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WebMemo #946 on Health Care

December 16, 2005

Vaccine Liability: Congress Should Give Vaccines a Shot in the Arm

By

In response to scientists' warnings about an avian influenza pandemic, President George W. Bush recently called for the creation of a $7.1 billion influenza preparedness strategy. The cornerstone of his plan is vaccination.[1] As things now stand, however, the country does not have the resources to make this plan a reality: vaccine makers face too many legal obstacles and too much potential liability to make the investments needed to combat avian flu. Congress has dealt with this problem before, with respect to childhood vaccinations, and should respond today similarly. Extending the Vaccine Injury Compensation Program (VICP) to cover more vaccines will give vaccine manufacturers breathing room to innovate and bring their life-saving products to market, to the benefit of all Americans.

Senate Majority Leader Bill Frist (R-TN) and the House leadership are in final negotiations over a provision to help the vaccine industry meet its challenges. The provision, which is attached to the defense appropriations bill, offers liability protection for a limited number of vaccines deemed critical for responding to an avian influenza pandemic. However, it is unclear what kind of compensation, if any, would be included to cover the small number of people injured by vaccines.[2] While this effort represents a good first step towards shielding the vaccine industry from litigation, Congress will have to revisit the issues of expanding liability protections to more vaccines and improving and extending compensation programs for those injured by vaccines.

Low Prices, Unlimited Liability

Drug industry experts estimate that it costs nearly $900 million to bring a new vaccine to market.[3] Despite the increasing costs of research, development, and compliance with Food and Drug Administration regulations, major government programs, such as the Vaccines for Children Program, demand deep discounts that have made many vaccines unprofitable.[4]

Worse, vaccines have fallen prey to the tort monster in America. Unpredictable lawsuits obtain huge verdicts on shaky foundations, stifling the ability of vaccine makers to compete and innovate.[5] Many have criticized the courtroom's ability to weigh the complex scientific and statistical evidence involved in vaccine liability cases.[6] Buffeted by successive waves of courtroom attacks and huge legal expenses over the past three decades, many firms now avoid the potential liability posed by vaccines.

To address vaccine shortages and the resulting dangers to public health, Congress established VICP in 1986. Funded by an excise tax imposed on vaccine doses, VICP was intended to protect the makers of childhood vaccines from legal liability. VICP was designed to be a less adversarial alternative to litigation; victims who can prove that their injuries fall within certain scientifically established boundaries receive full compensation for economic losses without showing fault and without expensive, time-consuming litigation. Furthermore, plaintiffs can decide to opt out of VICP and sue in state or federal court if they choose-though subject to some additional limits.

Congress Should Give Vaccines a Shot in the Arm

In the VICP, Congress has a model that it can use to provide strong liability protections for vaccine makers while providing fair and prompt compensation to those injured by vaccines. While other "no-fault" compensation systems can become prohibitively expensive, the concept works well for vaccines because there are few injuries.

A re-vamped VICP has the potential to create a legal atmosphere for vaccine manufacturers similar to that which existed during the "golden age" of vaccines. Because VICP is funded with excise taxes on vaccine doses and provides relatively hassle-free compensation, it can also approximate the kind of insurance that consumers might purchase for themselves on the private market. To achieve these objectives, Congress should take the following steps:

