The Weekly
Standard/ October 25, 2004
La Grippe of the Trial Lawyers
Guess
who's to blame for the flu vaccine fiasco.
by william tucker*
John kerry wasted no time
jumping on President George Bush about the unexpected shortage in flu vaccines
this year. Why wasn't Bush paying attention? He should have done things
differently. And of course Kerry had a "plan" to solve the whole
mess.
If Kerry thinks he can solve the flu vaccine problem, he need look no
further than his own running mate, trial lawyer John Edwards. Vaccines are the
one area of medicine where trial lawyers are almost completely responsible for
the problem. No one can plausibly point a finger at insurance companies, drug
companies, or doctors. Lawyers have won the vaccine game so completely that
nobody wants to play.
Two weeks ago, British regulators suspended the license of Chiron Corp.,
the world's second-leading flu vaccine supplier, for three months. Officials
cited manufacturing problems at the factory in Liverpool, England, where
Chiron makes its leading product, Fluvirin. Chiron was scheduled to supply 46
million of the 100 million doses to be administered in the United States this
year. The other 54 million will come from Aventis Pasteur, a French company
with headquarters in Strasbourg.
So why is it that 100 percent of our flu vaccines are now made by two
companies in Europe? The answer is simple. Trial lawyers drove the American
manufacturers out of the business.
In 1967
there were 26 companies making vaccines in the
United States. Today there are only four that make any type of vaccine and none
making flu vaccine. Wyeth was the last to fall, dropping flu shots after 2002.
For recently emerging illnesses such as Lyme disease, there is no commercial
vaccine, even though one has been approved by the Food and Drug Administration,
All this is the result of a legal concept called "liability without fault" that emerged from the hothouse atmosphere of the law schools in the 1960s and became the law of the land. Under the old "negligence" regime, you had to prove a product manufacturer had done something wrong in order to hold it liable for damages. Under liability without fault, on the other hand, the manufacturer can be held responsible for harm from its products, whether blameworthy or not. Add to that the jackpot awards that come from pain-and-suffering and punitive damages, and you have a legal climate that no manufacturer wants to risk.
In theory, prices might have been jacked up enough to make vaccine
production profitable even with the lawsuit risk, but federal intervention made
vaccines a low-margin business. Before 1993, manufacturers sold vaccines to
doctors, doctors prescribed them to patients, and there was some markup. Then
Congress adopted the Vaccine for Children Act, which made the government a
monopsony buyer. The feds now purchase over half of all vaccines at a low fixed
price and distribute them to doctors. This has essentially finished off the
private market.
As recently as 1980, 18 American companies made eight different vaccines for various childhood diseases. Today, four companies— GlaxoSmithKline, Aventis, Merck, and Wyeth—make 12 vaccines. Of the 12, seven are made by only one company and only one is made by more than two. "There are constant shortages," says Dr. Paul Offit, head of the Vaccine Education Center at Children's Hospital of Philadelphia. "With only one supplier for so many vaccines, the whole system is fragile. When even the smallest thing goes wrong, children miss their vaccinations."
The intersection between mass vaccinations and the tort system was bound
to be messy. When you vaccinate enough people, someone, somewhere, is going to
have a bad reaction. You could give a glass of milk to 100 million people and a
few would inevitably get violently sick from it, With vaccines, there will be
allergic reactions and a tiny but predictable percentage of people will suffer
some kind of permanent damage or even die. Because of liability without fault
and the generosity of the tort system, the result is huge damage awards.
The first instance of this came in 1955 with polio vaccinations. Cutter
Laboratories, the California company that now distributes Cutter's Insect
Repellent, made an early batch of vaccines, some of which had live viruses in
them. Almost all the children in Idaho were administered the vaccine and
several dozen contracted polio. In 1957, the parents of Anne Gotts-danker, an
8-year-old girl whose legs had become paralyzed, sued Cutter, with famed
personal injury lawyer Melvin Belli representing them.
The jury found Cutter's actions were not negligent—the orders had been
rushed, standards had not been clear, and safety precautions were still
rudimentary at the time. But, using the new doctrine of liability without
fault, the jury held Cutter accountable anyway and awarded $147,300.
"That decision made Ralph Nader possible," Belli later claimed.
"It was a turning point," says Dr. Offit, whose book The
Cutter Incident will be published next year. "Because of
the Cutter decision, vaccines became one of the first medical products to be
eliminated by lawsuits."
That this would be the outcome wasn't immediately clear. Soon after the
trial, the Yale Law Journal published an article arguing that insurance
against adverse reactions was the solution. The public wouldn't buy policies
because it would be too complicated and expensive, but vaccine makers could.
