup>events simulated by the model. Counterfactual solutions can<sup> </sup>be compared with the benchmark solution to estimate the economic<sup> </sup>impact of the simulated policy or event.
</dd><dd>Social accounting<sup> </sup>matrix?A matrix that represents the balanced income and<sup> </sup>expenditure flows of a regional, national, or global economy<sup> </sup>aggregated to make them a manageable size for use in a computable<sup> </sup>general equilibrium model. (The matrix rows represent income<sup> </sup>to the economy and the columns represent expenditure.)
</dd><dd>Global<sup> </sup>trade model?A computable general equilibrium model of<sup> </sup>the global economy.
</dd><dd>Prophylactic absenteeism?Absence<sup> </sup>from work of a healthy individual in order to avoid infection.
</dd><dd>Clinical<sup> </sup>attack rate?The percentage of individuals in a population<sup> </sup>who become infected.
</dd><dd>Case fatality rate?The percentage<sup> </sup>of infected individuals who die.
</dd><dd>Mortality rate?Percentage<sup> </sup>of individuals in a total population who die (clinical attack<sup> </sup>rate [FONT=arial,helvetica]x[/FONT] case fatality rate).
</dd><dd>Reactive school closure?Government<sup> </sup>closure of a school to reduce infection when a (government defined)<sup> </sup>proportion of children or staff is experiencing illness.
</dd><dd>School<sup> </sup>closure associated with prophylactic absenteeism?Closure<sup> </sup>of schools caused by the amount of prophylactic absence by staff.
</dd><dd>Transition<sup> </sup>point?The point at which the severity of the pandemic<sup> </sup>provokes sufficient fear to invoke a sudden increase in prophylactic<sup> </sup>absenteeism within the population.
</dd></dl>
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<sup> </sup> Pandemic impact
Pandemic planning documents<sup>4</sup> <sup>11</sup> <sup>12</sup> anticipate clinical attack<sup> </sup>rates between 25% and 35%, with a maximum of 50%. We therefore<sup> </sup>use these three values in our disease scenarios. Based on previous<sup> </sup>pandemics, predicted case fatality rates for the UK range from<sup> </sup>0.2% to 2.5%,<sup>4</sup> <sup>12</sup> <sup>13</sup> and the summary estimate for European pandemic<sup> </sup>preparedness plans is 0.37%.<sup>11</sup> We used 0.4% as our base disease<sup> </sup>scenario and 2.5% for our severe scenario, with an extreme scenario<sup> </sup>of 10% based on severe acute respiratory syndrome (SARS).<sup>13</sup><sup> </sup><sup>14</sup> We therefore have nine possible combinations of clinical<sup> </sup>attack rate and case fatality rate.<sup> </sup>
While deaths permanently remove labour from the workforce, absenteeism<sup> </sup>represents temporary removal. Illness absence will result in<sup> </sup>subsequent immunity to the virus, whereas those undertaking<sup> </sup>prophylactic absenteeism will still be vulnerable to infection.<sup> </sup>The Commission of the European Communities suggests that the<sup> </sup>duration of pandemic influenza illness is five to eight working<sup> </sup>days,<sup>11</sup> and absence for seasonal flu is approximately five days.<sup>15</sup> We therefore assume five days of illness for our mild scenario,<sup> </sup>seven days for severe, and 22 days for the extreme scenario,<sup> </sup>which is based on hospitalisation rates for SARS.<sup>16</sup> <sup>17</sup> All absences<sup> </sup>are estimated as a percentage of time lost from a working year<sup> </sup>of 220 days.<sup> </sup>

Pandemic mitigation: vaccination

Although the US recently announced that it expects to go from<sup> </sup>vaccine trial to mass vaccination within two months,<sup>18</sup> and the<sup> </sup>UK has signed agreements (with GSK and Baxter) to purchase 132<sup> </sup>million doses of pandemic-specific vaccine,<sup>19</sup> specific vaccines<sup> </sup>are unlikely to be available for the first wave of infection.<sup>20</sup> During this stage, pre-pandemic vaccines, based on existing<sup> </sup>virus strains, will be the only option for protection, giving<sup> </sup>approximately 20% efficacy and, when combined with other clinical<sup> </sup>countermeasures, reducing the pandemic?s impact to that<sup> </sup>of seasonal influenza.<sup>21</sup> Once matched vaccines become available<sup> </sup>they are likely to have 70-80% efficacy, probably requiring<sup> </sup>two doses at an interval of three weeks. Vaccine shelf life<sup> </sup>is currently about one year.<sup>22</sup><sup> </sup>
We assumed two vaccination strategies?a pre-pandemic vaccine<sup> </sup>with 20% efficacy and a matched vaccine with 40% efficacy (single<sup> </sup>dose) and 80% efficacy (double dose).<sup>23</sup> For all vaccines we<sup> </sup>assumed sufficient stocks for 60% coverage. Vaccination would<sup> </sup>have two potential impacts on a pandemic, reducing the number<sup> </sup>of infected individuals and moderating the extent of prophylactic<sup> </sup>absenteeism because people feel protected from infection.<sup> </sup>

