Pandemic Proof: Exploring Japan's Role in Strengthening Pandemic Preparedness Financing

Atsushi Mimura: Tackling global health issues is not just a matter of health policy, but it is really a matter of development policy, macroeconomic policy, and growth policies.

Javier Guzman: You are listening to Pandemic Proof from the Center for Global Development. In this podcast, we explore policies and reforms to better prepare and respond to infectious disease threats like COVID-19, but also other nasty viruses, microbes, and fungi that can throw our health, our communities, and our economies into crisis. Join us as we envision ways to better protect our world in the future. I'm your host, Javier Guzman. Let's get started.

As the world continues to grapple with the lasting impacts of COVID-19 and emerging outbreaks like mpox, there is a clear urgency for adequate pandemic preparedness and response financing, including appropriate surge financing. To our listeners, surge financing basically means pre-committed funds that are available from the very first moment a public health threat emerges. In other words, these are funds that are ready to go. The government of Japan has long been a key advocate for strengthening global pandemic preparedness and response, championing initiatives within the G7 and the G20.

From launching the first joint ministerial meeting between finance and health ministers during the G20 presidency in 2019, to issuing a shared understanding of leaders on pandemic preparedness and response during their G7 presidency in 2023, Japan has played a pivotal role in advancing global health security. That is commendable, and global health leaders do recognize the role played by Japan. However, despite widespread recognition from global leaders, we are not where we should be.

The need for investment in pandemic preparedness and response remains unmet by concrete action, and that is not a good thing. In this episode, I'm joined by two guests from the Ministry of Finance of Japan. Takahiro Tsuda, Director for Multilateral Development Banks, and Atsushi Mimura, Vice Minister of Finance for International Affairs. Together, we'll examine the current funding mechanisms for pandemic preparedness. We will explore Japan's role in driving global efforts and insights gain, and discuss potential pathways to strengthen pandemic preparedness and response financing.

To get us started, I'm very excited to be joined by Taka Tsuda, Director for Multilateral Development Banks at the Japanese Ministry of Finance. Mr. Tsuda has a track record in promoting various initiatives in strengthening MDBs' capacity to tackle global development challenges, including global health. Mr. Tsuda, it's great to have you here today. Thank you very much for joining me.

Takahiro Tsuda: Thank you very much. Pleasure.

Javier Guzman: Let's get started. My first question is about PPR financing. Can you reflect a bit on the current mechanisms that are available to fund pandemic preparedness and response? I'm interested to hear from you what progress has been made and what is missing.

Takahiro Tsuda: Before I go into the detail, I just like to emphasize that the Japanese strong commitment to global health started well before the COVID-19 pandemic. I, as the editor-in-chief of the shared understanding of the importance of universal health coverage by G20 Health and the Partners Ministries, we try to advocate the need to strengthen global health across the globe. You may ask the progress since the COVID-19 pandemic, and then there has been a significant progress, obviously in global health architecture.

Back in March 2022, WHO and the World Bank estimated amount of financing PPR as 10.5 million US dollars per year. The Pandemic Fund was established in September 2022 as a sole financing mechanism focusing on PPR. As one of the funding donors, Japan contributed $70 million at the time of initial fundraising and an addition $15 million at the last IMF-World Bank annual meetings. There are a couple of challenges. One is there is room for improvement in the coordination among global and regional stakeholders, and one is how to achieve the self-sustained health architecture at the national level.

Regardless of strengthening the local capacity to produce medical economy measures in Africa in particular, and also other developing world, is another priority. Having said that, I think most of the efforts by the Pandemic Fund focus on prevention and preparedness fronts, so how to mobilize financing resources for response in a timely and efficient manner warrants more works.

Javier Guzman: We were the secretariat of the G20 convening on financing pandemic preparedness and response. We were very aware of the $10 million. We were very happy with the establishment of the Pandemic Fund. Clearly, the fund hasn't met the financing aspirations, and I think this is a challenge, but you mentioned something that I want to focus on, which is surge financing. I think on that one, the progress is a bit different. Can you please tell us what progress has been made so far and what are the potential options for surge financing, particularly the critical role of multilateral development banks?

