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8 Vaccine Injury Compensation and Liability Remedies The committee believes that the goal of advancing the control of infectious diseases with vaccines should be pursued in a socially responsible and just manner. Its review of available scientific information led to the conclusion that a small number of severe adverse reactions are inevitable with existing vaccines, even when they are manufactured according to licensed procedures and administered in accordance with recommended medical practice. Most vaccines are promoted (or required) by the government for the public good; therefore, the committee believes that society has a responsibility to develop some means of compensating those with vaccine-related injuries. At present, injured individuals or their families can seek compensation through the tort system, but the results are not certain and the process is protracted (Chapter 6~. In addition, the courts' unpredictable handling of liability for vaccine-related injuries has created apprehension among manufacturers that ultimately could threaten the vaccine supply in the United States. The committee recognizes that solutions to the problems of providing just compensation for vaccine-related injuries and maintaining vaccine supply and innovation must be forged in a political setting. It concluded, therefore, that its most useful contribution would be to identify and evaluate a series of options available to those seeking alternatives to the current situation. Following a description of these options, the committee examines the rationale for compensating those with vaccine-related injuries and the major features desirable in a potential compensation system. COMPENSATION AD LIABILITY OPTIONS The need to compensate injured individuals and the need to reduce deterrents to vaccine manufacturing are two separate but closely related problems. Some of the possible solutions to the compensation problem would markedly increase the predictability of the liability situation; others would not. In contrast, certain actions that would provide greater predictability for manufacturers on the potential 136

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137 magnitude of costs resulting from vaccine-related injury would not necessarily ensure compensation to injured individuals. A range of possible options and combinations of options are: 1. A supplementary (non-exclusive) compensation system, established by federal legislation, would give claimants an alternative to pursuing a tort remedy. 2. A compensation system with restricted tort options, established by federal legislation, would provide a way for individuals expenses resulting from vaccine-related injury. under such manufacturers (but not others) would be protected from tort brought directly by individuals; the administrators of the compensation system would be empowered to pursue action for to recover a system, actions reimbursement in cases of misconduct in manufacturing (or deviation from recommended medical practices). 3. Mandatory claim review by a compensation board with tort option, established by federal legislation, under which claims for alleged vaccine-related injury would be reviewed by a compensation board that would render opinions on (1) whether the injury is vaccine related and hence eligible for compensation and (2) whether there is evidence of misconduct in manufacturing or administration. Claimants would then be free to pursue tort action irrespective of the compensation system's decisions, but not if they accept compensation. 4 A vaccine sunolv Public insurance Program. created to protect manufacturers against excessive payments tor Recense and settlement of vaccine-related injury claims (see Appendix B), would operate in conjunction with the current tort system. 5. No-fault insurance for vaccine-related injury could be promoted by groups such as medical specialty organizations. Under this approach, an insurance contract would be established whereby health care Providers (through insurers) would before a vaccine is , ~ _ administered, guarantee to tender wltnln a set perloa to a person seriously affected by a vaccine the claimant's net economic loss. The criteria of eligibility would be predetermined in the ~nsurer's cc~ntract The claimant would be aiven a set her iod to accent the tender or to choose to pursue the claim under tor t law. upon acceptance of the tender, the claimant would be required to waive tort claims against the tendering party, and in some instances, against other parties as well (see Appendix C). 6. A supplementary compensation system and a vaccine supply public insurance program could operate as tandem mechanisms. 7. A vaccine supply public insurance program and promotion of no-fault insurance for vaccine-related injury also could be linked. 8. Change the tort law relating to liability for vaccine-related injury. Two examples are described in tables 8.8 A and B. Both could be used in conjunction with other schemes. Under example A, n failure to warn" would be eliminated as grounds for action against a manu- facturer (but not others); liability would be limited to misconduct during manufacturing (e.g., deviation from approved procedures). Under example B. limits would be set on the types and amount of damages recoverable through vaccine-related injury claims.

