Infectious Disease Crisis Control in Japan
- Recommendations on an Exit Strategy -

Kazumasa Oguro
Professor, Hosei University

1. Serious Evaporation of Sales and Financial Limitations

The spread of the new coronavirus infection has seriously affected our society. For example, according to the Cabinet Office's quarterly GDP preliminary report for the period January-March 2020 (the first preliminary figures), the real GDP growth rate for the period was minus 3.4% per year (compared to the previous quarter). However, the average growth rate estimate by private-sector economists for the period April-June 2020 was more than minus 20% per year (compared to the previous quarter). The present author also estimates it is highly probable that the 2020 GDP will see the record drop in the post-war period.

Under Article 32, Paragraph 1 of the Act on Special Measures for Pandemic Influenza (Act No. 31 of 2012), the Japanese government declared a state of emergency in Tokyo and the other six prefectures on April 7, 2020. The state of emergency was extended to the entire nation on April 16. The hotel and restaurant industry and tourism sectors were the first to be hit by citizens' self-restraint from going out and the voluntary suspension of business. Customers restrained themselves from eating out or staying at inns and hotels. As a result, the "evaporation of sales "occurred. Some companies experienced a sales decrease of as much as 90% compared to the same month from the previous year. According to the Fourth Survey on COVID-19 by Tokyo Shoko Research, Lt., 84% of 10,905 companies registered sales decrease in April 2020, with their sales in April last year taken as 100%. The median value of sales of all companies was 80% of sales from last year regardless of their business sizes --- small, medium, or large. There is a possibility that their sales decrease after May will accelerate. If the sales of these businesses are predicted to decrease by 20% per day from the same day of the previous year due to the influence of the COVID-19 pandemic, by how much will sales decrease in total?

In this connection, the "Economic Census for Business Activity" published by the Ministry of Economy, Trade and Industry is informative. According to the latest report (June 2018), the sales of all industries in 2015 were about 1,625 trillion yen. Since the nominal GDP in 2015 was about 531 trillion yen, the sales of all industries were about three times the 2015 GDP, and the average daily sales of all industries were about 4.5 trillion yen. From the sales of all industries, the sales of accommodations, eating and drinking services accounted for about 25 trillion yen; living-related and personal services and amusement services such as movies and theaters about 46 trillion yen; and wholesale and retail trades like department stores about 501 trillion yen. The sales of these industries accounted for about 35% of the sales of all industries, and their average daily sales were 1.6 trillion yen. Based on this data, the decrease of sales --- due to long-term self-restraint from going out and a voluntary suspension of business --- of accommodations, eating and drinking services, living-related and personal services and amusement services, and wholesale and retail trades is estimated at 0.32 trillion yen per day. Difficult as it is at this moment to accurately predict, the economic loss at this time is likely to reach 9.6 trillion yen per month. As the number of new infections has now decreased, the state of emergency has gradually been lifted in an increasing number of prefectures since May. Thus, the situation is changing, and sales may recover. It is undeniable, however, that COVID-19 infections may resurge due to a full resumption of social and economic activities, and that voluntary suspension of business will be requested again. If the voluntary suspension of business continues for three months, sales worth 28.8 trillion yen will disappear; if this amount of sales loss continues for several months, the financing of companies will be immensely affected.

The 2020 White Paper on Small and Medium Enterprises (approved by the Cabinet on April 20, 2020) points out to the possibility that financial difficulties of the accommodations, eating and drinking services will worsen in the next six months. According to the 2018 Surveys for the Financial Statements Statistics of Corporations by Industry (Ministry of Finance), small and medium enterprises with a capital of 10 to 50 million yen hold cash and deposits equivalent to only about three months of operating costs. Under such circumstances, the government formulated emergency economic measures and over 50 trillion yen of the 2020 general account supplementary budgets (the first package worth approximately 25 trillion yen and the second about 32 trillion yen). However, with the outstanding Japanese public debt exceeding 200% of GDP, it will be impossible for the public finance to cover economic losses that will occur in the future. Uniform self-restraint from going out and the voluntary suspension of business will have a great impact on our social and economic activities.