Takahiro Tsuda: I think the report by WHO and the World Bank titled, Mapping Pandemic Response Financing Options and the Gaps, certainly does shift certain lights. Then the report identify various gaps. For example, first the prearranged financing mechanism while not fully implemented, or second, the fund was often not dispersed due to the trade-off with other competing priorities, and the third, we witnessed the lack of flexibility in terms of usage of money, therefore causing mismatches with the needs of the developing countries on the ground.

There has been some progress. The front progress is the crisis preparedness and the response toolkit, launched by the World Bank this year in its evolution process. This allows the bank to reallocate the money for crisis preparedness and response purposes, including pandemic PPR, but not limited to that, in a very flexible manner. Having said that, the reallocation means use of existing resources, so therefore policymakers have to face a trade-off with other competing priorities still, unless new additional money is replenished.

Also, it remains an open question how they can decide the different priorities, how the tradeoff could be solved by whom, and by what standards. I think the operational playbook being developed by the G20 Joint Finance and Health Task Force can provide a guidance on these questions such as sequencing and the timeline priorities, and so on, as far as response financing is concerned. Going forward, we could consider new surge financing mechanism by using pre-commitments such as promissory notes or call-up options in order to secure additional resources without compromising other developing financing.

Javier Guzman: You're right. A few improvements in terms of the toolkit and the playbook, but the bottom line is using existing resources. We also have discussed the role of the multilateral development banks in terms of joint procurement and medical countermeasures. I guess that's another big question mark and a very important topic that's on the table. A lot of people think about this as the past, but clearly, we face outbreaks every day. Recently we heard about the mpox and we had an episode here about mpox medical countermeasures

I wanted to hear from you about what has been the response from Japan. How is Japan actively reacting to pandemics, including mpox?

Takahiro Tsuda: I think the mpox is clearly a test case for us to assess how the evolution of global health architecture post-pandemic could work well against potential pandemic. As you know, soon after the WHO declared mpox a public health emergency in September last year, the Pandemic Fund approved $129 million in grant financing for 10 affected African countries. The Health Emergency Preparedness and Response Program, or HEPR of the World Bank provided the Japanese $5 million grant. Compared to the Pandemic Fund grants, I think this is very small.

However, this has a strong target at high-risk countries and the most needed countries and played a catalytic role for mobilizing more money and play the complementary role. Also, the Japanese Ministry of Health provided the training for improving capacity. All in all, I think we need the emergency response also to help build the capacity to tackle against the potential pandemic over the medium term. Clearly, this is part of the universal health coverage agenda as well. We have witnessed a lot of policy efforts, however, there is room for improvement.

Most of the responses that I mentioned came out only after the declaration of public health emergency by the WHO. Therefore, I wonder what we could have done in advance by making a formal agreement among different stakeholders so that we can provide the needed support swiftly and efficiently. I think the G20 Joint Finance Health Task Force could play a pivotal role in developing these policies.

Javier Guzman: Very interesting insights into the current mechanisms to finance pandemic preparedness and response.

Takahiro Tsuda: Great, thank you very much.

Javier Guzman: Now, we've had the chance to discuss technical aspects of pandemic preparedness and response financing, and we're going to shift towards a broader conversation on policy direction, specifically about Japan's approach and role in strengthening pandemic preparedness and response. To do that, I'm delighted to be joined by Atsushi Mimura, Vice Minister of Finance for International Affairs at the Japanese Ministry of Finance. Mr. Mimura has previously held several roles at the Japanese Ministry of Finance and the Financial Service Agency.

It's great to have you here today. Thank you very much for speaking with me.

Atsushi Mimura: Thank you very much for inviting me to this very important conversation.

Javier Guzman: Japan often emphasizes the importance of strengthening pandemic preparedness and response in tandem with health systems strengthening and achieving universal health coverage. Can you please elaborate a bit on what this approach means to Japan and how this thinking was developed?

Atsushi Mimura: Let me just provide the history of Japan since the end of World War II. In 1961, less than 20 years after the end of the World War II, Japan actually launched and established the universal health insurance system for Japanese people. In this way, we achieved the universal health coverage for Japanese people which means that all Japanese people were able to access the health or medical services at affordable cost with the help of this universal insurance system. Actually, this launch of the universal health insurance system led to a very rapid economic growth of Japan after that in 1970s.

