The Legal and Moral Implications of Giving Indemnity to Companies Manufacturing the Covid-19 Vaccine

I. Introduction

With the onset of COVID-19, governments around the world have been anticipatory the development of vaccines that are ultimately needed to address the abysmal condition of public health in the aftermath of the pandemic. However, in order to ensure such a development, it is important to address the biggest hindrance for vaccine manufacturers– liabilities.

Although rare, vaccine-related Adverse Events post Inoculation (‘AEIs’) may arise, especially as manufacturers develop vaccines with limited trials during dire public health emergencies.³ Historically, due to the absence of relevant legislation concerning liabilities for manufacturers, claims for compensation due to AEIs have ultimately been borne by the former, who often do not have control over testing or prescribing approvals during such times. Thus, ever since the world was hit by COVID-19 at the beginning of 2020, vaccine manufacturers have and continue to demand indemnification from national governments against any liabilities.

Indemnity refers to an agreement wherein one party voluntarily secures the other party for protection and compensation for any losses sustained. Essentially, vaccine manufacturers wish to protect their businesses from any liabilities which could arise out of the potential side effects of the vaccines.

This essay analyses the legal and moral implications of providing indemnity to vaccine manufacturers during COVID-19, taking into account the larger public health protections sought to be achieved through expedited vaccine manufacture and distribution and juxtaposing it against the individual rights of victims of AEIs. In Part I, we provide a brief overview of measures and principles adopted during previous public health crises by governments and courts alike for adjudicating AEI claims. Part II analyses the various legislations and programmes implemented by governments and international organizations to compensate AEI victims during COVID-19, who cannot hold manufacturers liable anymore as a result of indemnification provided to them in such countries. Part III analyses the legal implications while Part IV tackles the moral dilemmas posed by these measures. We conclude with recommendations for more robust, equitable and efficacious compensation programmes that help ameliorate the legal and ethical issues of indemnification to vaccine manufacturers, not only during COVID-19 but also for subsequent public health crises that may occur in the future.

II. Historical overview- why is indemnification necessary?

Historically, vaccine manufacturers have faced anxieties relating to liabilities in pursuit of effective vaccines to curb widespread diseases. In the United States, for example, vaccine side-effects were subject to claims made under the tort principles of strict liability, specifically for products that are ‘unavoidably unsafe.⁴ In the case of Reyes v Wyeth Laboratories⁵, a vaccine producer was held liable for the injuries caused to a polio victim who contracted the disease from the Sabin polio vaccine. Consequently, courts continued to compensate all victims of polio immunization by addressing liability through traditional tort doctrines.⁶

In countries that employ strict liability regimes to govern vaccine administration, there is a limited obligation for a plaintiff to prove causation between the vaccine and the injury caused. The plaintiff may only prove that the immunization and the injury are related in place and time.⁷ Hence, even if the manufacturers produce their products without any negligence, vaccines may cause huge liabilities, which is a high-risk situation. Thus, the threat of such legal action has continued to deter vaccine manufacturers from investing in research and development in the aftermath of widespread diseases which demand robust vaccine programmes.⁸ This hesitancy was clearly evident in 2009, as H1N1 began emerging as a potential pandemic. Negotiations for indemnification to manufacturers of vaccines caused significant delays in the development, manufacture and distribution of the vaccine.⁹

These precedents clearly demonstrate that not providing vaccine manufacturers with a liability shield for their products, thereby leaving them vulnerable to strict liability claims for AEIs, has detrimental ramifications. Firstly, there exists a high level of uncertainty as to whether or not tort doctrines should be applicable in such emergency scenarios, given the need for expedited vaccine development and the limited role vaccine companies play in their distribution compared to government bodies.¹⁰ Secondly, attaching tort decisions to compensate victims leads to the imposition of additional costs on vaccine manufacturers, thereby discouraging them from participating in future mass immunization programmes for the preservation of public health.¹¹

III. No-fault compensation pro- grammes as a result of indemni-fication to vaccine companies

As has been seen infra (in part I), there is a need for an alternative remedy to the question of vaccine liability during public health crises.¹² Therefore, governments and international organizations have adopted a different approach during the COVID-19 pandemic. In several jurisdictions such as the USA¹³, EU¹⁴, UK¹⁵, South Africa¹⁶, and the WHO’s Covax Facility,¹⁷ full indemnification against legal liability (subject to limited exceptions, such as wilful misconduct or gross negligence) has been granted to vaccine manufacturers. However, AEI victims are compensated for injuries through no-fault compensation programmes for any unforeseen complications arising as a result of vaccines.