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138 9. Federal assumption of liability for all vaccine-related injury could create a system similar to that resulting from the swine flu statute. 10. Acceptance of vaccine price increases to cover liability costs would entail assuring manufacturers that federal purchasers would allow increases in the prices of vaccines sufficient to cover anticipated future liability losses--the current tort system would continue. The first three options focus on different approaches to compensation. Possible alternatives in this area range from a purely supplementary compensation system to a totally exclusive system, precluding vaccine-related injury claims against manufacturers or physicians. Between these poles lie a host of options in which tort rights can be broadly or narrowly defined and the timing of the surrender of those rights can be varied. Resource constraints prevented the committee from undertaking a detailed legal, opera- tional, and economic analysis of injury compensation systems in other fields (Appendix D); however, such an analysis might prove useful to those involved in the operational design of a vaccine-injury compensation system. Information on arrangements made in other countries for payments to vaccine-injured individuals are described in Appendix E. The fourth and fifth options involve two types of insurance programs that could contribute to the resolution of current problems. The vaccine supply insurance program addresses the unpredictability of manufacturers' liability costs, but would not provide compensation. No-fault insurance would provide payments to those injured individuals covered by the insurance. The sixth option examines the effects of combining a vaccine supply public insurance program with a compensa- tion system, and the seventh explores the impact of providing both forms of insurance. Option eight presents two of many possible changes in the tort law relating to vaccine injury. Changes in tort law could be used to complement other approaches to these problems. Fuller assessments of these options appear in Tables 8.1 to 8.10. Their probable effects are compared in Table 8.11. The public health consequences of failing to deal with the vaccine injury compensation and liability issues are difficult to predict. Manufacturers may raise vaccine prices substantially to protect themselves against the expected costs of settling future injury compensation claims; or manufacturers may be unwilling to operate in a market characterized by an unpredictable risk of potentially over- whelming financial loss. Large increases in price could have adverse consequences for the federal consolidated vaccine purchases by which states obtain their vaccine supplies for public programs. If the remaining single-supplier companies were to withdraw from vaccine production, the committee believes that it is unlikely that other companies would enter the market. If replacements were found from domestic or foreign sources, new suppliers probably would be aware of the potential liability costs and set prices accordingly.

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139 TABLE 8.1 A Supplementary (Nonexclusive) Compensation System Intent To provide {as an alternative to the tort system) compensation to individuals sustaining vaccine-related injury. Precedent Similar system proposed as part of S.2117 and H.5810, National Childhood Vaccine-Injury Compensation Act. Requirements for Establishment Federal legislation. Operational Features Requires development of schedules of compensable events and payments. Early waiving of tort rights by claimants entering the system desirable to reduce administrative costs. Costs could be covered by surcharge on vaccine prices. Suggested Benefits Establishes a more certain means of providing payments to injured parties than the tort system. May reduce the number of tort claims. Creates a central location for collection of information on vaccine-related injury claims. to promote safe performance. Suggested Disadvantages Maintains liability incentives Would not relieve manufacturers' apprehensions over the unpredictability of claims and/or settlements for vaccine-related injury. Extent of recovery for some events would be limited. Time to Effects Time to establishment depends on enactment of federal legislation some delay anticipated before effects (if any) are observed on manufacturers' apprehensions over liability. Additional Comments ; Probably no immediate effect on certainty of vaccine supply. could be used in combination with other systems.

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140 TABLE 8.2 A Compensation System with Restricted Tort Options Intent To provide a compensation system for individuals sustaining vaccine-related injury; to maintain incentives for safe performance. Precedent . Legislation related to compensation for workpJ ace injuries (Appendix D). Requirements for Establishment Federal legislation. Operational Features System would require development of a schedule of compensable events and payments. Claimants would waive tort rights (if any) as a condition of receiving payment from system. Manufacturers (but not others) protected from individual tort actions involving alleged vaccine-related injury. Administrators of the system required to review cases for misconduct in manufacturing (e.g., failure to follow approved procedures) or deviation from recommended medical practices, and empowered to take action in cases of probable misconduct. Vaccine price surcharge could cover costs. Suggested Benefits Establishes a more certain means of providing payments to injured parties than the tort system. Relieves manufacturers of apprehension over the unpredictability of claims and/or settlements relating to ~unavoidable" vaccine injury. Maintains duty to warn and incentives for safe performance. Creates a central location for collection of information on vaccine-related injury claims. Suggested Disadvantages Loss of the individual's right to sue manufacturers for misconduct, which reduces the number of possible sources of tort action, perhaps dilutes the pressure for safe performance by manufacturers. System administrators may not pursue misconduct actions vigorously. Extent of recovery for some events would be limited. Removes whatever incentives present tort system has to e Improve vaccines. Time to Effects Time to establishment depends on enactment of federal legislation. Relief of manufacturers' apprehensions would be immediate. Additional Comments Probably would have immediate beneficial effect on certainty of vaccine supply.