Pandemic mitigation: school closure

School closures are believed to reduce the impact of the pandemic,<sup> </sup>since infection rates among children are high,<sup>4</sup> and this is<sup> </sup>mentioned in many pandemic planning documents.<sup>12</sup> <sup>24</sup> <sup>25</sup> <sup>26</sup> Although<sup> </sup>we witnessed closure at the early stages of the H1N1 influenza<sup> </sup>pandemic, it has been suggested that closure later, when the<sup> </sup>epidemic is better established, will be more effective in delaying<sup> </sup>spread, but also inevitable if large sectors of the population<sup> </sup>adopt prophylactic absenteeism in the face of increasing reports<sup> </sup>of deaths.<sup>27</sup> It is therefore important to distinguish between<sup> </sup>school closure as a reactive policy to a pandemic and school<sup> </sup>closure associated with prophylactic absenteeism.<sup> </sup>
Ferguson et al<sup>10</sup> suggest that reactive school closure will result<sup> </sup>in closure for 95% of the 15 weeks of the pandemic, regardless<sup> </sup>of how often they reopen (duration of school closure associated<sup> </sup>with prophylactic absenteeism cannot, of course, be known).<sup> </sup>Previous studies<sup>28</sup> <sup>29</sup> have assumed school closure at the four<sup> </sup>week peak of the pandemic, allowing for some variation around<sup> </sup>the two or three week disease peak cited in the Department of<sup> </sup>Health?s pandemic plan.<sup>4</sup> Any school closure policy will<sup> </sup>result in disruption for working parents and, based on peak<sup> </sup>pandemic duration and Ferguson?s estimates, we present<sup> </sup>scenarios with four weeks and 14.25 weeks of school closure.<sup> </sup>We also consider the mitigation impact of school closure, which<sup> </sup>is estimated as 2% for a 34% clinical attack rate in the Ferguson<sup> </sup>paper and up to a maximum of between 13% and 17% in the paper<sup> </sup>by Cauchemez et al,<sup>30</sup> which we approximate as 15%.<sup> </sup>
The UK Labour Force Survey (2005) suggests that 25 245 000 individuals<sup> </sup>aged 16-64 are in paid employment, of whom 3 900 000 are women<sup> </sup>who have dependent children in the household. That is, 15.5%<sup> </sup>of the workforce comprises women who are probably responsible<sup> </sup>for dependent children.<sup>31</sup> A small proportion of working men<sup> </sup>is also reported to be responsible for dependent children,<sup>32</sup><sup> </sup>bringing potential absenteeism estimates through school closure<sup> </sup>to 16.1%. However, we made some attempt to correct this estimate<sup> </sup>to account for informal care by grandparents, working from home,<sup> </sup>etc. In addition, we assumed that those 54% of working parents<sup> </sup>who maintain working hours during school closure because of<sup> </sup>informal care<sup>32</sup> will lose working hours equivalent to one person?s<sup> </sup>illness duration when their informal caregiver is ill.<sup> </sup>

