Legal Concerns and the Influenza Vaccine Shortage

Concerns have arisen that the paucity of suppliers of influenza vaccine for the US market, which contributed to the shortage of vaccine in 2004, is largely attributable to the legal liability that vaccine manufacturers face. For instance, in October 2004, President Bush signed into law the American Jobs Creation Act of 2004,¹ adding influenza vaccine to the federal Vaccine Injury Compensation Program (VICP), the administrative scheme that is the first-line legal remedy for certain vaccine-related injuries. Although the introduction of the bill predated the 2004 flu vaccine shortage,^{2 - 3} it presaged public concern about how the legal environment may be affecting vaccine supplies. In October, a nongovernmental organization called the Club for Growth ran a full-page newspaper advertisement⁴ that read, “Can’t get a flu shot? Thank the trial lawyers.” In the presidential debates, President Bush commented that manufacturers have stopped producing flu vaccine because they “are worried about getting sued.”⁵ A public opinion poll showed that 41% of Americans apportioned blame for the flu vaccine shortage to trial lawyers.⁶

Such views are not unexpected in light of the increasing awareness that litigation costs are affecting the supply of services in another area of health law, medical malpractice.⁷ Current initiatives in Congress to limit liability for pharmaceutical injuries and medical malpractice make it timely to examine how much legal concerns actually contribute to public health crises such as the flu vaccine shortage. While the immediate trigger of that shortage is clear—contamination problems at a key supplier (Chiron)—the longer-range conditions that left the United States so dependent on a single supplier are murkier.

This article examines the contributory role of litigation in the influenza vaccine shortage and the extent to which greater insulation from liability may help avoid future shortages.

Liability has twice before flared as a pressing issue for vaccine manufacturers in the United States. The first crisis, in the mid-1970s, related to swine influenza vaccine.^{8 - 10} In the late 1960s and early 1970s, 2 decisions in the federal courts had made manufacturers worried about their legal exposure.^{11 - 12} Previously, it had been sufficient for manufacturers to warn health professionals about the risks of vaccines; in the new cases, patients argued that they should have been warned directly. To the manufacturers’ surprise, the federal courts were receptive to that theory as applied to mass vaccination programs.

In 1976, Congress appropriated funds for universal vaccination against swine flu to avert an epidemic; however, the drug companies that were to manufacture the vaccine raised concerns about their potential liability and requested legal protection. In August 1976, Congress adopted legislation¹³ providing that the exclusive remedy for swine flu vaccine injuries would be to sue the federal government. The cases would be brought in tort, but would be heard by a federal judge, rather than a state court jury. The manufacturers agreed to make the vaccine, and 45 million people were vaccinated. About 5700 individuals subsequently sought compensation for Guillain-Barré syndrome (GBS) and other vaccine-related injuries, resulting in $73 million in payouts.⁸

The high compensation costs stemmed from the government’s decision to accept liability if claimants could causally link their illness to the vaccine. Most claimants did so by citing Centers for Disease Control and Prevention findings establishing causality for GBS developing within 10 weeks of vaccination.⁸ Although the government’s stipulation created a simple liability regime for swine flu vaccine, it compounded manufacturers’ uncertainty about their liability for other vaccines. It was not clear whether the government was taking the position that strict liability would also be appropriate for other vaccines, or that patients should be directly warned of vaccine risks, or both; it also was not clear how the government’s views might influence the courts. Thus, much of the liability problem facing manufacturers of vaccines in the 1970s was uncertainty about the applicable legal standard.