  1. Expand VICP to cover most or all vaccines. Liability protection for more vaccines will prevent a single lawsuit from destroying an entire company. Congress has already recognized this principle by extending VICP coverage to common influenza vaccines.[7] Covering more vaccines is important when, as in the case of influenza, only one company supplies the vaccine, putting that vaccine at high risk. Liability protection will also speed progress in creating vaccines to treat different ailments, because manufacturers will know the protection will be there. Moreover, increased diversity in vaccines can also help to cross-fertilize ideas from one kind of vaccine to another, improving existing vaccines.
  2. Make VICP the exclusive remedy for participants. One of the most important elements of liability protection is certainty, something that is in short supply in today's unpredictable legal environment. If, after choosing to participate in VICP, claimants are free to sue in court to obtain a higher judgment, liability protection will mean little. Congress should discourage claimants from "gaming" the system by requiring those receiving vaccines to decide up front whether or not they will participate in the VICP protection. If they choose not to participate in the program, Congress could require claimants to bring their cases in federal court under strict compensation standards. Congress might also choose to indemnify vaccine makers from the expenses of the resulting lawsuits.
  3. Ensure liability protection for the whole vaccine. As has been seen with thimerosol, a vaccine preservative that has been the subject of several lawsuits despite that the lack of evidence linking it with vaccine injuries, trial lawyers will find any way possible to thwart the intent of Congress and circumvent VICP's protections. Congress should provide that VICP prospectively applies to all vaccine components, including preservatives and other ingredients.
  4. Make VICP less adversarial. While Congress originally intended VICP to be an "expeditious, less adversarial, and fair system," it still retains many of the trappings of litigation.[8] For the small number of VICP claims that require hearings, Congress might provide for court-retained expert witnesses to offer unbiased testimony about causation reflecting the current state of scientific knowledge. By providing strong liability protections to vaccine makers, this could also encourage the companies themselves to help claimants determine the cause of their injuries. Similar results have been achieved in Scandinavian countries that have adopted "no-fault" compensation schemes for medical errors: doctors and nurses there (the would-be defendants in medical malpractice lawsuits) now help injured patients fill out their claim forms and share relevant information surrounding their cases.[9]
  5. Waive the excise tax for low-income or high-priority participants. Because VICP is funded with excise taxes imposed on vaccine doses, it is more like an insurance program than a litigation-based system. And, unlike the regressive "tort tax" that everyone pays regardless of their income, an excise tax on vaccines could be waived, raised, or lowered by the government. This could prove useful for encouraging low-income individuals and high-priority populations (such as the elderly or health care workers) to participate in vaccination programs.

Conclusion

Keeping in mind the dual objectives of promoting a robust vaccine industry and encouraging public confidence in vaccines, Congress should take the steps needed to bring about a second "golden age" of vaccines that will benefit all Americans. Of the solutions available, a retooled and expanded VICP, or some similar program, is the best opportunity to protect vaccine makers from lawsuits while quickly and fairly compensating injured parties. While the vaccine provision currently pending before Congress would be a good first step towards offering the vaccine industry the liability protection it needs, Congress will have to revisit the issues of extending the number of vaccines protected and providing fair and just compensation to those injured by vaccines.

Randolph W. Pate, J.D., MPH, is Visiting Fellow in the Center for Health Policy Studies at The Heritage Foundation.

Show references in this report

[1] See President George W. Bush, "President Outlines Pandemic Influenza Preparations and Response," November 1, 2005, at http://www.whitehouse.gov/news/releases/
2005/11/20051101.html
.

[2] Rebecca Adams, "Vaccine Makers Seek Inoculation From Suits," CQ Weekly, December 5, 2005, p. 3248.

[3] "Total Cost to Develop a New Prescription Drug, Including Cost of Post-Approval Research, is $897 million," Tufts Center for the Study of Drug Development, May 13, 2003, at http://csdd.tufts.edu/NewsEvents/RecentNews.asp?newsid=29.

[4] See Robert Goldberg, "Destroying vaccine development," The Washington Times, October 21, 2005, at http://www.washingtontimes.com/op-ed/20051020-092128-7162r.htm.

[5] See Michael Kinsley, "Taking Vioxx-For Plenty," The Washington Post, August 28, 2005, p. B07, at http://www.washingtonpost.com/wp-dyn/content/article/
2005/08/26/AR2005082601489.html
. See also Phillip K. Howard, "Legal Malpractice," The Wall Street Journal, January 27, 2003, at http://cgood.org/healthcare-reading-cgpubs-opeds-20.html.

[6] Paul Offit, "Vaccine history shows need to update VICP law," The Hill, November 15, 2005 at http://hillnews.com/thehill/export/TheHill/
News/Frontpage/111505/offit.html
.

[7] American Jobs Creation Act of 2004, Pub. L. No. 108-357, 118 Stat. 1644.

[8] Wendy K. Mariner, "The National Vaccine Injury Compensation Program," Health Affairs, Spring 1992 Update, p. 258.

[9] See Carl Espersson, "The Swedish Patient Injury Act," presentation delivered on October 31, 2005, at http://cgood.org/assets/attachments/
Carl_Espersson_USA.pdf
; Martin Erichsen, "The Danish Patient Insurance Scheme," presentation delivered on October 31, 2005, at http://cgood.org/assets/attachments/
Martin_Erichsen_USA.pdf
.

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