The Countermeasures Injuries Compensation Programme (‘CICP’) in the USA provides an administrative remedy for victims of serious injuries or death due to vaccinations. A mere temporal association is not sufficient to underwrite a claim- victims must show a direct nexus, based on reliable medical or scientific reports, between the inoculation and the serious injury caused to be eligible for compensation. Compensation is limited to out-of-pocket medical expenses and loss of income and does not cover legal expenses general or punitive damages. Claims must be filed within a year of the administration of the vaccine.¹⁸ Similarly, the requirements under the UK’s Vaccine Damages Payment Scheme for receiving compensation is that, on a preponderance of probabilities, there must be a causal link between the injury caused and the vaccine administered, and such injury should be severe.¹⁹

Besides this, around 24 countries have no-fault compensation programmes already in place, although many have not amended their provisions to include COVID-19 vaccinations as a covered countermeasure for which compensation can be claimed. Alternatively, countries such as South Africa have set up a special governmental fund under their existing laws to pay out AEI-related claims for inoculated citizens while giving full legal indemnification to Johnson & Johnson for its single-shot vaccine.²⁰

In the case of the WHO’s Covax Facility, compensation paid out is in the form of a consolidated lump-sum settlement decided on the basis of the complexity and severity of the injury caused. The compensation fund is comprised of a per-dose tax levy on the vaccines distributed to each of the 92 countries receiving dosages through Covax, as well as contributions from manufacturers who are indemnified by Covax in exchange for their products. Claimants are free to approach their national courts if they are dissatisfied by the settlement amount provided, although the compensation scheme is designed in such a way so as to disincentivize such actions to the greatest possible degree. If national governments are unable to pay out the compensation awarded by national courts, then the WHO arranges for third parties to pay the amount in the interim, which is later reimbursed to them by the national government through separate agreements.²¹

IV. The legal implications

However, all such compensation programmes have serious legal shortcomings, particularly in the context of the COVID-19 pandemic. COVID vaccines were developed within significantly shorter time periods compared to other vaccines and were approved for emergency use without a general approval status being granted, given the urgent need to inoculate citizens and curb the virus’s spread.²² Furthermore, many adverse side effects of the vaccines were and may still remain unforeseen because they have not undergone a significant period of testing on a larger and more diverse population.²³ This means that conclusive and reliable scientific or medical reports concerning their side effects are still in the process of being discovered and shared with the medical community and the general public at large.

In light of this, the high standards of proof under the CICP and the UK’s compensation scheme may make it unreasonably difficult for legitimate victims to claim compensation under such programmes, even though they may be suffering from injuries that have not, as of yet, been verified as caused by the COVID-19 vaccinations due to the inadequacy of reliable medical information. This, combined with the CICP’s requirement for claims to be filed within a year of vaccination, make the compensation system even more unjust for potential victims.

Furthermore, there is no clear rationale elucidated as to why compensation under the CICP is limited to “reasonable” medical expenses and income lost due to disability. In fact, a more suitable model for compensating AEI victims in the USA would be through the National Vaccine Injury Compensation Programme (‘VICP’), which adjudicates claims arising from the administration of routine vaccines in the USA (like seasonal influenza and paediatric vaccines).²⁴ The burden of proof is more relaxed for the claimant, and compensatory as well as punitive damages can be awarded to them under the VICP.²⁵ Given the uncertainty regarding complications arising out of COVID-19 vaccinations, it would be a lot more equitable to impose a lesser standard of proof and provide greater monetary relief to victims.

V. The moral conundrum

Finally, two questions remain to be answered with respect to the ethical soundness of providing indemnification to COVID-19 vaccine manufacturers. Firstly, what is the moral justification for making governments and international institutions liable to pay for adverse effects of a vaccine as opposed to the pharmaceutical companies who manufacture them? Secondly, what are the ethical ramifications of permitting vaccine companies to earn millions in profits through vaccine sales and yet be shielded from liability for their products at a time when the world grapples with a global health crisis?