The second liability crisis began with many claims alleging injuries related to diphtheria-tetanus-pertussis (DTP) vaccination in 1981. The National Vaccine Advisory Committee (NVAC) estimated that between 1980 and 1985, 31.5 lawsuits were brought for every 10 million DTP vaccinations, compared with 1 per 10 million between 1978 and 1981.¹⁴ Judges handed down inconsistent decisions,¹⁵ and in some jury trials, multimillion-dollar awards were made. Even though these large verdicts were few in number, they had a ripple effect on plaintiff attorneys’ decisions to file cases and manufacturers’ willingness to settle. In 1984, 2 of the 3 manufacturers of DTP vaccine for the US market stopped distribution; one named liability as a primary reason. In 1986, the manufacturers demanded legal protection, and Congress responded by passing the National Childhood Vaccine Injury Act,¹⁶ creating the VICP.

The VICP covers all vaccines recommended by the Centers for Disease Control and Prevention for routine administration to children.¹⁷ No-fault compensation is provided based on the available science concerning vaccine adverse effects. Full compensation is provided for economic losses, including health care, disability, and lost wages, after private insurance sources are exhausted. Compensation for noneconomic losses is capped at $250 000.¹⁸

Eligibility for compensation is based on tables that list vaccines, known adverse effects, and typical time to onset of symptoms. Injuries that fall within the tables are presumptively compensable. Other injuries also may be compensated, but the process is more burdensome and the presumption is generally against compensation. Although injured individuals must apply to the VICP, they may opt out after the initial evaluation of their claim and bring a tort suit in state court. However, certain procedural factors, such as the statutory mandate that state courts apply a very high liability threshold, make the judicial route unattractive.

Under the 2004 legislation, claims relating to flu vaccine are under VICP jurisdiction, including injuries to adults and claims from the previous 8 years. Currently, the VICP is considering which adverse effects of the flu vaccine will be covered. Anaphylaxis will no doubt be included, but GBS will be controversial in light of the epidemiological evidence on causation.^{19 - 20}

The VICP has played an important role in assuring childhood vaccine makers that it is safe to participate in the market. However, discussions of this history frequently focus on the VICP and liability issues to the exclusion of other factors that likely also contributed to manufacturers’ decisions to produce vaccines. For both childhood vaccines and flu vaccine, litigation costs are only one component of a broader profitability problem, as we discuss below.

How much litigation related to flu vaccine do manufacturers face? The potential volume of claims is a function of the prevalence of adverse events and recipients’ propensity to sue. No data are available on the latter point, but the Vaccine Adverse Event Reporting System (VAERS) provides some information on the former. Because of underreporting, VAERS data likely underestimate the prevalence of adverse events. However, adverse events that are serious enough to prompt claims are probably also likely to come to the attention of physicians and be reported to the database.

Analyzing VAERS data on influenza vaccine–associated injuries, NVAC found that between 1990 and 1995, for every 10 million doses delivered to adults, there were 5 deaths, 30 serious adverse events, and 135 nonserious adverse events.¹⁴ A more recent analysis determined that 501 instances of GBS were reported to the VAERS from 1990 through June 2003.²⁰ Reports of GBS declined from 17 cases per 10 million vaccinations (1993-1994) to 4 cases per 10 million vaccinations (2002-2003). Rates of other adverse events were stable at about 15 cases per 10 million doses (2002-2003).

Few data on the actual volume of flu vaccine claims are available. The NVAC estimated a rate of 2 claims per 10 million doses delivered during the 1990-1995 period.¹⁴ The NVAC concluded that litigation was a less serious concern for flu vaccine than for other vaccines and declined to recommend VICP coverage of adult flu vaccine injuries in 1996.¹⁴ However, these estimates likely understate the true litigation volume because the NVAC relied on data from physician insurers, who are unlikely to be aware of suits that allege only product liability claims against vaccine manufacturers and not malpractice claims against physicians.

The only other publicly reported estimate of flu vaccine litigation volume is that of Public Citizen and the American Trial Lawyers Association, which identified just 7 cases relating to influenza vaccine (excluding swine flu vaccine cases).²¹ This figure is derived from “reported cases” (cases that result in a published judicial opinion or jury verdict report), which in general represent a small fraction of all claims. We independently searched reported jury verdicts and judicial decisions for cases involving flu vaccine and found only 10 reported cases in the last 20 years (Table). One, a 1985 decision involving a patient who developed GBS, resulted in a $1.9 million verdict (another, not listed because its final disposition is unknown, resulted in a $13.5 million verdict that was subsequently vacated²² ). The rest settled for much smaller amounts or were resolved by the courts on summary judgment. These cases do not represent the entire volume of litigation, but provide a sense of how cases are faring in court.

