German State Finance Minister Found Dead
The body of Thomas Schäfer - finance minister of the German state of Hesse, was found next to high-speed train tracks on Saturday morning in the town of Hochheim, located between Frankfurt and Mainz, according to DW, citing local police.
The remains of Schäfer, 54, were initially unable to be identified due to the extent of the injuries after witnesses reported the body. His death has been ruled a suicide by police.
According to media in the state of Hesse, the 54-year-old regularly appeared in public in recent days, for example, to inform the public about financial assistance during the coronavirus crisis. Schäfer had been finance minister of Hesse for almost 10 yearsThe state premier of Hesse, Volker Bouffier, said in a statement Saturday that the state's leadership has received the news with "sadness and disbelief." -DW
"We are all shocked and can hardly believe," he died "so suddenly and unexpectedly" said Bouffier, adding "Our sincere condolences go to his closest relatives."
On Thursday, "Schäfer, together with Economics Minister Tarek Al-Wazir (Greens), explained how the government wants to support the more than 200,000 small entrepreneurs and solo self-employed in the country who fear for their existence due to the corona pandemic," according to WELT.
A bailout of 8.5 billion euros is opened and the debt brake, which Schäfer had always defended, is relaxed. The Mittelhesse from Biedenkopf near Marburg was very worried, that was obvious. The country and the whole world were facing “unforeseen challenges,” he said, and that tackling this “task of the century” would take several generations.But he also tried to relieve fears: The country would help quickly and unbureaucratically, Schäfer promised. “The fight against the corona crisis will not fail with money.” -WELT (translated)
He leaves behind a wife, a nine-year-old son and a twelve-year-old daughter.
Schäfer isn't the only high-profile German to meet his end on train tracks.
In 2009, 74-year-old billionaire Adolf Merckle committed suicide after pushing his business empire to the edge of ruin with a speculative bet on Volkswagen stock that went wrong. He was found dead on railroad tracks near his villa in the southern German hamlet of Blaubeuren.
Merckle lost hundreds of millions of euros after he was "caught in a brief but ferocious speculative riptide linked to a campaign by Porsche, the sports car manufacturer, to seize control of Volkswagen," reported the New York Times at the time. As a result, he was facing a massive liquidation of his empire to cover the bad bet.
New Chinese research may point to possible role of children in coronavirus spread
Covid-19 symptoms tend to be milder in kids, according to studies in Zhejiang and Wuhan, with asymptomatic infections ‘not uncommon’
But health experts say more investigation into the chain of transmission is needed
Children tend to get less severe symptoms when they contract Covid-19 and cases can be harder to detect than in adults, new research in China has found, as health experts, parents and officials weigh the risks of sending their kids to school.
A study of 36 cases in children in the eastern province of Zhejiang found that 10 – or 28 per cent – had no symptoms, while seven had mild upper respiratory symptoms, according to a paper published in The Lancet Infectious Diseases on Wednesday.
Separate research published this month in The New England Journal of Medicine had similar results. It found that of 171 children who contracted the new coronavirus in Wuhan, where it was first reported in December, 27 – or 15.8 per cent – were asymptomatic, or had no immediate symptoms
. Another 12 showed features of pneumonia in their medical scans, but not symptoms of infection.
. Another 12 showed features of pneumonia in their medical scans, but not symptoms of infection.
“The large proportion of asymptomatic children indicates the difficulty in identifying paediatric patients who do not have clear epidemiological information, leading to a dangerous situation in community-acquired infections,” the researchers in the Zhejiang study said.
Coronavirus: China bans most foreign arrivals to block imported cases of Covid-19
China last week declared it had “basically stopped” domestic transmission of the virus after imposing two months of lockdowns and mass quarantine measures around the country. Several provinces – including Guizhou, Qinghai and Yunnan – have already reopened some schools, and more provinces are preparing to resume classes in early to mid-April. But education authorities in Beijing and the southern province of Guangdong have yet to set a date for schools to reopen.
In Hong Kong, which is bracing for a surge of imported cases, the government has said schools would not go back before April 20.
As the pandemic continues to spread across the globe – with at least 655,000 people infected and more than 30,000 deaths worldwide – other countries have also closed schools and campuses, imposed social distancing measures and in some places total lockdowns to try to curb the contagion.
Canadian medical experts Alyson Kelvin and Scott Halperin said the Zhejiang research pointed to the potential role of children in spreading the virus.
“The most important finding to come from the present analysis is the clear evidence that children are susceptible to infection, but frequently do not have notable disease, raising the possibility that children could be facilitators of viral transmission,” they wrote in a comment in the journal.
The study, led by Song Qifa of the Ningbo Centre for Disease Control and Prevention and Chen Dong of Wenzhou Central Hospital, looked at a group of children aged between one and 16 who fell sick from mid-January to the end of February.
The children were all from the cities of Ningbo and Wenzhou and accounted for 5 per cent of the total cases in those places during that period. They had either had close contact with an ill family member or had been exposed to an outbreak area, or both.
Nearly half of them were mild cases and the rest were moderate, and they all recovered after an average of 14 days in hospital. Those with immediate symptoms tended to have a fever and dry cough.
The researchers found that compared to adult patients in the two cities, the severity of fever, coughs and pneumonia was significantly less in children with Covid-19. They also had a much milder illness compared to children who contracted severe acute respiratory syndrome (Sars) during the 2002-03 epidemic.
“The [new coronavirus] has little effect on the upper respiratory tract of children. Covid-19 is highly transmissible … but can have a covert presentation in children,” the researchers said.