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141 TABLE 8.3 Mandatory Claim Review by a Compensation Board with Tort Option Intent To provide a compensation system for individuals sustaining vaccine-related injury; to maintain the option for tort action; to provide an impartial opinion on the possibility that injuries are vaccine-related and the question of misconduct. Precedent , The mechanism for handling medical malpractice claims in New Mexico (Medical Malpractice Act, 41-5-1 to 41-5-28 NMSA 19781. Requirements for Establishment Federal legislation. Operational Features All claims relating to alleged vacc~ne-related injury would be filed initially with the administrators of a compensation system. Within a short predetermined period the administrators would render opinions on (1) whether the injury is vaccine related and hence eligible for compensation and (2) whether there is evidence of misconduct in manufacturing or administration. Claimants then would be free to pursue tort action irrespective of the system's decision, but not if they accept compensation. Suggested Benefits Establishes a more certain means of providing payments to injured parties. Maintains the right to tort action. In cases in which claimants are eligible for compensation, encourages rapid settlement rather than protracted, uncertain tort remedy. Hence. may reduce the number of tort claims. Creates a central location for collection of information on vaccine-related injury claims. Provides impartial information to the courts on the probable cause of the injury and the question of misconduct. Suggested Disadvantages May cause brief delay (while system administrators process cases) in the filing of tort claims. Does not preclude tort action. Hence, does not totally remove uncertainty for manufacturers. Time to Effects Time to establishment depends on enactment of federal legislation. Some delay anticipated before effects (if any) on manufacturers' apprehensions over liability. Additional Comments Could be used in combination with other systems, e.g., with a vaccine supply insurance program. Experience with malpractice prescreening panels in various jurisdictions suggests that the terms of reference need to be established carefully.

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142 TABLE 8.4 Vaccine Supply Public Insurance Program Intent - To protect manufacturers against excessive costs from vaccine related injury claims. Precedent Federal Deposit Insurance Corporation; Federal Savings and Loan Insurance Corporation; Small Investor Protection Corporation for brokerage houses; Price-Anderson Act (protecting operators of nuclear reactors against excessive liabilities). Requirements for Establishment Federal legislation. Operational Features Manufacturers would be protected against vaccine-related injury claim losses above a predetermined amount. Requires specification of the limits of manufacturers' responsibilities (e.g., production by approved procedures and duty to warn). Costs of defense and settlements must be reviewed to determine eligibility for reimbursement. Manufacturers would remain responsible for organization of the defense of all claims, including ~unavoidable" injuries, if no compensation scheme is created. Suggested Benefits Could provide relief of manufacturers' apprehensions over the unpredictability of vaccine injury claims and/or settlements. Suggested Disadvantages Establishment of such a system alone would not provide a more certain or equitable system of dealing with vaccine injury, because of continued reliance on the tort system to provide compensation. Time to Effects Time to establishment depends on enactment of federal legislation. Additional Comments ~. Could be used in combination with other systems. NOTE: See Appendix B for detailed explanation.

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143 TABLE 8.5 Promotion of No-Fault Insurance for Vaccine-Related Injury Intent To establish an insurance option that requires the liability carrier (on behalf of the health-care provider) to make an offer to the injured party to reimburse economic losses in exchange for a release of tort rights, if any. Precedent Similar no-fault insurance schemes have been adopted for serious high school athletic injuries under the auspices of the National Federation of High School Athletic Associations. Requirements for Establishment No legislative involvement. Operational Features Criteria for eligibility (and possibly payments) would be specified in the insurance contract. Suggested Benefits If widely adopted, would offer a more certain means of providing payments to injured parties than the tort system. May reduce the number of tort claims. Could be adopted immediately. Suggested Disadvantages Availability of compensation provided by such insurance would depend on its adoption by providers, i.e., universal availability of compensation would not be guaranteed. Does not preclude tort claims--manufacturers still at risk from tort claims for unavoidable injuries. Time to Effects Dependent on rate of widespread adoption of such insurance. Ultimate effects on the predictability of vaccine injury tort claims and the certainty of vaccine sunolv not clear without operational experience. Additional Comments Differences between insurance contract tenders and post-injury, out-of-court settlement offers are discussed in Appendix C. Medical specialty organizations could have a role in promoting the availability and adoption of such an option. NOTE: See Appendix C for detailed explanation.

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144 TABLE 8.6 Supplementary Compensation System and a Vaccine Supply Public Insurance Program Intent To provide compensation for individuals injured by vaccines (as an alternative to the tort system); to protect manufacturers against excessive costs from vaccine injury claims. Precedent See separate comments for each option. Similar scheme proposed in National Childhood Vaccine Injury Compensation Act of 1985, S. 827. Requirements for Establishment Federal legislation for both components of scheme. Operational Features See comments for each option. Suggested Benefits Establishes an option of more certain payment than the tort system and could provide relief of manufacturers' apprehensions over unpredictability of vaccine injury claims and/or settlements. Number of tort claims may be reduced. Suggested Disadvantages Manufacturers and vaccine providers still at some risk from tort claims for injuries that are unavoidable and still responsible for organization of defense of tort claims. Time to Effects See comments for each option. Additional Comments Administration may be complex. TABLE 8.7 Vaccine Supply Public Insurance Program and Promotion of No-Fault Insurance for Vaccine-Related Injury Intent To protect manufacturers against excessive losses from vaccine injury claims; to establish an insurance option under which injured parties would receive an offer of rapid settlement of economic losses in exchange for a waiver of tort rights. Precedent See comments for each option, no precedent for such a joint venture. Requirements for Establishment Federal legislation required for one component of scheme. Operational Features See comments for each option. Suggested Benefits Could provide compensation and some relief of manufacturers' apprehensions over unpredictability of vaccine injury claims and/or settlements. Suggested Disadvantages Uniform availability of compensation for injuries is dependent on widespread adoption of the no-fault insurance aspect of the joint scheme. Manufacturers still at some risk from tort claims for unavoidable injuries. Time to Effects See comments for each option.