All through this experience, we as the budget and financial or fiscal authority of Japan, the Japan's Minister of Finance has actually learned three lessons. The first lesson is that if we were to achieve the universal health coverage, it's not just the homework of our health ministry colleagues, but we also need some expertise and help and efforts from the finance side because we need to create some sound footing or sound financial basis if we are to provide these services, including the insurance system for the general public.

The second lesson is that universal health coverage is not only a health policy, but it is also a growth policy or macroeconomic policy. It is really the basis for creating tomorrow's job and tomorrow's human resources. It is a very important economic policy as well for the Ministry of Finance. The third lesson is that if you were to create or achieve the universal health coverage, in addition to those financial footing or financial institutional settings, such as the health insurance system, you also need to have some basic infrastructure that helps the provision of health services, such as clean water or stable electricity or universal coverage of electricity.

Here again, this is not just the work of the health ministry colleagues, but definitely the Ministry of Finance needs to be engaged in these efforts as the budget and fiscal authority. Through the experience in Japan in early 1960s, when we developed and launched the universal health insurance system for the Japanese people, the Ministry of Finance of Japan learned all these three lessons that I just described.

Javier Guzman: I think these three lessons resonate very much. Following on that, you mentioned the G7 and the G20, and I think these are very important platforms, and we've seen a lot of conversation about pandemic preparedness and response. Can you please tell me a bit, how has Japan, as a G7 and a G20 member, pushed for improvements in the pandemic preparedness and response agenda? How do you see that conversation evolving, and have you been able to keep that issue on the agenda?

Atsushi Mimura: In 2019, Japan had the honor of getting the presidency of the G20. In 2019, for the first time in the G20's history, Japan actually hosted the first G20 finance and health ministers' joint meeting in Osaka at the margin of the G20 Osaka summit in 2019. Here, we had the discussion among not only health ministers, but also finance ministers. We had the minister-level discussion on the issue of health, especially coverage of financing of universal health, including the need for this domestic resource mobilization for OUHC finance.

To be honest, when Japan made this proposal of holding this finance and health ministers' joint meeting at the G20, I have to say the initial reaction from many colleagues of the G20 countries in the finance track were more or less quite skeptical, probably, in holding this kind of joint meeting. We did have this joint meeting in 2019 in Osaka, and in the end, we had good discussions. Right after this, in 2020, we all know, and as you may recall, we had this COVID-19 pandemic breaking out.

All through this pandemic, all countries, including the G20 countries, had the sharp decline of their economic activities as the result of lockdown. They saw very sharp falling down of the economic growth. Their tax revenues fell down, and the debt issues in many emerging countries got much more serious because of this economic downturn and also the need to tackle with the pandemic. On top of all these short-term impact, we also saw a lot of long-lasting negative impact, including on the development of human resources, including education for younger generation who could not go to school, for example, during the pandemic.

All through this experience, which showed how pandemic can actually give long-lasting negative impact on growth and public finance and debt issues of many countries, I think all G20 members, together with all the non-G20 member countries, discovered how tackling pandemic or how global health issues can be a very important economic matter. A matter of domestic economic policy as well as development policy and macroeconomic policy. This skepticism that occurred in 2019 when Japan proposed this joint finance and health meeting completely disappeared.

Everyone understood that tackling global health issues is not just a matter of health policy, but it is really a matter of development policy, macroeconomic policy, and growth policies. Everybody discovered this through the painful joint experience of COVID-19. As a result of this, since 2020, following Japan's presidency in 2019, all the succeeding G20 presidencies, beginning with Saudi Arabia in 2020, every year have this joint finance and health meeting in the G20. In 2021, for example, under the Italian G20 presidency, we established the Joint Finance and Health Task Force.

Now we have some institutional basis that supports this joint work of finance and health ministries, or finance and health track in the G20. Following this experience in G20, we began to have this joint finance and health meeting in the G7 as well. I think it was first done by German presidency in 2022, and under the Japanese presidency of the G7 in 2023, we also held this finance and health joint ministers' meeting of the G7 as well. Both in G7 and G20, through this painful experience of COVID-19 pandemic, having this finance and health joint meeting has become a very important custom.