“This asymptomatic condition is relevant if community-acquired transmission becomes the primary mode; identification of paediatric patients without … symptoms will become a great challenge.”
Thousands of covert coronavirus cases unreported in central Chinese city of Wuhan, study says
The separate study in Wuhan carried out by researchers from the city, Beijing and Hong Kong, also found that most children infected with Covid-19 had a milder clinical course than adults.
“Asymptomatic infections were not uncommon. Determination of the transmission potential of these asymptomatic patients is important for guiding the development of measures to control the ongoing pandemic,” they said.
The Canadian experts cautioned that more investigation into the role of children in the chain of transmission was needed. But they said if children were found to have an important role in spreading the virus, governments should take this into account in policies to slow transmission and protect the vulnerable.
But other experts were concerned about the toll of school closures on children, especially disadvantaged students who may not be able to access distance learning through online platforms.
“School closure measures should consider epidemiological evidence and avoid exacerbating inequities, providing learning without digital technologies, childcare alternatives, and health care,” Richard Armitage and Laura Nellums of the University of Nottingham’s epidemiology and public health division, wrote in The Lancet Global Health.
“Authorities should implement strategies to reduce transmission within schools before or instead of closures, including smaller class sizes, physical distancing, and hygiene and sanitation promotion.”
In China, parents had mixed feelings about schools reopening.
Xu Zhen, whose 11-year-old daughter is still staying home in Wuxi, Jiangsu province, said the contagion risk was likely to be low when primary schools go back next month.
“Our city hasn’t had any new patients for weeks, and we haven’t reported any imported cases so far. I think the situation is under control,” she said.
“Actually, I really can’t wait – I think I’ll collapse soon watching my daughter having online classes every day. She’s so absent-minded, listening to the teacher while she plays with the cat.”
But for Shen Juan, it was too soon to send her seven-year-old son back to school in Beijing. The city’s health commission said nearly 95 per cent of its local cases – about 400 – had recovered, but there had been a recent spike in imported cases, which stood at more than 150.
“The real situation may not be as good as the official figures suggest – the reporting system involves many levels and there may be loopholes or misreporting,” Shen said.
“I won’t send my son back to school until the ‘two sessions’ open,” she said, referring to China’s postponed annual political meetings , which were due to be held in early March. Beijing has yet to set a new date for the gatherings.
“Only when the officials and cadres dare to gather can we draw the conclusion that China is safe,” Shen said. “I won’t send my child to school before that day.”
The Dow Ignored the Spread of Coronavirus Last Week. It Won’t Be Able to Anymore.
Hope springs eternal—but false hope can be costly.
For more than two months now, the world has moved to the drumbeat of increasingly bad news about the coronavirus crisis. As the disease has spread, fears about the possible death toll and the extent of the economic disaster roiled global financial markets. The fever of panic broke at least briefly this past week, thanks to a healthy dose of monetary and fiscal policy, and hope that the market carnage has a floor beneath it. The Dow Jones Industrial Average rallied more than 20% off its low, putting it in a bull market, at least by some definitions, though it remains down 24.2% on the year.
The wild card is the coronavirus itself. It is far from contained, and Covid-19, the respiratory disease caused by the virus, continues to spread. There are now more than 550,000 cases world-wide, touching nearly every country. The U.S. is now No. 1 in confirmed cases, passing China, where it all started. Even where the disease’s spread has been slowed and quarantines lifted, life hasn’t returned to full speed as people remain reluctant to interact and conduct commerce as usual. The financial stimulus and rescue measures signed into law Friday will bring people financial relief, but it isn’t clear that they will be enough for the economy to bridge the gap of a near-shutdown or prevent another stock market swoon—one that almost surely is coming.
In other words, this isn’t over yet.
There are reasons to be hopeful, however. With their robust action to shore up financial markets and give American businesses a lifeline, the Federal Reserve and Congress have likely kept the U.S. economy from sinking into a prolonged recession or even another Depression. The Fed, for its part, acted with unprecedented speed once it realized the scope of the problem. Beyond cutting short-term interest rates to near zero and launching bond-buying programs known as quantitative easing, its quick decision to backstop money-market funds, pump cash into the short-term funding markets, and make dollars available to foreign central banks has helped unclog the pipes of the financial system so that cash can get where it is needed.
This isn’t 2008, when both the Fed and lawmakers dithered as the financial system crumbled and the economy slumped. “The Fed took the kitchen sink and threw it at the market” says Wells Fargo Securities strategist Christopher Harvey. “Then it took another kitchen sink and threw it at the market.”
The fiscal response, too, has been unprecedented. In 2008, it took a market crash to get the legislative branch to take the financial crisis seriously. This time, while it took longer than some might have liked, the Senate took about a week to pass a $2 trillion rescue package. Even when roadblocks sprang up, it was clear by midweek that a bill would pass, and that it would be big. The final document included payments to individuals and families; $500 billion for corporate aid; and an extension of unemployment benefits that could cost $260 billion.
The stock market liked what it saw. Even with Friday’s decline, the Dow Jones Industrial Average soared 12.8% this past week, its biggest one week gain since June 1938. And well it should. Between the Fed and the government, two big issues facing the market have been addressed, at least for now. The financial markets are functioning, if still fragile, while the Cares Act provides enough funding to get even some of the hardest-hit industries through the next two months.
Airlines stocks got a lift from the $58 billion earmarked to help them through an unprecedented shutdown in travel, while credit-card companies such as Discover Financial Services (ticker: DFS) and Capital One Financial (COF) got a boost from the consumer assistance provided by the bill.
