PLF Meeting: Emergency Vaccines and Liability January 15, 2010

1. PLF Meeting: Emergency Vaccines and LiabilityJanuary 15, 2010 Jeff Bucholtz 202-626-2907 jbucholtz@kslaw.com Ami Patel 202-626-9257 appatel@kslaw.com

2. Public Readiness and Emergency Preparedness Act (PREP Act)42 U.S.C. § 247d-6dPub. L. No. 109-148 (2005)

3. PREP Act Enactment • Enacted in December 2005, spurred by fears of avian flu (H5N1) • Designed to encourage the production of vaccines and other countermeasures to pandemics • Added as a rider to a Department of Defense appropriations bill • “Although I support the Defense bill as passed, I do not support the Emergency Preparedness Act. This section was added at the last minute. And it only passed because all of us in the Senate wanted to provide support for our troops.” -- Senator Max Baucus, Dec. 22, 2005

4. PREP Act Provisions • Authorizes Secretary of Health and Human Services (HHS) to provide “covered persons” with broad protection from liability for claims arising from the use of countermeasures against diseases, threats, and conditions determined by the Secretary to constitute risks to the public health • Authorizes a “Covered Countermeasures Process Fund” to provide compensation to eligible individuals who suffer from specified injuries from the administration or use of a covered countermeasure • Covered persons: • The United States, • A manufacturer of countermeasures, • A distributor of countermeasures, • A “program planner,” • An individual qualified to prescribe, administer, or dispense countermeasures, or • An official, agent, or employee of any manufacturer, distributor, program planner, or qualified individual

5. PREP Act Provisions • PREP Act is activated by a declaration from the Secretary of HHS, which specifies: • The diseases, health conditions, or health threats for which countermeasures are recommended • The effective time period • The population of individuals receiving the countermeasure, • The geographic scope of administration and use of the countermeasure, within which program planners and qualified persons are immune from liability • Limitations (if any) on the means of distribution • Additional persons, if any, qualified to prescribe, dispense, or administer the countermeasures • Secretary shall consider the “desirability of encouraging the design, development, clinical testing or investigation, manufacture, labeling, distribution, formulation, packaging, marketing, promotion, sale, purchase, donation, dispensing, prescribing, administration, licensing, and use of such countermeasure” when determining whether to issue a declaration

6. PREP Act Provisions Limits on immunity from liability • PREP Act does not provide immunity from liability for: • Claims of death or serious physical injury caused by “willful misconduct” • Claims based on activities outside of the scope of the Secretary’s declaration • Claims not related to the administration or use of a covered countermeasure • Claims filed under foreign law in courts outside of the United States

7. PREP Act: Willful Misconduct • Plaintiff bears the burden of proving willful misconduct by clear and convincing evidence • A program planner or qualified person has not engaged in “willful misconduct” if he or she: • acted consistent with applicable directions, guidelines, or recommendations by the Secretary of HHS regarding the administration or use of the covered countermeasure; and • notified the Secretary of HHS or a state or local health authority of the serious injury or death within 7 days of discovering the act or omission in question • An act or omission that is subject to FDA regulation does not constitute willful misconduct if • neither the Secretary of HHS nor the Attorney General has initiated an enforcement action with respect to the act or omission; or • such an enforcement action has been initiated and did not result in a final determination by a court in government’s favor or an adverse final agency action against the regulated entity

8. PREP Act: Compensation Structure • Covered Countermeasures Injury Table • PREP Act calls for the Secretary of HHS to establish a table identifying covered injuries that are presumed to be directly caused by the administration or use of a covered countermeasure • No table for any covered countermeasures under the PREP Act has yet been established • PREP Act establishes the Covered Countermeasures Process Fund, which is designed to provide “timely, uniform and adequate compensation to eligible individuals for covered injuries directly caused by the administration or use of a covered countermeasure” • “As our experience with the asbestos litigation teaches us, there is always great interest in the level of compensation injured citizens may receive, especially if they give up their possible tort remedies.” -- Senator Orrin Hatch, Dec. 21, 2005 • Fund is to consist of amounts to be designated by future emergency appropriations

9. PREP Act: Compensation Structure • “The real question of compensation as part of liability is being addressed. And I personally believe that we need to have a fast and a fair and an equitable compensation [program to accompany]liability issues. And we’re addressing that over the next couple days.” • Senator Bill Frist, Remarks at the National Press Club on the Economic Impact of Flu Pandemic, Dec. 8, 2005 • “The provision now includes a fig leaf of a compensation program - but it’s a compensation fund with no funding. There is no guarantee that any victim of a faulty or negligently made drug or vaccine will receive any compensation whatsoever.” • Senator Ted Kennedy, Statement on Pandemic Flu Funding/Liability on Dept. of Defense Appropriations, Dec. 17, 2005