Pandemic mitigation: prophylactic absenteeism

Previous studies<sup>28</sup> <sup>29</sup> <sup>33</sup> have shown that a main driver of economic<sup> </sup>impact is behavioural change. Behavioural change can include<sup> </sup>changes in consumption patterns and prophylactic absence from<sup> </sup>work to avoid infection. Prophylactic absence from work is likely<sup> </sup>to be governed by personal choice related to fear and therefore<sup> </sup>is unlikely to be proportionate. There will be a transition<sup> </sup>point when the number of individuals who decide to take relatively<sup> </sup>drastic social distancing action to avoid infection increases<sup> </sup>rapidly over a short space of time.<sup> </sup>
We suggest that the transition point in public behaviour related<sup> </sup>to an influenza pandemic is likely to be heavily influenced<sup> </sup>by the case fatality rate but to be reasonably independent of<sup> </sup>the clinical attack rate since illness, by itself, causes limited<sup> </sup>fear if a full recovery is anticipated. The public response<sup> </sup>to the current H1N1 pandemic supports this.<sup> </sup>
The level of the case fatality rate at which such a transition<sup> </sup>point will occur is likely to be related to the density of deaths<sup> </sup>in "effective social networks"?that is, the prospect of<sup> </sup>death becomes rapidly personalised with the death of a member<sup> </sup>of one?s network of relatives, friends, colleagues, and<sup> </sup>acquaintances. To our knowledge, no study has been conducted<sup> </sup>to determine the impact of prophylactic absenteeism on modelling<sup> </sup>predictions related to disease and economic impacts. Accurate<sup> </sup>estimation of this transition point for pandemic influenza would<sup> </sup>require extensive survey work, and it would be useful to undertake<sup> </sup>such research in future so as to build up a body of knowledge<sup> </sup>relevant to the kind of modelling reported here. In its absence<sup> </sup>we have selected the conservative value of about 300 people<sup> </sup>as the effective social network, to include close contacts such<sup> </sup>as family and friends (10-12 people), acquaintances, and work<sup> </sup>colleagues.<sup>34</sup> <sup>35</sup> <sup>36</sup> <sup>37</sup> <sup>38</sup> On this basis almost everybody in<sup> </sup>the population will know someone who has died once the mortality<sup> </sup>rate reaches one death per 300 people, triggering prophylactic<sup> </sup>absenteeism.<sup> </sup>
Simple arithmetic suggests that there are 200 000 discrete effective<sup> </sup>social networks in the UK (60 000 000/300). However, many of<sup> </sup>these will overlap, and so the real figure for the number of<sup> </sup>discrete social networks involved in communication of news of<sup> </sup>a death, taking into account Facebook, texting, and other networking<sup> </sup>tools, is likely to be smaller. In the absence of research on<sup> </sup>this topic, a case fatality rate in the range 2.5-5% seems to<sup> </sup>be a valid assumption for the expected transition point.<sup> </sup>
Not all individuals will avoid work during a pandemic, but a<sup> </sup>survey conducted after the SARS outbreak<sup>31</sup> indicated that about<sup> </sup>34% of the working population in Europe would be willing to<sup> </sup>take prophylactic absence from work in the event of an infectious<sup> </sup>disease outbreak. Although survey responses do not always reflect<sup> </sup>true behavioural responses, it is reasonable to assume that<sup> </sup>the 34% of respondents who reported themselves as willing, in<sup> </sup>theory, to avoid work for a serious pandemic, would do so at<sup> </sup>the transition point presented above.<sup> </sup>
It is difficult to predict the duration of such absenteeism,<sup> </sup>as high levels of fear might cause prolonged periods of absence<sup> </sup>by some. However, it might reasonably be assumed that in most<sup> </sup>cases, absentees would be forced to take annual leave (as longer<sup> </sup>term sick leave usually requires a doctor?s authorisation).<sup> </sup>On this assumption, absenteeism is likely to last up to four<sup> </sup>weeks, and, since the peak of the pandemic is likely to last<sup> </sup>two or three weeks<sup>4</sup> and the transition point is unlikely to<sup> </sup>be reached before the peak, this is presumed to be a reasonable<sup> </sup>upper limit.<sup> </sup>
Table 1 provides a summary of the assumed parameter estimates<sup> </sup>used in our disease scenarios together with the sources of these<sup> </sup>estimates.<sup> </sup>
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</nobr> </td><td align="left" valign="top"> Table 1 Parameter assumptions and their sources used to estimate effects of pandemic influenza and possible responses to it
