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Who’s On the Hook If COVID-19 Vaccines Go Wrong?: Viewpoint

2021-01-07 14:03:10
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The COVID-19 vaccines are here and distribution has started. But what if something goes wrong?

Whether it's loss of income, high medical bills, or other serious adverse consequences of getting an injection, someone has to pick it up, be it vaccine manufacturers or governments. In the past, so-called liability shields have provided cover for companies to quickly produce effective treatments without legal exposure. But it is a risky venture for countries to take full responsibility for very new products developed and licensed at lightning speed. Especially when every man, woman, and ultimately every child needs to get an injection.

Adar Poonawalla, the CEO of Serum Institute of India Ltd., the world's largest vaccine producer by volume, is seeking damages. Competitors stumbling each other by filing frivolous civil lawsuits isn't a trivial risk to the likes of Poonawalla, who manufactures the jab developed by AstraZeneca Plc and Oxford University. It can get even messier as some health care systems can experiment with dosage amounts and intervals to deal with mutations. Who is responsible if there are serious side effects? No insurer will underwrite the risk; the burden of the compensation will rest on states or, in the case of poor countries, on Covax, a global initiative to ensure equitable distribution.

According to current estimates, Covax can only meet one fifth of global demand at the end of the year. So countries entering into direct agreements with producers will still have to worry about possible tort claims, seeking civil remedies – and not just for the next two years. The virus can persist even after universal immunization, with mutant strains creating an enduring market for stimuli long after Covid is no longer a public health emergency.

According to the RAND Corporation researchers, manufacturers, distributors and other entities in the United States are "very likely to find their COVID-19 products and services cross borders." Their legal exposure in foreign courts is thus uncertain, especially given the rapid development of vaccines and limited data on side effects and long-term consequences.

Judging by past pandemics, this data won't appear for a while. When this is the case, it will likely vary from country to country, which will affect how liability is handled. In 2013, four years after the swine flu hit worldwide, the UK government reversed its position on the safety of GlaxoSmithKline Plc's Pandemrix shot after a major investigation found it linked to narcolepsy. Affected persons can apply for compensation. At the time, the health department noted that "the decision to recommend that children receive this vaccine during the flu pandemic was based on the evidence available at the time, along with advice from the European Medicines Agency approving its use." Then it said the department is "monitoring all new evidence," and so its use stopped in 2011 for people under 20 years old. The data evolves, obscuring potential liability issues.

It gets more complicated. Rich countries are buying up large doses of viable vaccines from Pfizer Inc.-BioNTech SE and Moderna Inc. planned. For example, the European Union is considering donating 5% of its vaccinations, Reuters reported. With altruistic gifts it is even more difficult to assign responsibility.

During the 2009 H1N1 pandemic, the World Health Organization came up with a multi-country liability shield, as RAND researchers describe it, or a global legal framework. Recipient countries had to sign a letter of agreement that actually allowed donors to wash their hands of liability, or indemnify donors, as long as they followed WHO standards. The problems were knotty and some countries lacked the resources to interpret them. Of the 94 countries interested in donations, 87 eventually signed the agreement and only 78 completed the preconditions in the agreement for the supply of vaccines.

Due to the complexity of the current situation and the enormous production scale, a new agreement is required. National governments will have to negotiate, consider and approve different requirements – all lengthy processes. If inequalities arise between countries, manufacturers will face barriers to production and distribution. The alternative is national compensation funds, which honor claims for those who have suffered adverse effects from the vaccines. Many countries simply cannot afford these, further exacerbating the imbalance between resources and investment.

Previous widespread diseases such as smallpox and other influenza show that liability issues can hinder the progress of new vaccines, even domestically. In 1976, when the Ford government began an ambitious program to vaccinate millions against an expected swine flu outbreak, insurers and manufacturers opposed it. Their concerns about legal exposure prompted Congress to pass a law waiving liability. Legislation replaced the US as the defendant in lawsuits against a vaccine manufacturer, distributor, or US entity offering free inoculation. While that flu scare hasn't evolved into an outright pandemic, companies in the US are now effectively protected. Such a legal setup is not standard in most other places.

An additional challenge this time around is the international space competition type competition in the field of vaccine development. China and Russia promote vaccinations with little or no data that validate their effectiveness in large studies. India has licensed a native product developed by the local firm Bharat Biotech International Ltd. "in clinical trial mode" – those who receive the injections will be monitored and this is likely to prove their effectiveness. That's because phase three experimental data, which does just that, is not yet available.

All of this is too breathtaking a pace for scientists. Policy makers in developing countries may have no choice but to take what they can get – easily, cheaply and quickly. But by doing that, they might be able to save legal troubles for later.

Copyright 2021 Bloomberg.

About Anjani Trivedi, Bloomberg Opinion

Anjani Trivedi is a Bloomberg Opinion columnist on industrial companies in Asia. She previously worked for the Wall Street Journal.

About Andy Mukherjee, Bloomberg believes

Andy Mukherjee is a Bloomberg Opinion columnist on industrial companies and financial services. He was previously a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.

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