The answer to the first question is twofold. The first reason is that it helps ameliorate vaccine safety concerns. In the face of such public worry, the guarantee of compensation from the government is integral in building public trust and therefore reduces the likelihood of a large number of people choosing not to get vaccinated. The second, and more important reason, is fairness. Governments strongly promote and sometimes mandate vaccines due to the social benefits (such as herd immunity) that vaccinations provide, and therefore it is only just that people injured as a result of such a welfare-enhancing social policy are compensated by society for any injury that stems from the latter.²⁶

The second question, however, poses a much greater moral dilemma. It is no secret that the primary manufacturers of COVID-19 vaccines have operated on a for-profit model.²⁷ Pfizer is poised to generate a revenue of 33.5 billion USD, Moderna 19 billion USD, and Johnson & Johnson 2.5 billion USD from their respective vaccine sales.²⁸ Furthermore, inequalities in vaccine distribution worldwide means that low-income countries have received only 0.5 per cent of the total vaccines administered during the pandemic.²⁹ The dismal number of vaccines donated by Pfizer and Moderna to the Covax Initiative makes it clear that the excess revenue generated is being usurped by the companies instead of being directed toward more equitable vaccine distribution.³⁰

There does not seem to be a simple solution to this problem. It must be noted that not providing vaccine manufacturers indemnity in the early days of the pandemic might have contributed towards companies being hesitant to swiftly develop vaccines or even participate in the mass immunization effort in the first place (as was observed during the H1N1 Epidemic), leaving governments and the international community helpless against the rampant spread of the virus and its worst effects. However, the present compensation schemes do not place nearly enough accountability on manufacturers and rest the entire burden of payments upon governments. This has led to the implementation of flawed and often futile schemes that make it unreasonably difficult for victims to avail compensation in the first place, thus leaving them in an extremely vulnerable position. So far, no country or organization has been successful in developing a programme that equitably balances the need for speedy and effective mass immunization vis-á-vis the individual rights of citizens adversely affected thereof.

VI. Conclusion

The need for indemnity does not mean that vaccine manufacturers should face no accountability whatsoever. While granting immunity is an inevitable concession government must make for the protection of larger interests, there is still scope for more equitable contracts to be executed for vaccine sales and distribution. For example, any country that agrees to provide indemnification to a vaccine manufacturer should stipulate that the latter must pay a tax, based either on a percentage of their annual vaccine sales or the number of doses sold, to the country.³¹ The money collected through such taxes will be used by governments to directly pay out AEI-related claims. Such a scheme ensures that the burden of compensating victims falls to both governments and vaccine manufacturers alike. Manufacturers still have an incentive to agree to such a set-up since the contribution of a fixed amount to governments as a tax on vaccine sales involves substantially lesser risk and stable revenue as compared to battling AEI-related claims in various domestic courts around the world where their vaccines are administered.

Furthermore, there is a dire need for compensation programmes that are implemented during such times to be a lot more accessible. Legislators should be cautious not to limit criteria for payments to such an extent that it renders compensation programmes obsolete. Secondly, the proof required for the onset of injuries caused due to vaccines should not be too rigorous, as this would undermine the general goal of encouraging citizens to participate in mass immunization programmes.³²

Lastly, governments and private companies that manufacture vaccines should invest in a swift, effective and accurate post-vaccination collection of data. This helps to identify possible vaccine-related injuries which were not foreseen at the time of their development and testing, thus facilitating more uniform metrics for adjudicating AEI claims. Hence, potential victims and decision-makers alike have a clear idea of when a vaccine related injury has occurred, and the procedure for compensation to be followed thereof.

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Footnotes

1. Author is a student at Government Law College, Mumbai, India.

2. Author is a student at Government Law College, Mumbai, India.

3. Statement for healthcare professionals: How COVID-19 vaccines are regulated for safety and effectiveness, World Health Organization (June 11, 2021), https://www.who.int/news/item/11-06-2021-statement-for-healthcare-professionals-how-covid-19-vaccines-are-regulated-for-safety-and-effectiveness. ↩

4. Restatement (Second) of Torts §402A (1965); Restatement (Second) of Torts § 402. ↩

5. Reyes v. Wyeth Laboratories, 498 F.2d 1264 (5th Cir.), 419 U.S. 1096 ↩

6. J.M Pearce, Salk and Sabin: poliomyelitis immunisation, 75(11) Journal of Neurology, Neurosurgery & Psychiatry, 1552 (2004). ↩

7. Cary Looker & Harry Kelly, No-fault compensation following adverse events attributed to vaccination: a review of international programmes, Bulletin of the World Health Organization, 371-378 (2011). ↩

8. W.H. Aaranson, Manufacturers' Liability in tort, 46 The Yale Law Journal 709 (1937). ↩

9. Eileen R. Choffnes et. al., The domestic and international impacts of the 2009-H1N1 Influenza A pandemic: Global Challenges, global solutions: Workshop summary (2010). ↩