In terms of substance, especially at the beginning, as this occurred with the breakout of COVID pandemic, we've had a lot of discussion about pandemic PPR, prevention, preparedness, and responsiveness. We also have some very important tangible outcome already. For example, in the G20, we established in 2022 the Pandemic Fund, which provides funding to the preparedness and prevention for pandemic. We already made a lot of progress in terms of funding for pandemic PPR, especially on the prevention and preparedness side.

Also, there is some work that remains to be done. Probably one of the important items that remains to be done is to further strengthen the system for response financing or surge financing that you introduced at the beginning of this conversation. In 2023, under the Japanese G7 presidency, we actually proposed to the other G7 colleagues that we should work more on strengthening this response financing, or surge financing, which enables many countries to provide very rapid financing in very early days of the actual outbreak of the pandemic.

Since then, not only in the G7 but also in the G20, we have been working a lot on this issue of surge financing. This year South African presidency of the G20, the South Africa colleagues are also putting a lot of emphasis on this issue of developing surge financing. Of course, Japan is quite ready to contribute to this discussion.

Javier Guzman: You mentioned the progress, great to see how the Joint Finance and Health Task Force is now an institution, and we see how that has been very important in keeping the momentum going. We hope to get good news on the surge financing front because, as you said, there is homework to be done over there. We don't want world leaders to forget the difficult lesson we went through during the COVID pandemic, as you mentioned. There is one important point that we've been hearing about, which is this Universal Health Coverage Knowledge Hub.

I wanted to ask you, how is Japan's launch of this effort, the Universal Health Coverage Knowledge Hub, taking shape, and how do you see this playing a role in pandemic preparedness and response efforts?

Atsushi Mimura: As has already been discussed, we already made some progress in terms of funding of the universal health coverage. For example, we already have the Pandemic Fund, which provides funding for prevention and preparedness. Also, we are now discussing and actually making gradual progress in terms of further strengthening surge financing or response financing mechanism. In terms of external funding for many emerging countries to prepare for pandemic or to strengthen their universal health coverage system, the gradual progress is actually ongoing.

Of course, just having this kind of external funding source is not sufficient for many emerging countries or low-income countries to better prepare for pandemic or to strengthen their health systems. First of all, as I already mentioned, universal health coverage is not just a health policy, it is also a economic policy. It's a key of their sustainable growth strategy. If so, all these emerging and low-income countries should not only rely on concessional or external funding sources from outside, but they should also make sure they can allocate their own domestic resources more to this very important health policy.

Which is, again, also the seeds for next day's sustainable growth and development. Japan did already in 1961, we would encourage all those countries to have better domestic resource mobilization in order to fund their health policy efforts. Secondly, even if they get some domestic resource mobilization or even if they get some external funding money, that's not still enough. They need to be able to better manage all these funds or all this money collected through domestic resource mobilization or coming from external sources.

In addition to the efforts on domestic resource mobilization, there's need also to strengthen their public finance management capacity. If we had to really achieve the universal health coverage across the globe, we need to have some human resources who has the sufficient expertise on health policy, health finance, domestic resource mobilization, and public finance management, both on finance side and health sides. Here comes the idea of Universal Health Coverage Knowledge Hub that will be launched in Japan by the end of this year.

The idea of the UHC Knowledge Hub is to highlight on health finance and try to develop human resources who has, again, the sufficient knowledge and expertise about health finance, especially focusing on domestic resource mobilization or public finance management. The role of the knowledge hub that will be established in Japan this year is the only place we are both WHO and World Bank actually joining together to develop learning toolkits or training programs for those people who would like to learn more about health financing and especially improve their DRM or public finance management capacity.

Already, the WHO and the World Bank has been each doing lots of efforts in terms of capacity development or human resources development, and they already have some even fiscal offices who are working on these TA efforts, capacity development efforts. Japan is really looking forward to this establishment of UHC Knowledge Hub as the host country. In addition, Japan will be quite ready to also contribute to this hub, to this joint work of the World Bank and the WHO, through our own experience because now, as you know, we are really in the face of aging population.

The more and more the aging of the population, we see more and more new kinds of challenges for us to maintain or even somehow strengthen our universal health coverage in the face of aging demographic. In addition to just sharing our experience since 1960s, we believe we can also share our own ongoing experience as the aging society for many other countries who will also or who are already on the trend for aging of population.