Markets, however, are forward looking and may soon be looking for more. “The success of central bankers puts the spotlight on the more important aspects [of] this fight—the one against the spread and devastation of the virus, and the one against the economic blight that comes with it,” writes Société Générale strategist Kit Juckes.
And that is where the situation gets more complicated. While the fiscal rescue package, in combination with the Fed’s monetary stimulus, was enough to rally the market, it remains to be seen whether it is enough to plug the gaping hole in the economy that is just around the corner. More than three million Americans filed for first-time claims for unemployment insurance in the week ended March 21, and economists say the numbers will get far worse in coming weeks.
Stocks could still head south toward their recent lows, or even tumble further. “Every time we see those numbers, the market will act like it’s a surprise and go down,” says Peter Andersen of Andersen Capital Management.
What’s more, the financial stimulus and corporate rescue measures might not bear fruit commensurate with the trillions of dollars that will be spent to survive this crisis. Wolfe Research strategist Chris Senyek says it would be “shockingly good” if each dollar spent translated into 50 cents of GDP growth. “This package will help improve consumer, business, and, especially, investor sentiment,” he says. “However, we’re not that optimistic about the fiscal program’s ability to boost GDP growth.”
Then there’s the virus itself. No one knows how the disease will progress around the world or in the U.S. So far, 100,000 people have been infected in the U.S., while 1,544 died as of Thursday.
In Italy, the mortality rate is around 10% of reported cases; in China, where the disease appears to have been brought under control, the mortality rate is 4% of reported cases. The fact that just $180 billion, or 8.2% of the $2.2 trillion stimulus package goes to health-related spending is a sign that America is worried more about the economy than Covid-19 itself.
Even if the spread can be controlled soon, new questions will have to be answered. No one knows if someone who has had Covid-19 can get it again, or if they still carry the virus and can infect people who haven’t had it. If those who have had it can infect others, the government will have to decide to keep the two groups separated. “Locking up people without exposure, while the exposed go on their merry way won’t go over well,” writes Evercore ISI analyst Josh Schimmer.
For now, the hope that economic damage can be contained—regardless of whether the virus can—is what’s causing the market consternation. This past Thursday, even as the U.S. saw its largest daily increase in Covid-19 cases, the Dow gained 6.4%. No one should expect that to continue. The economic numbers are expected to be horrific, but the number of people who get infected is likely to get worse than many expected—and rattle the markets. “The market could easily go back and test the low,” writes Stuart Kaye, portfolio manager at Matarin Capital Management. “It will depend on the progression of the disease and its cost to society.”
That would square with the historical record. Bear markets rarely end without retesting the low. In 2008, the passage of the financial-system bailout package and other measures helped the market soar off its low. Attention then turned to the real economy and corporate earnings. The initial estimates were off—way off—and it wasn’t until analysts got a grip on the profit path that the S&P 500 found a bottom on March 9, 2009, says RBC strategist Lori Calvasina.
Analysts today are busy cutting their forecasts for earnings—but likely not fast enough. According to Refinitiv, S&P 500 corporations will see their earnings drop 0.2% in 2020. They had been predicting high-single digits heading into the year. Wall Street’s strategists, though, are warning of a much bigger drop. Calvasina calls for S&P 500 companies to report earnings of $139 a share in 2020, down 16% from $165 in 2019. But she acknowledges that it’s anyone’s guess right now.
“When we have these selloffs, it’s a process,” she says. “Bottoms take time.” And for $2 trillion, we’ve certainly bought ourselves that.
Saudis shoot down missile over Riyadh
State-owned media accuse Iran-backed Houthi rebels of launching attack
Saudi air defences shot down a missile fired at the kingdom’s capital Riyadh, state television reported, citing the Saudi-led coalition fighting in Yemen.
Residents in the city said they heard loud booms late Saturday night as the missile was destroyed.
There was no immediate claim of responsibility for the attack but Saudi state-owned media accused Iran-backed Houthi rebels of being behind it.
Houthis have previously launched hundreds of missiles and drone attacks against Saudi Arabia. The majority of these attacks targeted bases and towns across the border, but some missiles also reached major cities in other parts of the kingdom.
The most recent attack came on Friday when the coalition announced it had destroyed several Houthi drones over the southwestern Saudi cities of Abha and Khamis Mushait.
The Saudi-led coalition launched a military operation in Yemen in May 2015 with the goal of restoring the internationally recognised government of President Abd-Rabbu Mansour Hadi, who was forced into exile after Houthis ousted him in 2014.
The ballistic missile launch comes days after Yemen’s warring parties agreed to a ceasefire sponsored by the United Nations, with the hope of protecting the Arab world’s poorest country from the threat of coronavirus as the conflict marked its fifth anniversary.
A spokesman for the coalition called for de-escalation and practical steps in “alleviating the suffering of the Yemeni people and working earnestly to confront the threats of the coronavirus pandemic,” according to a statement released Wednesday.
No cases of Covid-19 have been reported in the country so far.
The World Health Organisation said last week that it has sent medical supplies to Yemen, including personal protective items for health workers and testing kits to the Houthi-held capital of Sana'a and the southern port city of Aden where the Hadi government is based.
M&G under pressure as investors flee flagship bond fund
Richard Woolnough’s Optimal Income fund has shrunk about a fifth in coronavirus sell-off
M&G’s flagship bond fund has lost nearly a quarter of its assets during the coronavirus-induced market sell-off, heaping pressure on the FTSE 100 investment group, which has had a turbulent start since floating on the London Stock Exchange in 2019.