2. The Uncertainty of COVID-19 and Two Opposing Positions

The fight with the coronavirus disease is just a battle against time. Uncertainties regarding the characteristics and properties of the novel coronavirus result in many controversial questions: (1) the number of potentially infected people, (2) the real mortality rate, (3) the duration of antibody, (4) the BCG hypothesis and virulence by virus type (including innate immunity/cross-immunity and racial differences), and (5) the possibility of developing medical drugs like vaccines and curatives, and new therapeutic methods.

According to the statistics site "Worldometer's COVID-19 Data" (as of May 23, 2020), death tolls per million people in the world are: 797 in Belgium; 612 Spain; 539 Italy; 536 the United Kingdom; 433 France; 389 Sweden; 6 Japan; 5 South Korea, and 3 in China. There is a hypothesis that mortality rates are different between Caucasian and Asian races. Given, however, that the population of Wuhan (China), where the coronavirus infection first broke out, is about 11 million and the number of deaths 3,869 (April 18 CNN reportage), the death toll per million people in Wuhan is some 350, which is close to the figures ​​in Sweden and France. The data on Wuhan seems to be inconsistent with the above hypothesis, although the present author lacks the expertise to judge its validity.

Among still other unanswerable questions are: (6) whether the spread of infection will occur again after the self-restraint of going out and the voluntary suspension of business have been gradually lifted; (7) whether the novel coronavirus will disappear spontaneously after a lapse of time, and (8) whether, in the end, it will be possible to contain the novel coronavirus. Needless to say, these are topics that demand professional expertise to answer. We should wait for the conclusions of researchers who specialize in infectious diseases and epidemiology. It will take some time to answer these controversial questions.

The spread of the novel coronavirus threatens human life in two ways: physical death from COVID-19 and economic death due to prolonged self-restraint of going out and voluntary suspension of business. These two issues are in a trade-off relationship. Enforced restrictions on people's movements will cause tremendous economic damage. If the restrictions are relaxed, the infection will spread and kill people. In the United States, for example, the novel coronavirus infection is spreading again in the states where the economy was reopened in haste (ex. Texas and Florida).

Then, is there not any lesson to be learned from history? What is informative in this respect is a paper on the 1918 Spanish Flu by US Federal Reserve economist Sergio Correia and others.

According to the paper's analysis, the Spanish Flu pandemic reduced manufacturing output by 18%. There are apparent differences between the cities that carried out earlier and longer-term non-pharmaceutical interventions (ex. curfew and social distancing) and those that failed to adopt comparable measures. The mortality rate (number of deaths in 1918 per 100,000 population) in the former was lower than in the latter. Moreover, post-pandemic employment growth (employment growth in the manufacturing industry from 1914 to 1919) tended to be higher in the former than in the latter.

However, problems caused by the novel coronavirus are not the same as those from the Spanish Flu. There are various debates overseas and in Japan over infection control measures against the new coronavirus. It may be premature to evaluate the effects of those measures at this moment. History alone will provide an assessment in hindsight.

Under these circumstances, Japan, like the United States, is being torn into two positions or into opposition camps --- a position that thinks more of life and another that thinks more of the economy. However, the enemy we should fight is the novel coronavirus. A philosophical quarrel over whether to "save life or economy" will never lead to a solution.

Unlike from the days of the Spanish Flu, we require a profound knowledge of viruses and various technologies. Although the spread of novel coronavirus infection is now temporarily diminishing, there is still a possibility that the infection will resurface, and a voluntary suspension of business will become necessary to prevent the collapse of the healthcare system. It is, therefore, at this moment that we should work on preparedness against the possible second and third waves of infection. The "exit" from COVID-19 crisis is not a quarrel over whether to "save life or economy," but a "strategy of protecting both life and economy" by use of technologies and thorough testing, thereby inducing people to resume their social life --- consumption, education, exercise, and leisure.

