Healthcare Policy Analyst Chris Meekins provides an update on the spread of the Chinese coronavirus.
Increasing attention has been drawn to the Chinese coronavirus (“nCoV”) and the threat it may pose to the U.S. and other countries. A few key points:
The U.S. government is the global leader in infectious disease response. U.S. Department of Health and Human Services Secretary Alex Azar was at the department during the H1N1 pandemic, anthrax attack and SARS outbreak. He is prepared to lead. Through the Strategic National Stockpile, the U.S. has millions of masks and other critical items if the U.S. needed to mount a response, something we doubt.
We are increasingly convinced the number of cases and deaths from the disease in China are being significantly under-reported by the Chinese government. In fact, based on our sources, the actual numbers are likely at least 10 times what’s been reported publicly. As of January 27, a dozen cities were on lockdown, and we view that as a positive to prevent global spread. Our checks reveal that lines stretch outside of urban and rural hospitals and triage facilities have been set up. We doubt we will ever know exactly how many people are/were infected.
The biggest shortfall is the lack of a diagnostic to quickly determine if a patient has the disease. In the U.S., we understand that all suspected specimens must go to CDC in Atlanta for review. The second goal would be to develop a treatment and the third to develop a vaccine. The National Institutes of Health (NIH) is partnering with biotech company Moderna on a vaccine candidate.
While no two virus outbreaks are identical, the SARS outbreak of 2002-2003 provides the closest precedent for the current situation. As with SARS, the current situation is likely to get worse before it gets better. After originating in China, SARS ended up causing infections in 15 other countries, mostly along the Pacific Rim. As of this past weekend, 12 countries other than China reported nCoV cases, also mostly in the region. As noted above, evidence shows that the number of likely cases is dramatically higher than official reporting.
As of this past weekend, it is also known that the nCoV transmits when patients are asymptomatic, which was not true of SARS. This means that even if a traveler clears a government screening, that person could still infect others before showing symptoms. This change in the knowledge of the virus increases the possibilities of additional travel restrictions.
On the other hand, the nCoV fatality rate seems to be lower: 3% as of last count, one-third that of SARS. Making the picture murkier is the fact that initial data had shown that patients dying from the nCoV were older and had other co-morbidities; that seems to have changed, and now, as with SARS, younger and healthy people are also dying.
Perhaps the most important contrast versus 2003 is that Chinese government action is much more rapid and decisive, including quarantines of a dozen cities totaling 50 million people, and a greater level of transparency, as is being demanded at the highest levels of the government. Needless to say, such action causes disruption to travel and other economic activity. Reduced urban driving activity and airport shutdowns both directly impact oil demand; there is less impact from train restrictions, since railways in China are predominantly electrified, as is also true of many buses. Regardless, the more quickly China can contain the outbreak, the shorter the period of disruption will be.
To be clear, the restrictions in China are likely to stay in place for weeks, perhaps longer. According to Columbia Health, the incubation period for the nCoV is likely five to seven days, but could be up to 14 days. We also believe the number of cases in the U.S. is likely to increase in the coming days.
All expressions of opinion reflect the judgment of Raymond James & Associates, Inc., and are subject to change. There is no assurance any of the trends mentioned will continue or that any of the forecasts mentioned will occur.