Investors have pulled about £2.5bn from M&G Optimal Income since mid-February — equivalent to almost £100m a day — after pandemic fears spooked bond markets and led to a rush towards cash, estimates from Morningstar show.
The fund, which is run by star manager Richard Woolnough, known for being one of Europe’s best-paid fund managers, suffered performance losses of about 15 per cent between February 19, when US markets hit an all-time high, and March 25.
The problems mark a reversal in fortunes for Optimal Income, which at its peak ran about £24bn and up until last year ranked as the UK’s largest retail fund.
The fund now stands at about £16bn, according to FTfm analysis of Morningstar data to March 25, compared with £21bn just five weeks earlier. This comprises the UK version of the strategy and a Luxembourg mirror fund that was set up last year to allow M&G to sell in the EU after Brexit.
The fall for Optimal Income adds to the turbulence M&G has experienced since breaking away from parent Prudential and listing on the stock market five months ago.
The newly independent group, which comprises asset management and a UK insurance business, has lost a third of its stock market value since its October float.
Ryan Hughes, head of active portfolios at investment platform AJ Bell, said M&G was hamstrung by the maturity of its fixed income business, with investors who piled in to funds such as Optimal Income after the 2008 crisis now redeeming as they near retirement.
He added Optimal Income’s poor performance last year and during the first few months of 2020 may have accelerated the pace of redemptions.
“The fund’s performance has been challenged in this crisis due to its large corporate bond holdings, short duration [positioning for a rise in interest rates] and ability to invest in equities,” said Mr Hughes.
In a webcast for Optimal Income investors this month, Mr Woolnough acknowledged “fund performance [would] detract in the current circumstances” as a result of its positioning for economic growth.
Mr Woolnough defended the fund’s heavy exposure to investment grade corporate bonds, which did not escape the mass sell-off of recent weeks, saying that “even in the scenario of wider credit spreads”, these bonds were “more robust and stable than lower-rated companies”. He said he was “monitoring the situation carefully with regards to shifting valuations”.
M&G is also battling wider outflows from its retail fund franchise. According to Morningstar, the group was the worst-selling active asset manager in Europe in February, bleeding €1.6bn, its worst monthly redemptions in a year.
RBC Capital Markets forecasts outflows from M&G will reach £5.2bn for the whole of 2020 and £4.7bn for 2021.
M&G said that all asset managers were experiencing outflows due to the recent market sell-off. It added that retail funds only represented 20 per cent of its total business.
Another headwind for M&G is its equity funds’ tilt towards value investing, a style that has long underperformed as growth stocks have rallied. M&G’s value-focused Recovery and Global Dividend funds have bled assets in the last year, shrinking by 27 per cent and 14 per cent respectively.
Speaking to the Financial Times this month, M&G chief executive John Foley said the group was reviewing its “value” house style. “Given value has been out of fashion for a while, what we’ll probably do is become more flexible [and] have strategies that are not just value strategies.”
In December, an M&G product became the first open-ended property fund since the UK’s Brexit referendum to halt trading after it was unable to sell properties fast enough to meet redemption requests. The £2.3bn fund remains suspended.
NYT : The Lost Month : How a failure to test Blinded the US to Covid 19
Aggressive screening might have helped contain the coronavirus in the US. But technical flaws, regulatory hurdles and lapses in leadership let it spread undetected for weeks.
The members of the coronavirus task force typically devoted only five or 10 minutes, often at the end of contentious meetings, to talk about testing, several participants recalled. The Centers for Disease Control and Prevention, its leaders assured the others, had developed a diagnostic model that would be rolled out quickly as a first step.
But as the deadly virus from China spread with ferocity across the United States between late January and early March, large-scale testing of people who might have been infected did not happen — because of technical flaws, regulatory hurdles, business-as-usual bureaucracies and lack of leadership at multiple levels, according to interviews with more than 50 current and former public health officials, administration officials, senior scientists and company executives.
The result was a lost month, when the world’s richest country — armed with some of the most highly trained scientists and infectious disease specialists — squandered its best chance of containing the virus’s spread. Instead, Americans were left largely blind to the scale of a looming public health catastrophe.
The absence of robust screening until it was “far too late” revealed failures across the government, said Dr. Thomas Frieden, the former C.D.C. director. Jennifer Nuzzo, an epidemiologist at Johns Hopkins, said the Trump administration had “incredibly limited” views of the pathogen’s potential impact. Dr. Margaret Hamburg, the former commissioner of the Food and Drug Administration, said the lapse enabled “exponential growth of cases.”
And Dr. Anthony S. Fauci, a top government scientist involved in the fight against the virus, told members of Congress that the early inability to test was “a failing” of the administration’s response to a deadly, global pandemic. “Why,” he asked later in a magazine interview, “were we not able to mobilize on a broader scale?”
Across the government, they said, three agencies responsible for detecting and combating threats like the coronavirus failed to prepare quickly enough. Even as scientists looked at China and sounded alarms, none of the agencies’ directors conveyed the urgency required to spur a no-holds-barred defense.
Dr. Robert R. Redfield, 68, a former military doctor and prominent AIDS researcher who directs the C.D.C., trusted his veteran scientists to create the world’s most precise test for the coronavirus and share it with state laboratories. When flaws in the test became apparent in February, he promised a quick fix, though it took weeks to settle on a solution.
The C.D.C. also tightly restricted who could get tested and was slow to conduct “community-based surveillance,” a standard screening practice to detect the virus’s reach. Had the United States been able to track its earliest movements and identify hidden hot spots, local quarantines might have confined the disease.