10. PREP Act: Compensation Structure • Countermeasures Injury Compensation Program (CICP) was established by HHS to administer the compensation program • Provides compensation for out-of-pocket medical expenses, lost employment income, and survivor death benefits • Individuals must request compensation within one year from the date the vaccine or other covered countermeasure was administered • An individual who chooses to accept compensation for a covered injury may not pursue litigation against any covered person • To request compensation, individuals may send a letter to the Health Resources and Services Administration (HRSA) with details regarding the covered countermeasure, including its dosage and the circumstances of its administration • No money has been appropriated to the Countermeasures Injury Compensation Program yet

11. PREP Act in Perspective

12. The National Swine Flu Immunization Program of 1976 (Swine Flu Act) • January 1976: Four cases of swine flu were identified in New Jersey • The U.S. government, fearing a pandemic on the scale of the 1918 Influenza Pandemic, initiated a massive vaccination program • Insurance companies announced they would end coverage for vaccine manufacturers in June 1976, prompting Congress to pass the Swine Flu Act in August 1976 • Under the Swine Flu Act, the United States assumed the liability for manufacturers, distributors, and dispensers • Injured individuals could pursue a suit against the government under the Federal Tort Claims Act after filing an administrative claim • Plaintiffs could recover unlimited compensatory damages

13. The National Swine Flu Immunization Program of 1976 (Swine Flu Act) • Several hundred cases of Guillain-Barré Syndrome were reported by people who had received the swine flu vaccine; more than 30 people died from Guillain-Barré Syndrome • “In the Swine Flu Program, the Federal Government, in an unprecedented effort, actively urged millions of Americans to get flu vaccination shots and funded the nationwide campaign. Thus we have decided to provide just compensation for those who contracted Guillain-Barré as a result of the Swine Flu program rather than force many individuals to prove government negligence in protracted proceedings.” -- Statement by Secretary of Health, Education, and Welfare (now HHS) Joseph Califano, June 20, 1978 • By 1985, the government had paid an estimated $90 million in judgments and settlements under the Swine Flu Act

14. National Vaccine Injury Compensation Program • Congress passed the Vaccine Act in 1986 to protect vaccine manufacturers from increasing litigation • The Vaccine Act established the National Vaccine Injury Compensation Program • A person alleging a vaccine-related injury can obtain compensation by filing a petition with the Vaccine Court. Claimant does not need to show fault or, in many cases, causation • Claimants can recover medical expenses, lost wages, and reasonable attorney’s fees • Recovery for pain and suffering is capped at $250,000 • A petitioner may reject the Vaccine Court’s judgment, or opt out of Vaccine Court after a period of time and then bring a tort action under state law

15. National Vaccine Injury Compensation Program • Vaccine Injury Table established by HHS provides list of vaccines covered, common adverse events, and the time frame within which those injuries must have occurred • Vaccine Injury Table creates a presumption of causation • Vaccine Act Section 22(b) • Vaccine manufacturers are immune from liability for damages associated with the administration of a vaccine after Oct. 1, 1988 “if the injury or death resulted from side effects that were unavoidable even though the vaccine was properly prepared and was accompanied by proper directions and warnings.” • If the manufacturer shows that it complied in all material respects with the requirements of the FDCA and PHSA §351, the vaccine will be presumed to be accompanied by proper directions and warnings • Until recently, Section 22(b) had been interpreted as a bar to state law design defect claims

16. National Vaccine Injury Compensation Program U.S. Supreme Court may consider Vaccine Act preemption • In American Home Products Corp. v. Ferrari, the Georgia Supreme Court held that the Vaccine Act: “does not [preempt] all design defect claims, but instead provides that a vaccine manufacturer cannot be held liable for defective design if it is determined on a case-by-case basis that the injurious side effects of the particular vaccine were unavoidable.” • In response to defendant’s cert. petition in Ferrari, the U.S. Supreme Court called for the views of the Solicitor General (U.S. No. 08-1120) • In Bruesewitz v. Wyeth, Inc., the Third Circuit rejected Ferrari and held that the Vaccine Act expressly preempted both strict liability and negligent design defect claims. Plaintiff filed cert. petition (U.S. No. 09-152), so the U.S. Supreme Court could take either, both, or neither case

17. Smallpox Emergency Personnel Protection Act of 2003 (SEPPA) • Fearing an outbreak of smallpox in the wake of September 11, the federal government attempted to vaccinate 500,000 first responders • In the initial 2002 program, the federal government assumed the liability of all covered parties, as in the 1976 Swine Flu Act • Injured persons would be compensated only if they could prove negligent conduct caused the injury • SEPPA was passed on April 30, 2003 • No-fault compensation program for individuals injured by the smallpox vaccine designed to encourage first responders to be willing to get vaccinated • Provided medical benefits, death benefits, and lost income benefits • More stringent caps on employment and death benefits than those provided under the VICP