3. COVID-19 Exit Strategy

Professor Paul Romer (2018 Nobel laureate in economics) of the New York University, and doyen of the American Economic Association, proposed 20 million tests per day (Romer, 2020). Almost coincidentally, the Group of State Power Studies / the Society of Security and Diplomatic Policy Studies of the Kajima Institute of International Peace and a group of like-minded supporters also built a website "Urgent Recommendations: Toward a V-shaped Recovery after the Novel Coronavirus Pandemic" (referred to from here as "web recommendations"), and released a proposal on the "exit strategy" on May 7, 2020. A UK team of infectious disease scientists has recommended 10 million tests per day (Peto, et al. 2020), and the Rockefeller Foundation 30 million tests per week (Allen, et al. 2020a), while Harvard University's Edmond J. Safra Center for Ethics more than 5 million tests per day (Allen, et al. al. 2020b). The key is mass testing.

It is needless to say that the basic infectious disease control measures are "testing" and "isolation," and thorough testing and isolation are essential to prevent the spread of infection. With strong infectivity, the novel coronavirus features a long incubation period, and therefore there are many asymptomatic spreaders. Consequently, adequate testing is of primary importance to implement infection control. In Japan, the so-called cluster control has been the principal strategy, achieving substantial results. But the number of tests in Japan is much smaller than in other countries because the Japanese government has been carrying out tests mainly on persons who have COVID-19 symptoms and tracing those who had contact with the carriers. Tests in Tokyo have detected a large number of infections through routes other than those monitored by cluster tracing experts. Untraceable infections in the urban areas and intra-hospital infections have sharply increased. In this sense, the expansion of testing is crucially important.

Many companies seem to be already facing financial difficulties and coronavirus pandemic-related bankruptcy, due to self-restraint from going out and the voluntary suspension of business. Nonetheless, a majority of people are not infected with COVID-19. If so, why are we requested to refrain from going out or to voluntarily suspend business? The reason is that there is an "information asymmetry" regarding the presence and absence of infections. In many cases, we cannot judge whether we are infected with COVID-19. Consequently, we try to reduce contact with others by self-restraint of going out and the voluntary suspension of business.

However, when we fully reopen the economy, if we can inform one another whether or not we are infected with COVID-19 by the use of technologies, the situation will dramatically change. As long as we use "tests" in order to only judge the presence or absence of infection for infection control without combining infection control and the perspective of economics, we should be blamed for having a narrow view of the situation. Although it is essential to "isolate" those who test positive, it is equally important to formulate an "exit strategy" by incorporating the perspective of economic policy and to gradually allow those who test negative consecutively to resume free economic activities. We should improve the climate for the formulation of such an exit strategy.

The gist of the above-mentioned web recommendations is as follows: to achieve the compatibility of infection control and social and economic activities, we should establish a system at the latest in a half-year time to provide people with a regular update on the current infection status of COVID-19 (once every two weeks), and to enable those who test negative consecutively to resume going out or to work without concern. This is of primary importance for moving to the next stage.

The significance of an update on the current infection status regularly (once every two weeks) is two-fold --- the macro status of infection and the micro status of infection.

Tests as an infection control tool include not only PCR tests but also such tests with high accuracy as antigen tests and antibody tests. Antibody tests are useful to grasp the macro status of infection. At present, a certain number of antibody tests are being conducted in Japan, but there is something wrong with the number of samples, and the number of latent carriers is not exactly known. First of all, we should conduct mass antibody testing regularly to grasp the macro status of infection.

Regarding the micro status of infection, on the other hand, it is necessary to establish a system capable of implementing 10 million tests a day to keep the people regularly informed of the latest infection status once every two weeks. The tests include antigen tests, Loop-Mediated Isothermal Amplification, and saliva-based PCR test reagent.

In expanding testing, it is extremely important to implement both PCR tests for the detection of new infections (including antigen tests waiting for government approval) and antibody tests for confirmation of infections. Since PCR tests are not free from false-negative results, the spread of infection that PCR tests fail to detect may be detected by antibody tests. A yardstick for deciding whether or not to lift non-pharmaceutical interventions including self-restraint from going out and voluntary suspension of business is the reduction of effective reproduction number (R) that indicates how many people a single spreader infects to below 1. However, since mass testing is not available, the number of infected people is not known. The expansion of PCR testing and antigen testing is essential to monitor true R in real time. It will be possible to verify the selection of effective interventions and the effectiveness of interventions by estimating infection rates by the use of antibody test results.