Dr. Stephen Hahn, 60, the commissioner of the Food and Drug Administration, enforced regulations that paradoxically made it tougher for hospitals, private clinics and companies to deploy diagnostic tests in an emergency. Other countries that had mobilized businesses were performing tens of thousands of tests daily, compared with fewer than 100 on average in the United States, frustrating local health officials, lawmakers and desperate Americans.
Alex M. Azar II, who led the Department of Health and Human Services, oversaw the two other agencies and coordinated the government’s public health response to the pandemic. While he grew frustrated as public criticism over the testing issues intensified, he was unable to push either agency to speed up or change course.
Mr. Azar, 52, who chaired the coronavirus task force until late February, when Vice President Mike Pence took charge, had been at odds for months with the White House over other issues. The task force’s chief liaison to the president was Mick Mulvaney, the acting White House chief of staff, who was being forced out by Mr. Trump. Without high-level interest — or demands for action — the testing issue festered.
At the start of that crucial lost month, when his government could have rallied, the president was distracted by impeachment and dismissive of the threat to the public’s health or the nation’s economy. By the end of the month, Mr. Trump claimed the virus was about to dissipate in the United States, saying: “It’s going to disappear. One day — it’s like a miracle — it will disappear.”
By early March, after federal officials finally announced changes to allow more expansive testing, it was too late to escape serious harm.
Now, the United States has more than 100,000 coronavirus cases, the most of any country in the world. Yet even with deaths on the rise, cities shuttered, the economy sputtering and everyday life upended, many Americans who come down with symptoms of Covid-19 still cannot get tested.
In a statement, Judd Deere, a White House spokesman, said that “any suggestion that President Trump did not take the threat of Covid-19 seriously or that the United States was not prepared is false.” He added that at Mr. Trump’s direction, the administration had “expanded testing capacities.”
Dr. Bruce Aylward, a senior adviser at the World Health Organization, led an expert team to China last month to research the mysterious new virus. Testing, he said, was “absolutely vital” for understanding how to defeat a disease — what distinguishes it from others, the spectrum of illness and, most important, its path through populations.
“You want to know whether or not you have it,” Dr. Aylward said. “You want to know whether the people around you have it. Because you know what? Then you could stop it.”
A Startling Setback
The first time Dr. Robert Redfield heard about the severity of the virus from his Chinese counterparts was around New Year’s Day, when he was on vacation with his family. He spent so much time on the phone that they barely saw him. And what he heard rattled him; in one grim conversation about the virus days later, George F. Gao, the director of the Chinese Center for Disease Control and Prevention, burst into tears.
Dr. Redfield, a longtime AIDS researcher, had never run a government agency before his appointment to lead the C.D.C. in 2018. Until then, his biggest priorities had been fighting the opioid epidemic and the spread of H.I.V. Suddenly, a man who preferred treating patients in Haiti or Africa to being in the public glare was facing a new pandemic threat.
At first, Dr. Redfield’s agency moved quickly.
On Jan. 7, the C.D.C. created an “incident management system” for the coronavirus and advised travelers to Wuhan to take precautions. By Jan. 20, just two weeks after Chinese scientists shared the genetic sequence of the virus, the C.D.C. had developed its own test, as usual, and deployed it to detect the country’s first coronavirus case.
“That’s our prime mission,” Dr. Redfield said later in an interview, “to get eyes on this thing.”
Assessing the virus would prove challenging. It was so new that scientists had little information to work with. China provided limited data, and rebuffed an early attempt by Mr. Azar and Dr. Redfield to send C.D.C. experts there to learn more. That the virus could cause no symptoms and still spread — something not initially known — made it all the more difficult to understand.
To identify the virus, the C.D.C. test used three small genetic sequences to match up with portions of a virus’s genome extracted from a swab. A German-developed test that the W.H.O. was distributing to other countries used just two, potentially making it less precise.
But soon after the F.D.A. cleared the C.D.C. to share its test kits with state health department labs, some discovered a problem. The third sequence, or “probe,” gave inconclusive results. While the C.D.C. explored the cause — contamination or a design issue — it told those state labs to stop testing.
The startling setback stalled the C.D.C.’s efforts to track the virus when it mattered most. By mid-February, the nation was testing only about 100 samples per day, according to the C.D.C.’s website.
Dr. Redfield played down the problem in task force meetings and conversations with Mr. Azar, assuring him it would be fixed quickly, several administration officials said.
With capacity so limited, the C.D.C.’s criteria for who was tested remained extremely narrow for weeks to come: only people who had recently traveled to China or had been in contact with someone who had the virus.
The lack of tests in the states also meant local public health officials could not use another essential epidemiological tool: surveillance testing. To see where the virus might be hiding, nasal swab samples from people screened for the common flu would also be checked for the coronavirus.
The C.D.C. announced a plan on Feb. 14 to perform the screening in five high-risk cities: New York, Chicago, Los Angeles, San Francisco and Seattle. An agency official said it could provide “an early warning signal to trigger a change in our response strategy.” But most of the cities could not carry it out.
“Had we had done more testing from the very beginning and caught cases earlier,” said Dr. Nuzzo, of Johns Hopkins, “we would be in a far different place.”
The consequences became clear by the end of February. For the first time, someone with no known exposure to the virus or history of travel tested positive, in the Seattle area, where the U.S.’s first case had been detected more than a month earlier. The virus had probably been spreading there and elsewhere for weeks, researchers later concluded. Without a more complete picture of who had been infected, public health workers could not do “contact tracing” — finding all those with whom any contagious people had interacted and then quarantining them to stop further transmission.