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145 TABLE 8.8A Change in Tort Law (Example A) Intent To eliminate n failure to warn" as grounds for action against a manufacturer, but not others; manufacturers' liability would be limited to misconduct in manufacturing, e.g., deviation from approved procedures. Precedent None. Requirements for Establishment Action at the federal level or by all state legislatures Operational Features Would operate through tort system. Suggested Benefits ~ - Manufacturers, in theory, would not be liable for unavoidable ~ Injury e Suggested Disadvantages Manufacturers still would be required to defend all claims. If action were at the state level, differences among states might make the situation unclear. Theoretically, unavoidable injuries would not be compensated. Time to Effects Legislation likely to be delayed by need to establish that vaccine-related injury liability deserves unique treatment. Operational experience needed to gauge effects. Additional Comments This is one of many possible changes in the tort law pertaining to vaccine-related injury liability; chosen for illustrative purposes only. Alone, it does not address the fundamental need for rapid and equitable compensation. other approaches. Could be used in combination with

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146 TABLE 8.8B Change in Tort Law (Example B) Intent To limit the damages recoverable from manufacturers for vaccine-related injury and therefore provide them a greater degree of predictability. Precedent None. Requirements for Establishment Action at the federal level or by all state legislatures. Operational Features Would operate through the tort system. A limit could be placed on some types of recovery (e.g., for pain and suffering); other types (e.g., punitive damages) could be eliminated. Suggested Benefits Manufacturers would be better able to predict the extent of their potential liability for vaccine-related injury. Suggested Disadvantages Manufacturers still would be required to defend all claims. If action were at the state level, differences among states might make the situation unclear. Theoretically, unavoidable injuries would not be compensated. Could reduce incentives to safe performance. Time to Effects Legislation likely to be delayed by the need to establish that vaccine-related injury liability deserves unique treatment. Operational experience needed to gauge effects. Additional Comments This is one of many possible changes in the tort law pertaining to vaccine-related injury liability; chosen for illustrative purposes only. Alone, it does not address the fundamental need for rapid and equitable compensation. Could be used in combination with other approaches. Constitutionality issues regarding the removal of tort rights (without compensation) would need to be addressed before this approach could be implemented.

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151 immunization programs often are mandatory; when not required, they are often encouraged by the government. Therefore, vaccine recipients and their families lack the free choice about participation and risk- taking that characterizes many medical situations. In addition, vaccination programs are justified as being for the public good. In some cases, the principal reason to vaccinate a person is to protect others from a disease. Thus, the victim of an adverse reaction to a vaccine may be seen as a casualty of the public health, and therefore especially deserving of compensation. Moreover, assuring potential vaccine recipients, providers, and producers that compensation for untoward consequences is available would remove one potential disincentive to participation in vaccination programs. Other publicly promoted or required activities also involve a combination of risk to the individual and benefit to society. Examples include military conscription, travel to and from school, and the use of food preservatives. Vaccine injury is unique, however, in that individuals are required to submit to an invasive medical procedure for their own and society's benefit. To suggest that the victims should bear their own losses (in cases in which there is no misconduct) because they could have avoided injury and the resulting medical and economic expenses simply by not obtaining a vaccination would be unreasonable. (The question of informed consent is discussed later in this chapter.) The nature and current state of the vaccine industry suggest additional reasons for treating vaccines differently from other injury-causing products and activities. The vaccine industry is vitally important to public health, yet the number of vaccine manufacturers in the United States continues to decline. Two manufacturers of pertussis vaccine ceased distribution of their products during the tenure of this committee (Chapter 3~.* The liability situation is a major source of concern for the industry. A small number of large tort awards, coupled to a confused and unstable legal situation (especially with regard to "unavoidable" injury), make liability difficult to predict and potentially destructive (Chapter 6~. Therefore, the evaluation of options to provide compensation for vaccine-related injuries should include an assessment of their potential effects on the vaccine industry and, through vaccine supply, on public health. Finally, the issue of compensation for vaccine-related injuries is especially unwieldy for the common law tort system. Like other medical and technical issues, putative vaccine injury poses very difficult problems of proof (Chapters 5 and 6~. Judges and lay jurors, informed primarily by lawyers and hired experts (whose testimony has been structured by lawyers), are unable to determine with acceptable accuracy the likelihood of a causal relationship between a vaccine and an injury. The tort system is just beginning to consider ways to improve the use of scientific evidence,3'4 including the possibility *Immediately prior to the printing of this report, Connaught Laboratories, Inc., resumed distribution of DTP vaccine.