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Introduction
Methods
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Discussion
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<!-- end of navigation --> Model of economic impact of pandemic influenza
The accuracy of these results is subject to the scenarios we<sup> </sup>have outlined, the model specification, and the economic data<sup> </sup>from 2004 underlying the model. Figure 1 shows the impact of<sup> </sup>various disease and mitigation scenarios on gross domestic product:<sup> </sup>disease only (with no mitigation), disease with four weeks of<sup> </sup>school closure, disease with pre-pandemic vaccine, disease with<sup> </sup>matched vaccine (single dose), and disease with matched vaccine<sup> </sup>(double dose). Each scenario is plotted for low, medium, and<sup> </sup>high clinical attack rate (25%, 35%, and 50%) and low, high,<sup> </sup>and extreme case fatality rates (0.4%, 2.5%, and 10%), although<sup> </sup>both rates are adjusted to allow for mitigation effects in the<sup> </sup>mitigation scenarios.<sup> </sup> <sup> </sup>
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</nobr> </td><td align="left" valign="top"> Fig 1 Effect of pandemic influenza on UK gross domestic product (GDP) according to various disease and mitigation scenarios (all vaccination strategies assumed to have 60% coverage)
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Low case fatality rate
The first three histogram bars show the impact of a low case<sup> </sup>fatality rate, in which variations in clinical attack rate have<sup> </sup>little impact (loss of 0.51-1.02% of gross domestic product).<sup> </sup>However, the impact of four weeks of school closure is large,<sup> </sup>doubling or even tripling the impact of the disease alone. The<sup> </sup>results also show that in a low fatality pandemic a pre-pandemic<sup> </sup>vaccine might result in savings of 0.13-0.26% of gross domestic<sup> </sup>product, and a matched vaccine could result in savings of 0.26-0.51%<sup> </sup>for a single dose and 0.49-0.96% for a double dose. The transition<sup> </sup>point of prophylactic absenteeism is not reached in any of the<sup> </sup>scenarios with a low case fatality rate.<sup> </sup> High case fatality rate
With a high case fatality rate, however, the transition point<sup> </sup>is reached (mortality rate becomes similar to that of the 1918<sup> </sup>pandemic), so that individual change in behaviour to avoid infection<sup> </sup>yields large impacts of 3.3%, 3.7%, and 4.3% of gross domestic<sup> </sup>product for the low, medium, and high infection rates, respectively?emphasising<sup> </sup>that the mortality rate can, in such circumstances, be a more<sup> </sup>important determinant of economic impact than the infection<sup> </sup>rate.<sup> </sup>
The introduction of school closures in high fatality scenarios<sup> </sup>has less impact than in low fatality scenarios, with an additional<sup> </sup>impact of 0.75-0.8% of gross domestic product. A pre-pandemic<sup> </sup>vaccine would be insufficient to avoid the transition point<sup> </sup>in a high fatality pandemic and so would reduce the impact on<sup> </sup>gross domestic product by only 0.33-0.64%. A matched vaccine,<sup> </sup>even if only single dose, would have sufficient effect to avoid<sup> </sup>the transition point and could therefore result in savings of<sup> </sup>2.6-3.2% of gross domestic product (roughly equivalent to half<sup> </sup>of the impact of the financial crisis over the past year (www.statistics.gov.uk/instantfigures.asp)).<sup> </sup>Two doses of a matched vaccine are likely to reduce the impact<sup> </sup>further, yielding savings of 3-4%.<sup> </sup>
Extreme case fatality rate
The extreme fatality scenarios predictably yield the largest<sup> </sup>impacts. Our assumptions dictate that for such a serious pandemic<sup> </sup>the transition point would be passed, and the low, medium, and<sup> </sup>high infection scenarios yield reductions in gross domestic<sup> </sup>product of 6.0%, 7.4%, and 9.6%, respectively. School closure<sup> </sup>increases this impact by 0.63-0.77%, which is smaller than for<sup> </sup>the less severe scenarios as the mitigation impact of school<sup> </sup>closure reduces the severity of the disease. Pre-pandemic vaccine<sup> </sup>has some effect on reducing the impact of the school closure<sup> </sup>scenarios by 1.2-2.3%, and a single dose of matched vaccine<sup> </sup>yields slightly larger savings of 2.2-4.3%. The matched vaccine<sup> </sup>with two doses is the only mitigation strategy that avoids the<sup> </sup>transition to prophylactic absenteeism in the extreme fatality<sup> </sup>scenarios, reducing the overall impact of the pandemic to 1.1-1.2%<sup> </sup>of gross domestic product (much less than the impact of the<sup> </sup>current financial crisis).<sup> </sup>

