Dec. 8, 2005

Frist Fans Public Fears of Avian Flu to Ram Through Sweeping Liability Shield for the Drug Industry

Bill Would Leave Injured Consumers to Fend for Themselves While Industry Gets a Free Ride

WASHINGTON, D.C. – A proposal to immunize the drug industry from legal accountability for death, disability or sickness caused by the use of pandemic flu vaccines and pharmaceuticals would be a gift to industry, but bad medicine for consumers, Public Citizen said today. The organization’s comments came after Senate Majority Leader Bill Frist (R-Tenn.) renewed his call for passage of legislation, which is being tacked on to a must-pass defense spending bill and has never been debated or voted on in either the House or Senate.

Frist’s plan is especially troubling because it provides no means for victims who are seriously injured to seek compensation, unlike other federal vaccine programs. Moreover, the industry does not need additional liability protection for the flourishing market for “pandemic vaccines” and antivirals, and the Department of Health and Human Services (HHS) already has authority to exempt drugmakers from liability under the kind of “hazardous” circumstances that would be present during a disease pandemic. 

“Under the guise of an impending public health ‘emergency,’ Sen. Frist is inflicting collateral damage on unsuspecting health care workers and consumers,” said Sidney Wolfe, M.D., director of Public Citizen’s Health Research Group. “It is amazing how far he has strayed from the principles of first preventing harm to patients and is instead pandering to special industry interests.”

The backroom maneuver is such bad news because:

  • Frist wants to shield companies from legal responsibility when their negligence, recklessness, deceptive claims – or even intentional failure to warn users about potential dangers – sicken or kill the people who take their pandemic vaccines and pharmaceuticals. Although emergency vaccines and medicines may be rushed to first responders and the public on short deadlines, with reduced scrutiny and less stringent testing, drug companies can rest assured that they will not have to worry about any harmful consequences. Some 4,000 people fell ill after taking the swine flu vaccine in 1976; 500 contracted a paralyzing nerve disorder and more than 30 people died. Some military personnel and first responders who took the smallpox vaccine in 2003 suffered heart attacks, increased risk of heart inflammation and neurological disorders. None of these people would have had any recourse under this bill. Moreover, conferring legal immunity on the drug industry could thwart the public health goals that a pandemic disease program is designed to achieve: ensuring that a critical mass of people are vaccinated or accept prophylactic treatments to stop the outbreak. The 2003 smallpox campaign failed in part because both first responders and ordinary citizens balked once they knew that lawsuits against the manufacturer were barred and they would have no way to get compensation if injured. 
  • Frist’s scheme gives innocent victims no means of obtaining compensation. Ordinarily, when the government grants liability exemptions to companies, it provides some form of relief for consumers who are injured. For example, the 1976 Swine Flu Act allowed those who had bad reactions to the vaccine to sue the government under an expanded version of the Federal Tort Claims Act. In 2003, the government set up a compensation plan for people injured by the smallpox vaccine after people refused to get vaccinated without it. And since 1986, a National Vaccine Injury Compensation Program has been available for children suffering bad reactions to childhood vaccines. In contrast, Frist’s plan would set up a system whereby injured people could seek compensation only if they could first clear hurdles so high as to effectively bar any chance of recovering damages.
  • Frist’s claim that drug companies need the incentive of a liability shield because the vaccine business is not lucrative enough is bogus. The same companies that would benefit under Frist’s plan already are investing heavily in vaccine and antiviral production, lured by the prospect of huge profits driven by global need and the certainty of large government purchases. Established vaccine manufacturer Chiron has been working on an H5N1 vaccine since 1997. Novartis, which already owned 42 percent of Chiron, bought the rest of the company this past fall, offering the company 23 percent above its closing share price at the time of the deal. Roche estimates that sales of its antiviral Tamiflu will reach $1 billion in 2005 – about four times the 2004 level. Biotech firms like Novavax and Vical are competing to develop improved vaccine production techniques –and seeing their stock values soar to new heights.
  • Frist is deceiving the public by not revealing that government indemnification of drug companies already is available under existing law and has been incorporated into recent contracts. Under an executive order, HHS can indemnify contractors that may not have sufficient insurance to cover their legal liability for damages. The contract that Sanofi-Aventis signed in September with HHS for $100 million worth of avian flu vaccine contains such an indemnification clause, according to Hill staffers familiar with the deal. Chiron’s contract for $62.5 million worth of avian flu, signed in October, also has the indemnification provision. In fact, the HHS Pandemic Influenza Plan released in November lists in its appendix of legal authorities “Executive Order 10789, as amended by Executive Order 13232” giving the agency the right to indemnify its contractors under the Federal Acquisition Regulations, 48 C.F.R. 50.403, for risks not covered by private insurers. Accordingly, Frist’s claim that immunity from liability is needed so that companies will agree to produce vaccines is unfounded.

“Giving blanket immunity to the drug industry without providing any means for victims or their families to get compensation for serious injury or death is unconscionable,” said Jillian Aldebron, civil justice counsel for Public Citizen’s Congress Watch division. “It looks like Christmas will come early for the drug industry, but consumers will only get a lump of coal.”

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