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152 of proportional damage awards in cases of statistically probable causal relationships that cannot be proved definitively. Rather than allow potential injustice to injured claimants, continued apprehension and confusion on the part of manufacturers, and peril to the public health (from possible cessation of vaccine production), compensation for vaccine-related injuries should be restructured in a more fair, certain, and consistent manner. Based on these considerations, the committee concluded that persons injured by vaccines should be compensated; that compensation should not imperil the vaccine industry, but should be seen as part of a general program to promote public health; and that any vaccine compensation mechanism must accommodate the fact that resolution of causation may not be possible in some cases. The common law tort system is not able to provide predictable, rapid, and equitable compensation for vaccine-related injuries because each claim requires an extended, costly, and complex adjudicative procedure that results in unpredictable outcomes (Chapter 6~. THE COMPENSATION MECHANISM The primary objective in designing a system to provide payments to individuals with vaccine-related injuries is to find an approach (or combination of actions) that (1) provides predictable, rapid, and equitable compensation for those injured; (2) ensures that no party is shielded from action for suspected misconduct; and (3) reduces or Removes disincentives to vaccine manufacturing. The compensation system envisioned by the committee would be created by federal legislation. It could be established within an existing government department or as a new entity. It would be empowered to raise and distribute funds to compensate persons with vaccine-related injuries. The compensation system administrators would be encouraged to obtain advice from the vaccine commission discussed elsewhere in this report, but the two bodies should be separate. Specific issues relating to the operation of the system are discussed below. Provision of Payments To achieve rapid payments, all claims made to the compensation system should be processed without regard to "fault," i.e., the possibility that misconduct may have occurred. A determination would be made with the assistance of a schedule of compensable events whether the alleged injury was vaccine related. Eligible parties would be compensated. A review of cases for misconduct would be required to determine if the system should recover payments from responsible parties. The conclusions of the system administrators about the relationship between vaccination and the alleged injury and about the possibility of misconduct would be made available to the courts (in addition to the scientific data and reasoning upon which they were based) to aid in any further evaluations.

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153 The creation of a compensation system is not intended to provide protection for wrongdoers. Legal action should be possible it- there is evidence of misconduct. The committee believes, however, that any injury resulting from a vaccine that has been correctly manufactured and administered in accordance with recommended medical practices should be treated essentially as a no-fault injury.6 This position appears to be in accordance with the legal theory that some products are unavoidably unsafe (Chapter 6~. The committee was concerned that apprehensions over liability on the part of health care providers might become a disincentive to their participation in immunization programs. In its review of the state of the law, however, the committee found little evidence that liability had been imposed on health care providers except in situations involving failure to follow accepted medical procedures. The committee presently does not recommend any change in the rules applicable to health professionals because liability for improper administration is appropriate;* it recognizes, however, that if any proposal limiting recovery against manufacturers were adopted without provision for reasonable compensation, lawsuits might be redirected from the manufacturer to the administering professional. This could have deleterious effects on the willingness of health care providers to participate in immunization programs. Such a situation would require careful monitoring. Tracking shifts in litigation and recommending remedial action would be one of the functions of the proposed vaccine commission (Chapter 7~. The possible elimination of the individual's tort remedy against manufacturers (as envisaged in a compensation system with restricted tort options) would in no way affect other legal and administrative controls over vaccine manufacturers or providers, e.g.' in cases of serious misconduct, such as the intentional falsification of data to obtain certification. The Amount and Nature of Payments The committee's conclusion that persons who suffer vaccine-related injuries should be compensated does not mean that they all should receive the same high compensation now awarded to some by the tort system. One distinguished critic of the tort system has referred to the current situation as a "lottery. n7 A plaintiff who enters the system has a large chance of winning nothing and a small chance of winning a great deal. Goals in vaccine injury compensation should be to remove chance from the system, to decide on an appropriate and fair level of compensation, and to ensure that all deserving claimants receive that amount. An appropriate amount of compensation (1) removes financial *The committee recognized that malpractice claims, in general, represent a major concern of the medical profession, but it did not feel that the malpractice issue was within the scope of its charge.