Alternative scenarios

Alternatives to these scenarios have also been modelled but<sup> </sup>are not reported in detail here. In brief, schools closing for<sup> </sup>about 95% of the 15 weeks of the pandemic?s duration and<sup> </sup>assuming a mitigation equivalent to 2% if the clinical attack<sup> </sup>rate was 34%, as outlined by Ferguson et al,<sup>10</sup> produces a 2.5%<sup> </sup>further reduction in gross domestic product compared with our<sup> </sup>four week closure scenarios; it reduces the infection rates,<sup> </sup>but the dominance of the case fatality rate in determining the<sup> </sup>transition point is such that the degree of prophylactic absenteeism<sup> </sup>remains the same.<sup> </sup>
Similarly, informal care by grandparents and friends, reducing<sup> </sup>the level of prophylactic absenteeism from 16.1% to 8.7%,<sup>32</sup><sup> </sup>reduces the loss to gross domestic product by 0.56-0.58% in<sup> </sup>the four week school closure scenarios and by 1.8-2.0% in the<sup> </sup>longer closure scenario. Assuming the higher mitigation rate<sup> </sup>of 15% suggested by Cauchemez et al,<sup>30</sup> which would apply to<sup> </sup>longer school closure scenarios, the severity of the economic<sup> </sup>impact of school closures is reduced in proportion to the severity<sup> </sup>of the pandemic. This reduction is quite small?up to 0.25%<sup> </sup>of gross domestic product for non-extreme scenarios and up to<sup> </sup>0.9% of gross domestic product in the most extreme and unmitigated<sup> </sup>scenario?so overall reductions in gross domestic product<sup> </sup>are still between 1% and 2% larger than with the four week school<sup> </sup>closure scenarios. School closure?s failure to mitigate<sup> </sup>the impact of the disease despite the assumption of its efficacy<sup> </sup>is due to the large amount of absenteeism induced by school<sup> </sup>closures, which, in our model, is not affected by the clinical<sup> </sup>attack rate.<sup> </sup>
Additional scenarios relating to the swine flu pandemic and<sup> </sup>alternative vaccine efficacy assumptions are included in an<sup> </sup>online appendix.<sup> </sup>

Impact of pandemic on different economic sectors

Figure 2 shows the impact on different sectors of the economy<sup> </sup>for the 35% clinical attack rate and 0.4% case fatality rate<sup> </sup>scenario. The pattern is similar across scenarios. The lowest<sup> </sup>impacts are seen in the extraction sector (mining, quarrying,<sup> </sup>forestry and fishing) followed by crops, utilities, and health<sup> </sup>and non-health services. The largest impacts are in the meat<sup> </sup>and livestock, processed foods, textiles/paper/plastics, manufacturing,<sup> </sup>and transport and communications sectors.<sup> </sup>
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View larger version (52K):
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</nobr> </td><td align="left" valign="top"> Fig 2 Impact of pandemic influenza on different economic sectors of UK gross domestic product (GDP)
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Equivalent variation
Computable general equilibrium modelling also produces the welfare<sup> </sup>measure of equivalent variation, which represents the amount<sup> </sup>of money that, if an economic change does not happen, leaves<sup> </sup>the population just as well off as if the change had occurred.<sup> </sup>This may be thought of as the amount of money that the population<sup> </sup>might be willing to pay to avert the pandemic. For the purposes<sup> </sup>of this paper, the welfare measure is quoted as a percentage<sup> </sup>of gross domestic product, with the results presented in table<sup> </sup>2. In order to avoid the economic impact of the pandemic, the<sup> </sup>cost that the population might be willing to pay ranges from<sup> </sup>0.7% (?11.8bn) for the mildest disease-only scenario to<sup> </sup>14% (?235bn) for the most extreme. School closure increases<sup> </sup>these values to 5.1% (?85.8bn) in the mildest scenario<sup> </sup>to 17.9% (?301.1bn) for the most severe scenario.<sup> </sup> <sup> </sup>
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</nobr> </td><td align="left" valign="top"> Table 2 Equivalent variation as percentage of gross domestic product (GDP) and ?bn for different influenza pandemic scenarios
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<!-- start of nav, hiding until we can rip out for good --> Abstract
Introduction
Methods
Results
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Discussion
References