Insurance would cover the cost of bad outcomes and the manufacturers would pass
these costs on to their customers. Those few who were harmed by a vaccine would
be covered by those who benefited. Everything would work out. Unfortunately,
this thesis failed to anticipate how high damage awards would go.
TV/hen
an unusual epidemic VV occurred at Fort Dix, N.J., in 1976, for example, the
federal government decided to vaccinate the whole country against the new
"swine flu." To the astonishment of Congress, the insurance companies
refused to participate. Senator Ted Kennedy charged "cupidity" and
"lack of social obligation." The Congressional Budget Office
predicted that with 45 million Americans inoculated, there would be 4,500
injury claims and 90 damage awards, totaling $2 million. Congress decided to
provide the insurance.
As Peter Huber recounts in his book Liability, the CBO's first
estimate proved uncannily accurate. A total of 4,169 damage claims were filed.
However, not 90 but more than 700 suits were successful and the total bill to
Congress came to over $100 million, 50 times what the CBO had predicted. The
insurance companies knew their business well.
Adding to the problem are the predictable panics about vaccines that
spread among parents and are abetted by trial lawyers. In 1974, a British
researcher published a paper claiming that the vaccine for pertussis (whooping
cough) had caused seizures in 36 children, leading to 22 cases of epilepsy or
mental retardation. Subsequent studies proved the claim to be false, but in the
meantime Japan canceled inoculations, resulting in 113 preventable whooping
cough deaths. In the United States, 800 pertussis vaccine lawsuits asking $21 million
in damages were filed over the next decade. The cost of a vaccination went from
21 cents to $11.
Every American drug company dropped pertussis vaccine except Lederle
Laboratories. In 1980, Leder-le lost a liability suit for the paralysis of a
three-month-old infant—even though there was almost no evidence implicating the
vaccine. Lederle's damages were $1.1 million, more than half its gross revenues
from sale of the vaccine for that entire year.
In recent years, the most prevalent anti-vaccine rumor has held that
Thimerosal, a mercury-containing preservative used in vaccines from the 1930s
until just recently, is behind an "epidemic of autism." Once again,
scientific studies have disproved the allegation, but hundreds of parents are
filing suit, and trial lawyers continue to troll for clients.
Congress tried to stave off liability problems with the National Childhood Vaccine Injury Act in 1986. The program functions almost as an ideal "medical court," with panels of scientists, virologists, and statisticians reviewing each complaint and rewarding those that seem legitimate. Unfortunately, the program allows plaintiffs to opt out of the system. Trial lawyers continually bypass it and elect to go to trial—particularly for cases where the review looks unpromising. With Thimerosal, lawyers have argued that the law does not apply because mercury was an additive, not the actual vaccine. The result is jackpot awards and very little protection for the vaccine companies. In 1998, the FDA approved a vaccine for Lyme disease, which strikes 15,000 people a year. GlaxoSmithKline manufactured it for three years but quit when rumors began circulating that the vaccine caused arthritis.
All this has made the flu an epidemic waiting to
happen. Each year flu viruses circle the globe, moving into Asia in the spring
and summer and back to North America in the winter. Surface proteins change
along the way so that the previous year's vaccine doesn't work against the
following year's variation.
Each year in February, the Centers for Disease Control meets with the
vaccine-makers—all two of them— and decides which strain of the virus to
anticipate for next year. Then they both make the same vaccine. Last year the
committee bet on the Panama strain, but a rogue "Fujian" strain
suddenly emerged as a surprise invader. A mini-epidemic resulted and 93
children died, only two of them properly vaccinated.
With several companies competing in the field, as was once the case, somebody would have been more likely to produce a dark horse vaccine. If that rogue strain emerged, the dissenting company would hit the jackpot, and there would be ample supplies of an effective vaccine, at least for those most at risk. In the "planned economy" of the CDC, however, there is no back-up for an unexpected turn of events. This year there isn't even a front line.
Are trial lawyers ready to accept responsibility for their starring role
in creating this health hazard? Don't hold your breath. "This is just the
typical garbage and propaganda from the drug manufacturers," says Carl-ton
Carl, spokesman for the Association of Trial Lawyers of America. "There's
absolutely no disincentive for making vaccines. American companies don't do it
for the same reason they're sending jobs overseas— because it increases their
profits."
Whether doctors are quitting the profession because of
an out-of-control tort system, whether malpractice premiums are the cause of
health care increases—such hardy perennials of the litigation debate are still
a subject of lively controversy. But with vaccines there is no argument. Trial
lawyers have all but ruined the market. Yet they are still unwilling to take
responsibility.
* William Tucker is a fellow at the Discovery Institute. His book on trial lawyers, Civil Lynchings, will be published next year.