Kevin Drum argues that the reason that liability fears are not enough to keep vaccine makers out of the market is because vaccine makers can buy liability insurance and then raise their uncapped prices to compensate them for this additional expense. Thus, he concludes, restrictive FDA regulations are behind the shortage.

But why can vaccine makers raise their prices to cover liability insurance costs, but not raise their prices to cover their regulatory costs? After all, regulatory costs are much more predictable than liability costs.

The Weekly Standard correctly pins the culprit: strict product liability. American vaccine manufacturers have fallen by the wayside because trial lawyers have succeeded in driving them out of business.

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.

(William Tucker, “La Grippe of the Trial Lawyers”, Oct. 25; this site, Oct. 14, Dec. 23). If only the Discovery Institute could stick to its sound work on tort reform and give up its embarrassing support for creationism quackery, I wouldn’t be so reluctant to cite to an article by one of its fellows.

Filed under: product liability, vaccines