<!-- end of navigation --> Our results show that, depending on the disease severity, pandemic<sup> </sup>influenza alone could reduce gross domestic product by 0.5-4.3%.<sup> </sup>Extending fatality rates beyond those observed in previous pandemics<sup> </sup>to a SARS-like case fatality rate of 10% yields an impact of<sup> </sup>5.9-9.6% of gross domestic product (?99.2bn to ?161.5bn).<sup> </sup>School closure, and its related absenteeism, causes a notable<sup> </sup>increase in economic loss, and caution might therefore be advised<sup> </sup>in pursuing this policy when the case fatality rate is low.<sup> </sup> A pre-pandemic vaccine with moderate efficacy and 60% coverage<sup> </sup>could result in large relative savings for any low or high fatality<sup> </sup>pandemic of ?2.2bn-?10.8bn, or ?20.2bn-?39.0bn<sup> </sup>for extreme scenarios. A matched vaccine, even if only available<sup> </sup>in sufficient time for a single dose to be administered to 60%<sup> </sup>of the population, would result in substantially higher savings,<sup> </sup>in both low and high fatality scenarios, and a double dose of<sup> </sup>a matched vaccine could keep the reduce the loss in gross domestic<sup> </sup>product to below 3%, even with the most extreme pandemic and<sup> </sup>long school closures?which is little more than half the<sup> </sup>impact of the current recession, although recovery from a severe<sup> </sup>flu event would probably be much more rapid. Estimates suggest<sup> </sup>that the planned H1N1 flu vaccination will cost about ?6<sup> </sup>per person (www.bloomberg.com/apps/news?pid=20601124&sid=auYQiQYJ.73I),<sup> </sup>yielding a total cost of about ?792m, compared with savings<sup> </sup>that start from ?2.2bn for the mildest pandemic. Our results<sup> </sup>suggest that, even in a mild pandemic, a vaccination costing<sup> </sup>?16.60 per person would be beneficial in terms of its<sup> </sup>health impact without imposing a burden on the economy.<sup> </sup>
Our results also consider the possibility that there is a transition<sup> </sup>point in case fatality rate, above which many individuals might<sup> </sup>change their usual behaviour and avoid work in an attempt to<sup> </sup>avoid infection. Evidence suggests that 50% prophylactic absence,<sup> </sup>which is larger than our assumed absence rates, is likely to<sup> </sup>reduce a 34% clinical attack rate by only 1% (case fatality<sup> </sup>rate is unchanged as this is dependent on the disease).<sup>10</sup> Since<sup> </sup>these absence rates could cost the economy billions of pounds,<sup> </sup>prophylactic absence should be discouraged except in exceptional<sup> </sup>circumstances.<sup> </sup>

Limitations and strengths of study

This work does not take into account consumption effects from<sup> </sup>avoidance of public places, entertainment events, and changes<sup> </sup>in shopping patterns, although further work is under way to<sup> </sup>establish an evidence base from which these effects can be modelled.<sup> </sup>Impacts on trade, imports, and exports have not been examined<sup> </sup>here as it is difficult to assess these impacts accurately with<sup> </sup>a single-country model. A study with a global trade model is<sup> </sup>ongoing and will supplement the findings presented here.<sup> </sup>
The strength of our findings depends on the underlying assumptions<sup> </sup>which, though based on published evidence where possible, are<sup> </sup>subject to the bias of surveys, the unpredictability of the<sup> </sup>disease and its resultant impact on policies and behavioural<sup> </sup>change. We included estimates of school closure and prophylactic<sup> </sup>absence, but their true values in the middle of a pandemic could<sup> </sup>vary widely. However, this paper extends previous work<sup>24</sup> by<sup> </sup>using the best available estimates to approximate the impact<sup> </sup>of social networks on behavioural change, considering various<sup> </sup>lengths of school closure, their feedback effects on the pandemic,<sup> </sup>and the impact of informal care both in mitigating absenteeism<sup> </sup>due to school closure and in causing absenteeism by parents<sup> </sup>when informal carers are unwell, as well as considering the<sup> </sup>impact of various vaccination strategies on disease and behaviour<sup> </sup>change.<sup> </sup>