Japan believes that in addition to hosting the universal health coverage, we would really be able to contribute our known expertise so that many countries around the world will be able to develop their own experts who will be able to support the universal health coverage policy efforts through the better domestic resource mobilization and with public finance management. Again, by the end of this year, the knowledge hub will be established and launched in Japan. We are quite delighted and looking forward to continuously working with the WHO and World Bank on this very important endeavor.

Javier Guzman: This is great. We are very much looking forward to the hub being set up end of the year, highlighting this importance of developing human resources, public financial management, and something that some people take for granted or some people don't know and is aligning the World Bank and WHO efforts in this matter. Let me ask you the final question, which is we are going through a very interesting time with a lot of changes, a lot of challenges, and I wanted to ask about the role of the Japanese government.

What do you think is the role that the Japanese government is going to play in the global health architecture in light of the current global challenges and changes?

Atsushi Mimura: Indeed, I think for many years we have been talking about combined crises. Actually, in recent years we have been facing lots of crises. The pandemic itself was already one of the global crises that we all faced, but we also are facing with other kind of across the global challenges like climate change or gender or debt issues of low-income countries. Also, in addition to this crisis, we are also facing with a lot of structural changes in the world, including digitalization or innovation.

The important thing is that tackling health issues or global health policies, again, it's not just a health policy, but if we had to develop and if we had to tackle these global health issues, we may somehow address many of the challenges that I just mentioned. If we tackle better with health issues, then we will be able to, for example, better contribute to education. We will be able to create, develop human resources. We may be able to contribute to human resource development, and we will be able to create some decent job, decent work.

Through the health policy efforts, we can also somehow address climate issues. Through the education and through development of human resources, we can also respond to, for example, digitalization and innovation. Really tackling health issues is across the board economic policy or growth policy that help all countries around the world to go through or to overcome some kind of challenges that all countries have been facing in the recent years. It is true that in today's world, we talk a lot about fragmentation, inequality, social divide and we also have lots of different opinions about climate change, gender issues, et cetera.

Unfortunately, we also see some kind of backlash with regard to the need for international cooperation or collaboration. I believe that when it comes with the importance of health, when it comes to the fact that health actually is an indispensable basis for labor or employment, education, for human resource development, I think this kind of recognition can be shared by everybody around the world irrespective of their policy stances or whatever. Also, one of the most important lessons that we all learned in the last pandemic at the time of the COVID-19 was that nobody is safe until everybody is safe.

All through this joint painful experience of pandemic, we learned that international cooperation is really the only solution for all of us to somehow address the health issues and achieve the health of ourselves. Especially in the global health issues, helping somebody else is not helping others, it's helping yourself. All through this experience, Japan would really like to continue to help and contribute to these global health issues because again, we believe that by tackling global health issues, we will be able to contribute addressing many of the other challenges like climate, gender, social divide, et cetera, through these health perspectives.

We also believe that international cooperation is really something indispensable if we are to achieve the better outcome with regard to universal healthcare coverage and the international health issues around the globe. With this recognition, Japan would like to continue contributing to all international work that is ongoing and different international arena, the G20, the G7, World Bank, WHO, and many other important health arenas. Thank you very much.

Javier Guzman: Thank you very much. We highlight three main comments of what you said. First thing is health policy is economic policy. Second thing you said is strong health systems are needed to adequately respond and adequately prepare to pandemic threats. I will end with what you just said, international cooperation is essential. We need to work towards these global public goods. Thank you very much, Mr. Atsushi Mimura, it's been a pleasure talking to you.

Atsushi Mimura: Thank you very much. It has been a great pleasure for me as well. Thank you very much.

Javier Guzman: Thanks for listening to Pandemic Proof from the Center for Global Development. Very special thanks to the CGD podcast team, Sophia Greenhoe, Stephanie Donohoe, and Soundeazy for making it happen. Pandemic Proof is available on the CGD podcast stream, so make sure you are subscribed to the CGD podcast on Apple, Spotify, or wherever you listen to podcasts. Remember, you can check out all of our work on pandemic preparedness and beyond at cgdev.org. That is C-G-D-E-V.org. Thank you very much.