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154 disincentives for participation in vaccination programs; (2) prevents financial devastation of victims and their families; (3) keeps vaccine costs low enough to permit universal use; (4) avoids disproportionate expenditures on an area of public health that, although important, is not the only legitimate claim on the nation's resources; and (5) avoids creating incentives to litigate. These goals lead to several general suggestions. First, small injuries that do not pose a risk of significant financial loss should not be compensated. The compensation system should make no award to persons whose out-of-pocket losses are less than a specified minor amount, which should be reset periodically. At the other end of the injury spectrum, limits should be placed on maximum recoveries. Predetermined dollar limits are undesirable, however, because they discriminate against those most severely injured. To ensure fair compensation and at the same time keep total costs reasonable, compensation for nonmonetary losses (e.g., pain and suffering, emotional distress, and loss of companionship) should be strictly defined and limited by the bodies establishing the schedules of compensable events and payments. Projections for the proposed National Childhood Vaccine Injury Compensation Act suggest that a large proportion of costs (90 percent) could arise from loss of future earnings.8 Hence, any estimates of future earning potential should be made carefully. Because most injuries occur in young children, whose potentials are unknown, an award based on the "average" worker's earnings projected over the period of the claimant's working life expectancy appears reasonable. Finally, fees for the attorneys of claimants should be paid by the compensation system according to a fee schedule. In sum, an injured person should be reimbursed for all present and future out-of-pocket losses for medical, hospital, nursing home, personal assistance, special training, special equipment, legal, and other expenditures plausibly caused by the vaccine injury, and receive a limited amount for lost earnings. Awards for future costs should be paid over time through a system of periodic payments so that the compensation fund is protected from depletion. Defining Compensable Events The scope of the schedule of compensable events and the manner in which it is established will affect operational costs of the system, the ease of administration, and the likelihood that it will be acceptable, or preferred over other remedies (if any are available). Establishing a schedule of compensable events can begin with evaluation of pertinent scientific information, especially epidemiologic data, and proceed to the use of the resulting conclusions to formulate policy, i.e., the actual schedule. In the latter phase, the scientific evidence (and its limitations) must be balanced with other considerations, such as likely costs and ease of administration.

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155 The section on untoward reactions to vaccines in Chapter 5 describes the problems of establishing association or causation in cases of possible vaccine injury. The difficulty of proving or disproving a causal relationship between a given vaccine and a particular injury suggests that if causation is required, for payment of compensation, outcomes will depend on who is required to carry the burden of proof. Moreover, these efforts to prove causation will be time-consuming, expensive, and probably inconclusive. Given the current situation, little purpose will be served by efforts to determine causation on a case-by-case basis. The best way to control expenses for any payment system will be to establish a generally acceptable schedule of compensable events that can be administered without frequent specialist intervention or judgment. The schedule should reflect the best available scientific information and judgment on the existence (or absence) of associations between specific conditions and vaccine administration. Only those conditions for which scientific evidence indicates a plausible association with vaccination should be included on the schedule of compensable events. To be eligible to receive payments, claimants also should meet at least two additional criteria--onset of the condition should be within some specified time after vaccine administration and there should be no evidence that establishes a different cause. It was not within the committee's purview or resources to undertake elaboration of a detailed schedule of compensable events, although its review of untoward reactions to vaccines (Chapter 5) could serve as a starting point for such an effort. The committee recommends that if the decision is made to establish a compensation system, a group of experts in the necessary disciplines should be convened by an inde- pendent body or organization to develop it. In addition, it would be preferable to establish the schedule by administrative rule, rather than legislation, to allow updating. However, an interim schedule may be developed to allow rapid implementation of the compensation system. Establishing a workable schedule would entail recognition of the fact that some individuals whose injuries were not actually caused by vaccination would receive compensation (i.e., those "background rate" cases of conditions listed on the schedule of compensable events but, in fact, related only temporally to the vaccination). Such "mistakes" are extremely difficult to avoid. They would be on the side of compensation and, if few in number, would be tolerable. The schedule of compensable events must be drawn carefully to ensure that such mistakes are few, that nuisance or fraudulent suits are discouraged, and that the social policy of promoting vaccine use while compensating its victims is not perverted by extraneous payments or administrative costs. To minimize administrative costs, review and appeal mechanisms should be strictly limited. Judicial review should be limited to abuse of discretion. A board of scientific advisors could be convened to assist the system's administrators with cases in which inter- pretation or application of the schedule is unclear.