The C.D.C. gave little thought to adopting the test being used by the W.H.O. The C.D.C.’s test was working in its own lab — still processing samples from states — which gave agency officials confidence. Dr. Anne Schuchat, the agency’s principal deputy director, would later say that the C.D.C. did not think “we needed somebody else’s test.”
And the German-designed W.H.O. test had not been through the American regulatory approval process, which would take time.
Throughout February, Dr. Redfield shuttled between Atlanta, where the C.D.C. is based, and Washington, holding multiple calls every day with Mr. Azar and participating in the coronavirus task force.
Mr. Azar’s take-charge style contrasted with the more deliberative manner of Dr. Redfield, who lacked the kind of commanding television presence that impressed Mr. Trump. He was “a consensus person,” as one colleague described him, who sought to avoid conflict. He relied heavily on some of the C.D.C.’s career scientists, like Dr. Schuchat and Dr. Nancy Messonnier, the director of the agency’s National Center for Immunization and Respiratory Diseases.
Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases, has taken a public role in the crisis.Credit...Amanda Voisard/Reuters
Under scrutiny from Congress, Dr. Redfield offered reassurances. Responding on Feb. 24 to a letter from 49 members of Congress about the need for testing in the states, he wrote, “CDC’s aggressive response enables us to identify potential cases early and make sure that they are properly handled.”
Days later, his agency provided a workaround, telling state and local health department labs that they could finally begin testing. Rather than awaiting replacements, they should use their C.D.C. test kits and leave out the problematic third probe.
Meanwhile, the agency’s epidemiologists were growing more concerned as the virus spread in South Korea and Italy. On Feb. 25, Dr. Messonnier gave a briefing with a much blunter warning than usual. “Disruption to everyday life might be severe,” she said.
Mr. Trump, returning from a trip to India, was furious, according to senior administration officials. Later that day, Mr. Azar seemed to be tamping down the level of concern. All Dr. Messonnier had meant, he said at a news conference, was that people should “start thinking about, in their own lives, what that might involve.”
“Might,” Mr. Azar repeated emphatically. “Might involve.”
Barriers to Testing
Dr. Stephen Hahn’s first day as F.D.A. commissioner came just six weeks before Mr. Azar declared a public health emergency on Jan. 31. A radiation oncologist and researcher who helped turn around MD Anderson in Houston, one of the nation’s leading cancer centers, Dr. Hahn had come to Washington to oversee a sprawling federal agency that regulates everything from lifesaving therapies to dog food.
But overnight, his mission — to manage 15,000 employees in a culture defined by precision and caution — was upended. A pathogen that Mr. Trump would later call the “invisible enemy” was hurtling toward the United States. It would fall to the newly arrived Dr. Hahn to help build a huge national capacity for testing by academic and private labs.
Instead, under his leadership, the F.D.A. became a significant roadblock, according to current and former officials as well as researchers and doctors at laboratories around the country.
Private-sector tests were supposed to be the next tier after the C.D.C. fulfilled its obligation to jump-start screening at public labs. In other countries hit hard by the coronavirus, governments acted quickly to speed tests to their populations. In South Korea, for example, regulators in early February summoned executives from 20 medical manufacturers, easing rules as they demanded tests.
But Dr. Hahn took a cautious approach. He was not proactive in reaching out to manufacturers, and instead deferred to his scientists, following the F.D.A.’s often cumbersome methods for approving medical screening.
Even the nation’s public health labs were looking for the F.D.A.’s help. “We are now many weeks into the response with still no diagnostic or surveillance test available outside of C.D.C. for the vast majority of our member laboratories,” Scott Becker, chief executive of the Association of Public Health Laboratories, wrote to Mr. Hahn in late February. “We believe a more expeditious route is needed at this time.”
Ironically, it was Mr. Azar’s emergency declaration that established the rules Dr. Hahn insisted on following. Designed to make it easier for drugmakers to pursue vaccines and other therapies during a crisis, such a declaration lets the F.D.A. speed approvals that could otherwise take a year or more.
But the emergency announcement created a new barrier for hospitals and laboratories that wanted to create their own tests to diagnose the coronavirus. Usually, they faced minimal federal regulation. But once Mr. Azar took action, they were subject to an F.D.A. process called an “emergency use authorization.”
Even though researchers around the country quickly began creating tests that could diagnose Covid-19, many said they were hindered by the F.D.A.’s approval process. The new tests sat unused at labs around the country.
Stanford was one of them. Researchers at the world-renowned university had a working test by February, based on protocols published by the W.H.O. The organization had already delivered more than 250,000 of the German-designed tests to 70 laboratories around the world, and doctors at the Stanford lab wanted to be prepared for a pandemic.
“Even if it didn’t come, it would be better to be ready than not to be ready,” said Dr. Benjamin Pinsky, the lab’s medical director.
But in the face of what he called “relatively tight” rules at the F.D.A., Dr. Pinsky and his colleagues decided against even trying to win permission. The Stanford clinical lab would not begin testing coronavirus samples until early March, when Dr. Hahn finally relaxed the rules.
Executives at bioMérieux, a French diagnostics company, had a similar experience. The company makes a countertop testing system, BioFire, that is routinely used to check for the flu and other respiratory illnesses in 1,700 hospitals around the country. It can provide results in about 45 minutes.
“A lot of us said, you know, your typical E.U.A. is just much too demanding,” said Dr. Mark Miller, the company’s chief medical officer, referring to the emergency approval. “It’s going to take much too much time. And can’t you do something to shorten that?”
