Ebola and the economics of fear: Don Pittis

In the world of business, there is a saying that markets are driven by fear and greed. As shares in drug companies surge, the Ebola virus has already unleashed the power of greed. And as we watch the coverage of the disease move into what many commentators have labeled irrational hysteria, some people are finding ways to tap the power of fear.

Joel Kettner of the International Centre for Infectious Diseases in Winnipeg says that when it comes to infectious diseases, fear is not clearly good or clearly bad.

"It can be both," he says.

• Ebola outbreak compared to wartime by Doctors Without Borders
• Ebola outbreak 'vastly underestimated,' WHO says
• Ebola outbreak: it's not the virus but Africa that's changed

Most medical experts say Ebola's contagion in the global consciousness has outgrown the disease's actual risk. One of the people pointing that out is Seth Berkley, head of the GAVI Alliance, a group that promotes developing world health through vaccination.

"It starts with familiar flu-like symptoms," he wrote on the BBC Health site. "But within days this can quickly descend into something more exotic and frightening: Vomiting and diarrhoea, followed by bleeding from the gums, the nose and gastrointestinal tract."

But the disease Berkley is describing is not Ebola but Dengue shock syndrome. Caused by a mosquito-borne disease, the latter kills about 20 times more people worldwide every year than the confirmed death toll from the current Ebola outbreak (although the numbers are changing constantly).

Despite the wall-to-wall coverage of Ebola as the latest terrifying plague, its ranking in the death pecking order is negligible. Latest estimates from the World Health Organization show that, for example, between one and two million people die of AIDS every year.

Fear as motivator

According to Berkley, the reason the developed world fears Ebola despite its low risk of spread in the developed world is that the idea of an untreatable disease is foreign to us and stimulates long-forgotten fears.

There is no doubt some truth in Berkley's analysis, but as a participant and a critic of the influence of media on our lives, I don't think we can absolve the people in my business. During the quiet summer news cycle, the news media are partly implicated in stimulating a disproportionate horror of Ebola, just as they did with H1N1 and SARS.

Unlike many other commentators, however, I think this could be a good thing.

And with some reservations, Joel Kettner agrees. Fear is motivating, he says.

Certainly, in parts of West Africa where the disease is spreading, fear of hospitals, of western medicine, of neighbours is part of the problem.

Fear is closing borders, shutting down trade, seriously damaging local and national economies. Liberian Finance Minister Amara Konneh recently said due to the Ebola outbreak, the country's growth forecast "is no longer realistic."

International rating agency Moody's has warned that besides the death toll, the outbreak will cause "critical commercial and transport disruptions" in the affected West African countries, leading to "significant" economic and fiscal damage.

Fear can also help the disease spread. The frantic urge to escape areas where the Ebola virus is present can make it worse. "You're not leaving the risk behind," says Kettner. "You're just carrying it to another location."

As a result, Kettner says there is a "reasonable expectation" that people will arrive in Canada or other developed countries who may have been exposed to the virus and won't get sick until after their return. Fear of that happening is already prompting Canadian health authorities to dust off their preparedness skills, which were learned during the SARS crisis.

Kettner also observes that global media fears and a sense of crisis have awakened new interest in companies and agencies working on cures and vaccines. Although its shares have fallen from their highs earlier this week, Canada's Tekmira Pharmaceuticals gathered worldwide attention and credibility for its experimental Ebola drug.

Despite a rollercoaster ride on the market, Tekmira's shares are still worth nearly twice as much as they were a month ago,giving the company better access to capital to do its work. And Tekmira is not alone. Suddenly, investors are also interested in BioCryst, MAP BioPharma and others because of their "race to combat Ebola."

The upside of panic

In an article ostensibly telling us to beware trading in Ebola virus stocks, Turney Duff, a former Wall Street trader and author of The Buy Side, actually gives instructions on how to profit from health scares.

"The last thing you want to do when news breaks is try to find the right stocks to trade," Duff wrote on CNBC.com. "Back when I was a health-care trader and the SARS virus had the world's attention, we broke down every sector to see how it could be impacted."

Pharmaceutical companies and those that invest in them can benefit from outbreaks by creating and selling drugs to fight diseases.

While critics of the pharmaceutical industry may fulminate against the ethics of profiting from poverty and disease, the fact is, the wave of fear over Ebola means the virus is punching far above its weight compared to other developing country diseases. After all, the pharmaceutical industry is notorious for ignoring diseases of the developing world because poor people can't pay for expensive drugs.

But the Ebola scare has actually helped focus minds and financial resources on creating treatments that, in a commercial sense, might not justify their development costs.

Respiratory illness, for instance, kills more than a thousand times more people than Ebola.

A recent recurrence of one of those respiratory diseases H1N1, or swine flu that swept through Canada in 2009 reminds Kettner of another advantage of the fear of disease and the attention it brings.

"We became aware that the population of First Nations and other aboriginal people, especially those living in remote and northern communities, appeared to be at higher risk for getting severe [cases of the] disease," says Kettner.

He said fear in those communities "was a motivation for focusing on the health needs... and quality of health care in those communities."

Opportunities to improve health care

Fear of a new disease is not irrational. Diseases mutate. And while Ebola is not a perfect candidate, epidemiologists know there is a chance that some new strain of bug will ride our integrated transportation system to sweep the world like a modern Black Death. That would be a personal problem for many of us, but it would also be a very big economic problem.

Kettner observes that the main causes of disease outbreaks that could spread around the world are not germs, but poverty and poor health care.

"What I hope will happen from the fear that is generated from the Ebola virus is that there will be more attention paid to the health needs of the communities that are at risk," he says.

After years of civil war, with poverty, few doctors and abysmal education levels, the people in the worst affected areas of West Africa are poorly equipped to save themselves from a disease like Ebola.

Maybe it is a good thing for those of us in the developed world to be afraid, to buy into the current hysteria. Because if we don't commit the resources to stop the outbreak there, maybe, just maybe, Ebola will soon be coming for you.