10. Marc A. Franklin & Joseph E. Mais, Tort Law and Mass Immunization Programs: Lessons from the Polio and Flu Episodes, 65 Calif. L. Rev., 754 (1977). ↩

11. Bruesewitz v. Wyeth 562 U.S. 223 (2011) (Sotomayor, J. dissenting). ↩

12. John D. Winter et. al., Towards the global solution on vaccine liability and compensation, 74 (1) Food and Drug Law Journal, 3-5 (2019). ↩

13. The PREP Act and COVID-19: Limiting Liability for Medical Countermeasures, Congressional Research Service (Jan 13, 2022), https://crsreport s.congress.gov/product/pdf/LSB/LSB10443. ↩

14. Fred Porter, UK government grants Pfizer civil legal indemnity for COVID-19 vaccine, The Jurist ( Dec 6, 2020), https://www.jurist.org/news/2020/12/ uk-government-grants-pfizer-civil-legal-indemnity-for-covid-19-vaccine/ ↩

15. Fransesco Guarascio, COVID-19 vaccine makers see EU shield against side-effect claims, Reuters (Sept 22, 2020), https://www.reuters.com/article/us-health-coronavirus-eu-vaccine-idUSKCN26D0TY. ↩

16. S’thembile Cele, South Africa to establish compensation fund to allay J&J concerns, Bloomberg (April 15, 2021), https://www.bloomberg.com/news/a rticles/2021-04-15/s-africa-to-establish-compensatio n-fund-to-allay-j-j-concerns. ↩

17. Additional information on indemnification for Covax AMC participants, WHO Covax Facility (Nov 2020) ↩

18. Id. at 11. ↩

19. Id. at 12. ↩

20. Id. at 14. ↩

21. Id. at 15. ↩

22. John Solis-Moreira, How did we develop a COVID-19 vaccine so quickly? Medical News Today (Dec 15, 2020), https://www.medicalnewstoday.com/articles/how-did-we-develop-a-covid-19-vaccine-so-quickly. ↩

23. Ariana Remmel, Why is it so hard to investigate the rare side effects of COVID vaccines? Nature News (April 01, 2021), https://www.nature.com/articles/d41586-021-00880-9. ↩

24. Compensation Programmes for Potential COVID-19 Vaccine Injuries, Congressional Research Service (Oct. 20, 2021) https://crsreports.congress.gov/produ ct/pdf/LSB/LSB10584 ↩

25. Id. ↩

26. Gareth Millward, A disability act? The vaccine damage payments act 1979 and the British Government’s response to the pertussis vaccine scare, 30 (2) Social History of Medicine, 429-442 (2017). ↩

27. James Paton & John Lauerman, When Lifesaving Vaccines Become Profit Machines for Drugmakers, Bloomberg Businessweek (July 06, 2021) https://www.bloomberg.com/news/articles/2021-07-06/when-lifesaving-vaccines-become-profit-machines-for-drugmakers. ↩

28. Manas Mishra, Carl O’Donell, J&J keeps vaccine sales outlook unchanged after third-quarter miss, Reuters (Oct 19, 2021), https://www.reuters.com/bus iness/retail-consumer/johnson-johnson-maintains-2021-sales-forecast-covid-19-vaccine-2021-10-19/. ↩

29. Josh Holder, Tracking Coronavirus Vaccinations Around the World, New York Times (Oct 23, 2021), https://www.nytimes.com/interactive/2021/world/covid-vaccinations-tracker.html. ↩

30. Rebecca Robbins, Moderna, Racing for Profits, Keeps Covid Vaccine Out of Reach of Poor, New York Times (Oct 09, 2021), https://www.nytimes.co m/2021/10/09/business/moderna-covid-vaccine.html.; Rebecca Robbins & Peter Goodman, Pfizer reps hundreds of millions in profit from COVID vaccine, New York Times, (May 05 2021), https://www.nytimes.com/2021/05/04/business/pfizer-covid-vaccine-profits.html. ↩

31. Sam Halabi et. al., No-Fault Compensation for Vaccine Injury — The Other Side of Equitable Access to Covid-19 Vaccine, 383 (23) New England Journal of Medicine, 125 (2020). ↩

32. MA Franklin, Replacing the negligence lottery: Compensation and selective reimbursement, 53 (4) Virginia Law Review, 774-814 (1967); Walter J. Blum, & Harry Kalven Jr, Ceilings, Costs and Compulsion in Auto Compensation Legislation, Utah L. Rev, 341 (1973). ↩