Officials at the F.D.A. tried to be responsive, Dr. Miller said. But rather than throw out the rules, the agency only modified the regulatory requirements, still requiring weeks of discussions and negotiations.
After conversations with the F.D.A. in mid-February, the company received emergency approval for its BioFire test on March 24. (The company also began talking to the F.D.A. in January about another type of test, but decided not to pursue it in the United States for now.) Dr. Miller said that while he was ultimately satisfied with the F.D.A.’s actions, the overall response by the government was too slow, especially when it came to logistical questions like getting enough testing supplies to those who needed them.
“You’ve got other countries — and I’m sorry, unfortunately, the U.S. is one of those — where they’ve been slow, disorganized,” he said. “There are still not enough tests available there to test everybody who needs it.”
In an emailed statement, Dr. Hahn maintained that his agency had moved as quickly as it safely could to ensure that tests would be accurate. “Since the early days of this pandemic,” he said, “the F.D.A.’s doors have always been and still remain open to test developers.”
A Lack of Trust
Alex Azar had sounded confident at the end of January. At a news conference in the hulking H.H.S. headquarters in Washington, he said he had the government’s response to the new coronavirus under control, pointing out high-ranking jobs he had held in the department during the 2003 SARS outbreak and other infectious threats.
“I know this playbook well,” he told reporters.
A Yale-trained lawyer who once served as the top attorney at the health department, Mr. Azar had spent a decade as a top executive at Eli Lilly, one of the world’s largest drug companies. But he caught Mr. Trump’s attention in part because of other credentials: After law school, Mr. Azar was a clerk for some of the nation’s most conservative judges, including Justice Antonin Scalia of the Supreme Court. And for two years, he worked as Ken Starr’s deputy on the Clinton Whitewater investigation.
As Mr. Trump’s second health secretary, confirmed at the beginning of 2018, Mr. Azar has been quick to compliment the president and focus on the issues he cares about: lowering drug prices and fighting opioid addiction. On Feb. 6 — even as the W.H.O. announced that there were more than 28,000 coronavirus cases around the globe — Mr. Azar was in the second row in the White House’s East Room, demonstrating his loyalty to the president as Mr. Trump claimed vindication from his impeachment acquittal the day before and lashed out at “evil” lawmakers and the F.B.I.’s “top scum.”
As public attention on the virus threat intensified in January and February, Mr. Azar grew increasingly frustrated about the harsh spotlight on his department and the leaders of agencies who reported to him, according to people familiar with the response to the virus inside the agencies.
Described as a prickly boss by some administration officials, Mr. Azar has had a longstanding feud with Seema Verma, the Medicare and Medicaid chief, who recently became a regular presence at Mr. Trump’s televised briefings on the pandemic. Mr. Azar did not include Dr. Hahn on the virus task force he led, though some of the F.D.A. commissioner’s aides participated in H.H.S. meetings on the subject.
And tensions grew between the secretary and Dr. Redfield as the testing issue persisted. Mr. Azar and Dr. Redfield have been on the phone as often as a half-dozen times a day. But throughout February, as the C.D.C. test faltered, Mr. Azar became convinced that Dr. Redfield’s agency was providing him with inaccurate information about testing that the secretary repeated publicly, according to several administration officials.
In one instance, Mr. Azar appeared on Sunday morning news programs and said that more than 3,600 people had been tested for the virus. In fact, the real number was much smaller because many patients were tested multiple times, an error the C.D.C. had to correct in congressional testimony that week. One health department official said Mr. Azar was repeatedly assured that the C.D.C.’s test would be widely available within a week or 10 days, only to be given the same promise a week later.
Asked about criticism of his agency’s response to the pandemic, Dr. Redfield said: “I’m personally not focused on whether they’re pointing fingers here or there. We’re focused on doing all we can to get through this outbreak as quickly as possible and keep America safe.”
For all Mr. Azar’s complaints, however, he continued to defer to the scientists at the two agencies, according to several administration officials. Mr. Azar’s allies said he was told by Dr. Redfield and Dr. Fauci that the C.D.C. had the resources it needed, that there was no reason to believe the virus was spreading through the country from person to person and that it was important to test only people who met certain criteria.
But even in the face of a crescendo of complaints from doctors and health care researchers around the country, Mr. Azar failed to push those under him to do the one thing that could have helped: broader testing.
In a statement, Caitlin Oakley, Mr. Azar’s spokeswoman, said that the secretary had “empowered and followed the guidance of world-renowned U.S. scientists” on the testing issue. “Any insinuation that Secretary Azar did not respond with needed urgency to the response or testing efforts,” she said, “are just plain wrong and disproven by the facts.”
By Feb. 26, Dr. Fauci was concerned that the stalled testing had become an urgent issue that needed to be addressed. He called Brian Harrison, Mr. Azar’s chief of staff, and asked him to gather the group of officials overseeing screening efforts.
Around noon on Feb. 27, Dr. Hahn, Dr. Redfield and top aides from the F.D.A. and H.H.S. dialed in to a conference call. Mr. Harrison began with an ultimatum: No one leaves until we resolve the lag in testing. We don’t have answers and we need them, one senior administration official recalled him saying. Get it done.
By the end of the day, the group agreed that the F.D.A. should loosen regulations so that hospitals and independent labs could move forward quickly with their own tests.
But the evening before, Mr. Azar had been effectively removed as the leader of the task force when Mr. Trump abruptly put Mr. Pence in charge, a decision so last-minute that even the top health officials in the White House learned of it while watching the announcement.
