Hook Dem
10-18-2004, 10:10 AM
From Weekly Standard October 25, 2004 issue:
Guess who's to blame for the flu vaccine fiasco.
by William Tucker 10/25/2004, Volume 010, Issue 07
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 Gottsdanker, 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.
WHEN AN UNUSUAL EPIDEMIC 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, Lederle 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
Carlton 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.
Guess who's to blame for the flu vaccine fiasco.
by William Tucker 10/25/2004, Volume 010, Issue 07
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 Gottsdanker, 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.
WHEN AN UNUSUAL EPIDEMIC 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, Lederle 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
Carlton 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.