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156 Establishing a Schedule of Payments Final determination of medical and other costs (e.g., special education and rehabilitation) that should be covered for each con- dition and the size of different types of payments should be made by an independent group of experts in the economic analysis of medical costs. As with the schedule of compensable events, the payment schedule should be formulated administratively rather than legis- latively to allow updating. Periodic (structured) payments rather than lump sums should be favored. Again, an interim schedule may be used initially. Source of Funding Because vaccine programs are for the public good and are frequently endorsed or mandated by government, public funds may appear to be an attractive source of compensation for those with vaccine injuries. However, promotion of a compensation system funded from general tax revenues would encounter several obstacles. Such a system may be unattractive to many legislators because it could be characterized as a "give-away" program, an unjustified tax increase, or an undeserved windfall to one industry. These charges are difficult to refute, especially during a period of increasing concern about the federal deficit. Moreover, insistence on a federally financed compensation system would place an undue burden on the argument that the vaccine injury compensation problem is unique. Jeopardizing the proposal to establish a compensation system by exposing it to such political risks should not be necessary. Certain nonpolitical arguments provide support for an alternative approach to raising funds. A well-designed vaccine price surcharge plan could assign injury costs in an economical, predictable, and therefore manageable way. Moreover, by revealing the true costs of vaccines {the cost of compensating injuries, as well as the costs of production, marketing, etc.), it would offer society an opportunity for rational decision making. For example, if it were learned that a vaccine caused 31 million worth of injuries per year and prevented $1 billion worth of injuries from the target disease, decisions about use of the vaccine would be very different from those made if the figures were reversed. In either event, there would be a basis for rational, rather than intuitive, decision making. The surcharge ultimately would be paid by recipients of vaccines or others who purchase them. As a practical matter, it should be noted that because a large proportion of vaccines are purchased with federal funds for public programs, society at large would contribute to the compensation fund generated by the surcharge. The surcharge should be based on the best available actuarial judgments about vaccine risks, and should be reset at least annually to reflect previous over- or underestimates of needs. The money obtained from the surcharge should be the primary source of

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157 compensation for vaccine-related injuries. If the surcharge fund becomes exhausted at any time, the federal government should be obligated to lend the compensation system enough money to pay claims, and the system obligated to make sufficient adjustments in its future surcharges to repay the loan. An early problem in establishing the compensation mechanism will be whether to establish one surcharge fund to pay all vaccine injuries or to have different funds for different vaccines. Each vaccine should have its own fund if the major goal is to reveal the true costs of these vaccines. However, that approach sacrifices the benefits of aggregation of resources and adds an element of luck to the fund's management. For example, if in any given year the pertussis fund were low and the measles fund were high, and the compensation system were faced with several pertussis and no measles claims, it would have to borrow to pay pertussis claims while hoarding measles money, or start borrowing from itself. In addition, the complexity of multiple funds would increase management and administrative costs, which should be kept low. Finally, a vaccine-by-vaccine approach would result in the creation of "orphan" injuries, for which no adequate compensation would be available and for which borrowing would not be feasible. For all these reasons, the committee favors creation of only one vaccine injury fund, although the amount of the surcharge may vary from vaccine to vaccine. Informed Consent Every effort should be made to promote the availability to potential vaccine recipients (or their parents) of information on the risks and benefits of vaccination. However, the overall goal of providing appropriate compensation expeditiously will be ill-served if the administrators must attempt to base eligibility for compensation on the difficult question of whether the vaccine recipient gave n informed consent. n Indeed, informed consent may be a meaningless concept in the context of a public health program with legal requirements for vaccination. Attempting such a determination would slow dispute resolution and increase administrative costs. Thus. the giving of informed consent should not preclude eligibility for compensation. Administrative Location To be accepted as an alternative to the tort system, any new mechanism for achieving compensation for vaccine injury must be regarded as providing fair and adequate payments. It is essential, therefore, that the mechanism not be located in or associated with a body whose existing functions might be perceived as conflicting with the provision of equitable compensation. The administration of a vaccine-injury compensation scheme by the Public Health Service, whose responsibilities include the promotion of vaccine use, might be

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158 regarded as a potential conflict of interest and therefore is not desirable. A variety of alternative administrative locations are possible, including the Department of Justice, the Social Security Admin- istration, the Health Care Financing Administration, and a nonprofit compensation corporation. Additional Issues A number of other issues should be resolved prior to the final design and implementation of a vaccine-related injury compensation system. The purpose of establishing such a compensation scheme would be to provide a more rapid, equitable mechanism for payment to injured parties, not to increase the amount received by some individuals. Hence, the committee believes that payments from only one source should be possible. A claimant/plaintiff should be required to choose between the compensation system and tort remedy, or to waive tort rights a a condition of receiving payment. Additional questions that must be answered include: Which vaccines should be covered? It seems logical to be comprehensive because the arguments for a compensation scheme do not hinge solely on the fact that some vaccines are mandatory. Vaccina- tions given to adults, like pediatric vaccinations, are desirable on the basis of overall benefits to public health, e.g., they reduce disease transmission. The injured parties are equally deserving of compensation. How are initial compensation funds to be raised? A number of options are available. A price surcharge could be applied for a number of years before the system goes into operation. Alternatively, a one-time government appropriation could be made or a loan negotiated. Will the system be retroactive? If so, to what extent, and how will tort claims in process be handled? Because immunization, especially of children, has been widely promoted for many decades, there is a potential backlog of claims for vaccine injury. A number of options are available on these questions. Resolution of questions over retroactivity is important because payments for previous injuries could, in the early years of operation, far outweigh the routine annual incidence of claims.8 The question of whether these initial costs would be paid from general revenues or the surcharge set to recoup them also needs to be addressed. A number of questions involving the relative commercial competitiveness of present manufacturers and possible new entries into the vaccine market could arise depending on how retroactivity, claims in process, and the levying of the surcharge are handled. These must be resolved in an equitable fashion. Should new mechanisms be instituted at the state or federal level? Notwithstanding the fact that liability is currently governed by state law, a number of factors strongly support the proposition