Although the spread of COVID-19 is temporarily declining, COVID-19 will likely resurface, and the second and third waves of infection will occurr in the future. Therefore, it is necessary to aim at establishing a system of realizing PCR testing and antigen testing for all people once every one to two weeks, so that those who test negative consecutively can go out or resume work without worry. How to realize this matters. Not only PCR tests but also useful tests with high accuracy should be actively adopted.

However, since mass testing is not free from the problem of false-positives, the web recommendations state that the problem of false-positive/false-negative test results should be dealt with by multiple tests. For details of multiple testing, refer to a calculation sheet ( posted in the "Q&A" section of the web recommendations. For example, in a case where "infection rate is 1%, and specificity 99.9%," if two consecutive positive test results are judged "positive," 14 false-positives will be found in the population (13.95 million) of Tokyo. (The independence of testing must be guaranteed.) Under the same conditions, if three consecutive positive test results are judged "positive," the number of false-positives in the population of Tokyo will be 0, and the accuracy of positive test results will be 100%.

1) To deal with the problem of false-negatives, positive/negative judgment should be confirmed by two consecutive tests; if all the results are negative, the patient or testee is negative for coronavirus. (In this case, testees except those who test "negative" are judged "positive." They can request testing again.) 2) The asymmetry of information should be eliminated. To this end, we should create an environment that will facilitate mutual confirmation of test results (PCR tests and antigen tests). The issuance of PCR test negative certificates may be useful. (In certain countries and regions abroad, the presentation of a PCR test negative certificate has already become mandatory for business travelers. The Japanese government has also started to work on such certificates.)

The self-restraint from going out and the voluntary suspension of business should not be a policy demanding uniformity. We should change our mindset to protect both "life" and "economy" and urgently work out a strategy to regain economic normalcy taking into account group characteristics in terms of the risk of infection and age while containing the novel coronavirus. Papers and recommendations by Acemoglu, et al. (2020) share a similar perception.

Moving to the "the way out or exit" should presuppose that an infected person who needs treatment by hospitalization can be promptly hospitalized. We should constantly monitor whether or not a certain number of vacant hospital beds is available, and suspend, if necessary, the move to normalcy in a flexible manner as soon as the shortage of beds occurs.

4. Mass Testing and its Budget

When conceiving a system to carry out 10 million PCR tests (including antigen tests) per day in Japan, we should take into account the following: the drive-through method in South Korea; "PCR Centers" of the Tokyo Medical Association, and COVID-19 tests at dental clinics, laboratories of faculty of medicine, and pharmacies (New York). Also, we should learn from the operation of polling stations on the occasion of the Lower House Election. About 50 million voters visit polling stations across the country and engage in the act of voting that takes five minutes or so. There seems to be no polling station that is overcrowded with voters.

Therefore, it will be possible to carry out five-minute-long PCR tests on 10 million people per day around the country without much confusion. For example, in Wuhan, China, all inhabitants of each district of the city were subject to tests in 10 days in mid-May 2020. (Total cost was equivalent to some JPY 13.5 billion.) Out of about 9.9 million people, there was no case of symptomatic infection, while asymptomatic infections numbered 300. If all the asymptomatic infections are false-positives, PCR specificity is 99.9969% or more.

Candidate places for COVID-19 tests will include gymnasiums and public halls where we can install a polling station. To avoid infection in these places ventilation should be provided, and there should be enough space between people. Nonetheless, if too many people gather at specific points of time --- like at opening time ---, the risk of mass infection may grow significantly. Tests should be done in divided time slots.

One idea is to allocate time slots by age group (ex. parents with elementary school children, 20-24 age group, 65-70 age group, etc.) or by address. Since municipalities know the number of inhabitants by age and address, they can readily arrange the optimum allocation of time slots by age and address to avoid congestion. Also, the age and address of a person who comes to receive a test can be easily confirmed by checking identification cards such as a driving license and a health insurance card.