Conclusion

Pandemic influenza itself, if it occurs within the bounds of<sup> </sup>severity outlined in pandemic plans, will not yield unprecedented<sup> </sup>economic impacts: even a high fatality pandemic with high levels<sup> </sup>of infection would reduce gross domestic product by less than<sup> </sup>4.5%. However, two factors will compound the disease?s<sup> </sup>impact. Firstly, a pandemic in the near future would impose<sup> </sup>additional strain on an economy that is already stretched by<sup> </sup>recession, exaggerating the effect of recession and slowing<sup> </sup>economic recovery. Secondly, although the direct economic impact<sup> </sup>of disease is relatively small, school closures and prophylactic<sup> </sup>absenteeism, whether imposed by government or the result of<sup> </sup>fear of infection in the population, could greatly increase<sup> </sup>the economic impact.<sup> </sup>
In the event of a mild pandemic, long periods of school closures<sup> </sup>will not be necessary and could greatly multiply the economic<sup> </sup>impact of the disease and should therefore be minimised. In<sup> </sup>more serious pandemics, the relative economic impact of school<sup> </sup>closures decreases and the gains from school closure in mitigating<sup> </sup>the pandemic increase, so a policy of school closure should<sup> </sup>take into account the severity of the disease. However, such<sup> </sup>a policy should be limited in its duration?sufficient<sup> </sup>to maximise the lowering of peak disease levels and maintain<sup> </sup>a functioning health service, but allowing schools to open at<sup> </sup>other times. In an extreme pandemic, the relative incremental<sup> </sup>cost of school closure is small and should not influence policies<sup> </sup>that would minimise deaths.<sup> </sup>
Our "transition point" estimates provide an example of how fear<sup> </sup>induced behavioural change could greatly increase the economic<sup> </sup>impact of a pandemic while providing questionable health gains.<sup> </sup>We suggest that the overall mortality rate is the driver of<sup> </sup>this behavioural change, and vaccinations, whether pre-pandemic<sup> </sup>or matched vaccine, could be extremely important in preventing<sup> </sup>mortality rates from reaching the "transition point." The cost<sup> </sup>of vaccinations is likely to be less than the economic savings<sup> </sup>gained from vaccination, even in the mildest of pandemics, and<sup> </sup>in the event of a high or extreme fatality pandemic a matched<sup> </sup>vaccine might be the only method to avoid the unprecedented<sup> </sup>economic effects of behavioural change.<sup> </sup>


<center><table width="95%" border="1" cellpadding="0" cellspacing="0"><tbody><tr bgcolor="#e1e1e1"><td><table width="100%" cellpadding="2" cellspacing="2"><tbody><tr bgcolor="#e1e1e1"><td width="400" align="LEFT" bgcolor="#ffffff" valign="TOP"><!--style3-->What is already known on this topic
<dl><dd>Fear induced behavioural<sup> </sup>changes or government sanctioned absences from work or school<sup> </sup>in response to a flu pandemic could have a substantial economic<sup> </sup>impact, and these losses may not be balanced by large health<sup> </sup>benefits
</dd></dl> What this paper adds

<dl><dd>Vaccines play a major role<sup> </sup>in mitigating the economic impact of a pandemic regardless of<sup> </sup>the characteristics of the disease
</dd><dd>If increased fear caused<sup> </sup>by deaths within an individual?s social network provoke<sup> </sup>prophylactic absence from work, large economic loss could result
</dd></dl>
</td></tr></tbody></table> </td></tr></tbody></table> </center>
<sup> </sup> Cite this as: BMJ 2009;339:b4571<sup> </sup>
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<hr width="30%" align="LEFT" noshade="noshade" size="1"> <!-- null --> Contributors: RDS conceived the idea of a computable general<sup> </sup>equilibrium application for influenza, advised on the modelling<sup> </sup>and scenarios, and contributed to the drafting of the paper.<sup> </sup>MRK-B was responsible for the modelling, the underlying dataset,<sup> </sup>construction of modelling scenarios and shocks, and drafted<sup> </sup>the paper. TB and JT conceived the idea of the transition point<sup> </sup>based on social networking theory, advised on the scenarios<sup> </sup>and vaccination strategies, and contributed to the drafting<sup> </sup>of the paper. MRK-B is guarantor for the study.<sup> </sup> <!-- null --> Funding: No specific funding for this study.<sup> </sup>
<!-- null --> Competing interests: None declared.<sup> </sup>
<!-- null --> Ethical approval: Not required for this study.<sup> </sup>
<!-- null --> Data sharing: Model output data are available on request from<sup> </sup>MR Keogh-Brown marcus.keogh-brown@lshtm.ac.uk<script type="text/javascript"><!-- var u = "marcus.keogh-brown", d = "lshtm.ac.uk"; document.getElementById("em1").innerHTML = '<a href="mailto:' + u + '@' + d + '">' + u + '@' + d + '<\/a>'//--></script><sup> </sup>
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References

<!-- start of nav, hiding until we can rip out for good --> Abstract
Introduction
Methods
Results
Discussion
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References

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(Accepted 2 November 2009)
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