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159 that a federal solution is needed. A multiplicity of approaches probably would arise at the state level to what is essentially a uniform problem for the entire country. Undesirable differences would develop in access to and magnitude of compensation. Also, vaccine manufacturers operate on a national scale and it would be best to avoid a situation in which they are discouraged from supplying products to some areas where they remain subject to unpredictable litigation. The committee did not attempt to prescribe detailed approaches to each of these sets of problems, but identifies them because the manner of their resolution could significantly affect the costs and operation of the compensation system. SUMMARY AND CONCLUSIONS A variety of methods exist for dealing with the problems arising from vaccine-related injury, the most serious of which are the need to compensate injured individuals and the need to reduce deterrents to vaccine manufacturing. The committee evaluated eight individual options and two combined approaches from the range of possible actions--some address only one facet of this complex situation and others address a broader range of issues. The 10 alternatives are: . a supplementary (non-exclusive) compensation system a compensation system with restricted tort options mandatory claim review by a compensation board with tort option a vaccine supply public insurance program promotion of no-fault insurance for vaccine-related injury a supplementary compensation system and a vaccine supply public insurance program a vaccine supply public insurance program and promotion of no-fault insurance for vaccine-related injury changes in the tort law relating to liability for vaccine- related injury federal assumption of liability for all vaccine-related injury acceptance of vaccine price increases to cover liability costs The committee believes that the goal of advancing the control of infectious diseases with vaccines should be pursued in as just and fair a manner as possible. Those who respond to the government's promotion of or legal requirement for vaccination convey benefits to other members of society because they reduce the risk of disease in the community. If vaccination results in an injury, the injured individual should be certain of receiving rapid and adequate compensation. The common law tort system can not be relied on to provide such compensation because each claim requires an extended, costly, and complex adjudicative procedure to establish liability. The results of these procedures are erratic and unpredictable, and therefore inequitable.

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160 The committee urges political decision makers to develop a compensation system for vaccine-related injury with the features outlined in this report. It also recommends that action be taken to reduce the serious deterrents to vaccine manufacturing and innovation that arise from the unpredictable nature of the current liability situation (such action should not be designed to shield those suspected of possible misconduct). The information and analysis presented in this report should help guide policymakers in the choice of appropriate solutions. REFERENCES AND NOTES 1. Beale, A.J. 1985. Modern approaches to the development of vaccines: perspective of a traditional manufacturer. Pp. 377-381 in Vaccines 85. Molecular and Chemical Basis of Resistance to Parasitic, Bacterial, and Viral Diseases, R.A. Lerner, R.M. Chanock, and F. Brown, eds. Cold Spring Harbor, N.Y.: Cold Spring Harbor Laboratory. 2. Coe, F.A., Jr. 1983. A vaccine manufacturer's view of the vaccine market. Prepared for the Institute of Medicine Conference on Barriers to Vaccine Innovation, November 28-29, 1984, Washington, D.C. 3. Pharmaceutical Manufacturers Association. 1985. Jury rules that bendectin did not cause birth defects. PMA Newsletter 27:1. 4. Curran, W.J. 1983. The acceptance of scientific evidence in the courts. N. Engl. J. Med. 309:713-714. 5. See, e.~., Sindell v. Abbott Laboratories, 26 Cal.3d 588, 607 P.2d ~ _ 924, 163 Cal. Rptr. 132 (1980), Rosenberg, The Causal Connection in Mass Exposure Cases. A n Public Law" Vision of the Tort System, 97 Harv. L. Rev. 849 (1984~; Comment, DES and a Proposed Theory of Enterprise Liability, 46 Fordham L. Rev. 963 (1978~. 6. In this regard the licensing approvals and Good Manufacturing Practices of the Food and Drug Administration and the recommendations of the Centers for Disease Control Advisory Committee on Immunization Practices should serve as guidelines. 7. Franklin, Replacing the Negligence Lottery: compensation and Selective Reimbursement, 53 Va. L. Rev. 774 (1967~. 8. Penner, R.G. 1984. Letter to Sen. Orrin Hatch, February 7, 1984, on preliminary Congressional Budget Office cost estimates of S. 2117, the National Childhood Vaccine Injury Compensation Act.