To carry out such large-scale testing nationwide, it is necessary to secure a considerable number of personnel and materials. Doctors and nurses alone are far from able to provide the necessary number of coronavirus testers. Therefore, as a special temporary measure, medically unqualified individuals who have undergone a certain level of training should be allowed to serve as coronavirus testers under the supervision of medical doctors. In this connection, we would like to propose to position the expansion of testing as a kind of public works, and preferentially employ as coronavirus testers those who have lost their jobs or income due to self-restraint from going out and the voluntary suspension of business , which will help to secure personnel necessary to expand testing.

To eliminate the risk of bottlenecks as effectively as possible that can hinder the acquisition of materials, we recommend that a "network for emergency measures for the novel coronavirus testing" be formed by related ministries, prefectural governments, and supportive organizations under the leadership of the office of the Prime Minister, and that a collective effort be made to procure materials, carry out testing, and collect and analyze test results. A budget is needed for the improvement of the testing system. Professor Paul Romer's proposal "Roadmap to Responsibly Reopen America" estimates the necessary costs of carrying out 20 million tests per day at 10 trillion yen. Meanwhile, our urgent recommendations estimate 1) the costs of developing, spreading the use of, and reducing the price of highly accurate test kits at 5-9 trillion yen (provisional), and (2) the improvement of the testing system --- including personnel costs and cost for capacity building of coronavirus testers) --- at 3 trillion yen (provisional).

Then French Prime Minister Philippe announced that France would ease restrictions on lockdowns after May 11, aiming to implement 700,000 COVID-19 tests per week. The United States set the goal of increasing the number of COVID-19 tests to 2 million per week by the end of May. Japan should start with 50,000 COVID-19 tests per day including trial experiments (ex. pilot tests in Tokyo), targeting specific areas and people with specific occupations. Japan should totally and gradually increase the number of daily coronavirus tests and improve its testing system, thereby also increasing the number of people who can engage in economic activities without restrictions.

At this moment, the effectiveness and duration of coronavirus immunity are still controversial. But if the immunity period is long, those who were infected with the novel coronavirus and then recovered (after a lapse of certain period of time) or those who tested positive for antibodies may dispense with the frequent renewal of a PCR test negative certificate. Moreover, if coronavirus vaccines become available earlier than expected, we should use them.

Besides new vaccines, the development of new "therapeutic methods" also matters. If we can develop an appropriate treatment based on effective existing drugs --- dose combination, the amount of drug and dosing frequency may vary with the patient's condition ---, and lower the COVID-19 mortality rate below that of ordinary influenza, we will be able to eliminate the trade-off between life and economy and restore normal economic activities.

However, if we adopt an incomplete exit strategy, we will not succeed in properly containing the novel coronavirus. In that case, the infection will break out again in the form of the second and third waves, and we will have to continue infection control efforts for more than one and a half years. If so, taking into consideration the research of US Federal Reserve economist Sergio Correia, we should adopt a strategy of carrying out exhaustive "testing" and "isolation" from an initial stage to realize a swift economic normalization. Total economic damage over time must be limited.


  • Group of State Power Studies/Society of Security and Diplomatic Policy Studies in Kajima Institute of International Peace and a Group of Like-Minded Supporters (2020) "Urgent Recommendations: Toward a V-shaped Recovery after the Novel Coronavirus Pandemic ‘Coronavirus Testing for All' --- the First Step of the Next Phase"
  • Acemoglu, D., Chernozhukov, V., Werning, I., and Whinston, M. (2020) "A multi-risk SIR model with optimally targeted lockdown," NBER Working Paper No. 27102.
  • Allen, D., et al. (2020a) "National Covid-19 Testing Action Plan Pragmatic steps to reopen our workplaces and our communities," Rockefeller Foundation
  • Allen, D., et al. (2020b) "Roadmap to Pandemic Resilience," Safra Center for Ethics, Harvard University
  • Peto, J., et al.(2020) "Stopping the lockdown and ending the epidemic by universal weekly testing as the exit strategy"
  • Romer, P. (2020) "Roadmap to responsibly reopen America"
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