A Tacit Acknowledgment
Previous presidents have moved quickly to confront disease threats from inside the White House by installing a “czar” to manage the effort.
During an outbreak of the Ebola virus in 2014, President Barack Obama tapped Ron Klain, his vice president’s former chief of staff, to direct the response from the West Wing. Mr. Obama later created an office of global health security inside the National Security Council to coordinate future crises.
“If you look historically in the United States when it is challenged with something like this — whether it’s H.I.V. crises, whether it’s pandemic, whether it’s whatever — man, they pull out all the stops across the system and they make it work,” said Dr. Aylward, the W.H.O. epidemiologist.
But faced with the coronavirus, Mr. Trump chose not to have the White House lead the planning until nearly two months after it began. Mr. Obama’s global health office had been disbanded a year earlier. And until Mr. Pence took charge, the task force lacked a single White House official with the power to compel action.
Since then, testing has ramped up quickly, with nearly 100 labs at hospitals and elsewhere performing it. On Friday, the health care giant Abbott said it had received emergency approval for a portable test that could detect the virus in five minutes.
The president boasted on Tuesday that the United States had “created a new system that now we are doing unbelievably big numbers” of tests for the virus. The U.S., he said, had done more testing for the coronavirus in the last eight days than South Korea had done in eight weeks.
Yet hospitals and clinics across the country still must deny tests to those with milder symptoms, trying to save them for the most serious cases, and they often wait a week for results. In tacit acknowledgment of the shortage, Mr. Trump asked South Korea’s president on Monday to send as many test kits as possible from the 100,000 produced there daily, more than the country needs.
Public health experts reacted positively to the increased capacity. But having the ability to diagnose the disease three months after it was first disclosed by China does little to address why the United States was unable to do so sooner, when it might have helped reduce the toll of the pandemic.
“Testing is the crack that split apart the rest of the response, when it should have tied everything together,” said Dr. Nahid Bhadelia, the medical director of the Special Pathogens Unit at Boston University School of Medicine.
“It seeps into every other aspect of our response, touches all of us,” she said. “The delay of the testing has impacted the response across the board.”
An Open Letter from our Chairman and CEO
Daniel O’Day - March 28, 2020
When the news of the coronavirus first emerged, Gilead immediately began to investigate the potential of remdesivir, a medicine we had been studying for many years as part of our extensive research in antivirals. Remdesivir had never been approved for use but based on what we had learned to date, we knew it might have potential with the novel coronavirus. Since then, we have been working with the greatest sense of urgency and responsibility to determine whether remdesivir does indeed work against COVID-19.
The urgency comes from knowing the desperate need among patients and the lack of any approved treatment. The responsibility is to ensure that remdesivir, an investigational medicine, is effective and safe before it is distributed for use worldwide.
This is why we have been working at unprecedented speed to enroll patients in clinical trials. Establishing the safety and efficacy of remdesivir, in partnership with regulatory authorities, is essential to potentially enabling the treatment of many more patients in the future. Multiple studies are ongoing, and we are on track to have initial data in the coming weeks. If it is approved, we will work to ensure affordability and access so that remdesivir is available to patients with the greatest need.
In the meantime, we have made the investigational medicine available for severely ill patients who cannot enroll in a trial. This “compassionate use” program is typically reserved for a small number of individual cases but there is nothing typical about this crisis and to date we have provided remdesivir to more than 1,000 patients. The program is designed by regulatory authorities in such a way that each application has to be reviewed on an individual basis. This works well when there is only a limited number of requests – as is normally the case – but the system cannot support and process the overwhelming number of applications we have seen with COVID-19.
To address this, we are transitioning to what should be a more streamlined, sustainable approach with “expanded access” programs. The compassionate use program will continue for children and pregnant women only, reducing the numbers to a level where the system can cope. With expanded access, hospitals or physicians can apply for emergency use of remdesivir for multiple severely ill patients at a time. While it will take some time to build a network of active sites, this approach will ultimately accelerate emergency access for more people. Initial sites in the United States are up and running as of yesterday, and it is expected that sites in additional countries will be activated soon.
In recent days, many people have reached out to Gilead to advocate for access to remdesivir on behalf of friends and loved ones. I can only imagine how it must feel to be in that situation. We are used to seeing numbers and statistics in the news on a daily basis but we all know that behind each of those numbers is a real and often heartbreaking human story. I know I speak for everyone at Gilead when I say how much we all wish we could help every patient in need. Today we are working at speed to establish the temporary expanded access programs, while at the same time establishing the potential safety and efficacy of remdesivir and determining for which patients remdesivir may have activity.
Remdesivir is still an investigational medicine. We are planning for the outcome we all hope for – that it will prove to be a safe, effective treatment – and in the meantime we are taking the ethical, responsible approach to determining whether that is the case. At each step of the way, our decisions are informed by guidance from public health authorities and bioethicists, and by our decades of experience in making antiviral treatments for diseases such as HIV and viral hepatitis.
We hope that, in partnership with many groups around the world, we can play a part in helping patients with this disease. We know how much is at stake and the urgent need to determine whether remdesivir will be a safe and effective treatment.
We think about the healthcare workers who are on the front lines of fighting this pandemic around the clock and the urgent need to equip them with a treatment. We know that patients and their families around the world are waiting. All of us at Gilead are doing everything we can to meet our responsibility with remdesivir, with the greatest sense of urgency and care.
As we continue with those efforts, we will provide updates on our progress as soon as information becomes available, recognizing the significant public interest in remdesivir around the world.