Overall, there is little evidence of significant litigation involving the flu vaccine. Although the available data sources are not comprehensive and the possibility of additional unreported lawsuits cannot be excluded, by all appearances the situation is not one in which a rational observer would conclude that litigation is a substantial burden on manufacturers. Of course, the fascinating aspect of legal dynamics is that the participants rarely act in a completely rational fashion. Manufacturers may misestimate risks and act accordingly. They may also anticipate that their future risk may be higher than their past record suggests—for example, that new facts such as a sharp increase in GBS incidence or product contamination problems may spur new claims. Importantly, insurers and reinsurers may make similar (mis)judgments, creating a situation in which manufacturers find it difficult to obtain affordable coverage. Manufacturers complained of this problem during the childhood vaccine crisis of the early 1980s.

Inclusion of flu vaccine in the VICP should help dampen these tendencies and provide more predictability of outcome. Companies and insurers should be able to estimate roughly what will be paid out using VICP compensability rules, VAERS data on the number of reports of significant injuries, and data on VICP payouts and jury awards for other vaccine-induced injuries.

In 1967, 26 companies were producing vaccines for the US market; today, there are 5 companies.^{2 - 3} As of 1999, 4 manufacturers were producing flu vaccine for the US market; today there are 2 (Aventis and Chiron).³ Postmortems of vaccine manufacturer attrition have discussed a range of influences on manufacturers’ exit decisions.^{2 - 3 ,23 - 29} These factors, which have been thoroughly reviewed elsewhere,^{2 - 3 ,23 - 29} are summarized in the Article . Most barriers can affect all vaccines, whereas some development and production issues affect flu vaccine uniquely, and the problem of unstable demand has been especially severe for flu vaccine.

Costs

Market Features

*Data sources: references 2, 3, and 23-29.

The reasonable conclusion to draw from these reviews is that vaccine production decisions flow from a holistic judgment about the likely economic benefit from making vaccines vs other products. Manufacturers balance a variety of risks and costs against expected returns; liability exposure is only one of the weights on the scale. There are ample reasons to suspect that flu vaccine is not an attractive product to drug manufacturers quite apart from liability concerns.

Coverage under VICP means that flu vaccine manufacturers need worry much less about liability going forward. However, the historical record provides cause for skepticism that liability relief alone will prevent another flu vaccine shortage. Indeed, there have been shortages of several childhood vaccines despite VICP coverage. These shortages likely resulted primarily from factors other than litigation costs, as did the flu vaccine crisis. Vaccine market entry and exit decisions are affected by a host of factors—most of which, fortunately, are within the government’s power to manipulate.

Transcripts of recent congressional hearings on the flu vaccine supply suggest that policy makers continue to emphasize the liability issue.^{30 - 31} Policy responses should not be limited to this domain, but should reflect the complexity of the supply problem and the need to address it on multiple fronts. Several sound and useful policy options have been proposed, including guaranteed-purchase programs, price commitments, subsidies, and regulatory streamlining.^{2 - 3 ,28}

The broad lesson of the flu vaccine saga relates to the propensity of lawmakers and others to seize on litigation as the mainspring of public health crises, and relief from liability exposure as the solution to far more complex market ills. For example, in the finger-pointing over the causes of the current medical malpractice insurance crisis, physician groups have fixed blame squarely on mounting litigation costs, but the evidence suggests that a constellation of factors, including insurance market cycles, have been important drivers. Unquestionably, liability concerns can and do have adverse effects on health care delivery, but policy makers should keep the angle of their lens wide enough to see the entire picture.