18. Smallpox Emergency Personnel Protection Act of 2003 (SEPPA) • Smallpox Vaccine Injury Table lists injuries and the time intervals for manifestation of the injury • Incorporates elements of the Public Safety Officers’ Benefits Program • Initiative to vaccinate 500,000 first responders did not succeed: By July 2004, fewer than 40,000 first responders had received the smallpox vaccine

19. PREP Act in Context PREP Act draws upon prior liability and compensation regimes • Protects vaccine manufacturers, distributors and dispensers from liability, similar to Swine Flu Act of 1976, VICP • But PREP Act liability protection is broader because only suits for claims of death or serious physical injury caused by willful misconduct are carved out • U.S. Government less likely to assume liability (FTCA model) after the large settlements and awards arising from the Swine Flu Act of 1976 • Incorporates no-fault compensation similar to VICP and SEPPA • But no funding for compensation program yet • No injury table yet

20. PREP Act Implementation

21. PREP Act Implementation: Swine Flu • April 26, 2009: HHS Secretary Kathleen Sebelius issued H1N1 (Swine Flu) Declaration for Countermeasures • Amendment to the Pandemic Antiviral Countermeasures Declaration (originally issued in Oct. 2008), maintaining the same: • Covered countermeasures: Influenza antiviral drugs Tamiflu and Zanamivir • Effective time period: Oct. 10, 2008 (date of declaration) - Dec. 31, 2015 • Population: All persons who use a covered countermeasure or to whom a covered countermeasure is administered in accordance with the declaration • Geographic area: No geographic limitations • Other qualified persons: • Any person authorized in accordance with a public health and medical emergency response of the authority having jurisdiction to prescribe, administer, deliver, distribute or dispense covered countermeasures, and their officials, agents, employees, contractors and volunteers; and • Any person authorized to prescribe, administer, or dispense covered countermeasures or who is otherwise authorized under an Emergency Use Authorization. • Category of Disease was amended to include H1N1: • The threat of or actual human influenza that results from the infection of humans with highly pathogenic avian H5N1 influenza A viruses or other animal influenza A viruses (including, but not limited to, H1N1 swine influenza) that are, or may be capable of developing into, a pandemic strain

22. PREP Act Implementation: Swine Flu • June 15, 2009: Secretary Sebelius issued declaration for Swine Flu vaccine • Amendment to Avian Flu Vaccine Declaration (issued in Jan. 2007) • Covered countermeasures: influenza A H5N1, H2, H6, H7, H9, and 2009 H1N1 vaccines and any associated adjuvants • Effective time period: June 15, 2009 - March 31, 2013 • Population: All persons who use a covered countermeasure or to whom a covered countermeasure is administered: • (1) as an investigational new drug in a human clinical trial or pursuant to a contract, grant, or cooperative agreement with the government; • (2) in a pre-pandemic phase; and/or • (3) in a pandemic phase • July 2009: Obama administration stated that 80-120 million doses of the Swine Flu vaccine would be available by October • October 2009: Only 16.5 million doses were available • Growth of the virus in chicken eggs was slower than anticipated

23. PREP Act Implementation: Other Threats • Jan. 2007: H5N1 (Avian Flu) Pandemic Influenza Vaccine Declaration • Oct. 2008: Anthrax Countermeasures Declaration • Oct. 2008: Botulism Countermeasures Declaration • Oct. 2008: Pandemic Antiviral Countermeasures Declaration • Oct. 2008: Smallpox Countermeasures Declaration • Oct. 2008: Acute Radiation Syndrome Countermeasures Declaration • April 2009: Amendment to Pandemic Antiviral Countermeasures Declaration to Add H1N1 Countermeasures • June 2009: H5N1 (Avian Flu) Pandemic Influenza Vaccine Declaration to Add H1N1 Vaccine

24. PREP Act: Effects and Implications • How much liability protection is necessary to keep vaccine manufacturers in the market and encourage new entry and investment? • Patent concerns and uncertain markets may be significant deterrents as well as potential tort litigation • Developments in the vaccine manufacturing process • Tissue culture cell lines to incubate viruses instead of chicken eggs (approved in Europe) • Adjuvants to boost immune response (approved in Europe, not yet approved by the U.S. FDA) • Reverse genetics to insert spliced genes into pieces of DNA (still in development) • Effect on vaccine production for other threats and diseases • May be too soon to determine whether PREP Act has encouraged advancements and investment in the development of vaccines and other countermeasures

25. Unresolved Questions

26. Willful Misconduct • PREP Act carve-out for willful misconduct is novel • Whether it provides any remedy for injured claimants will depend on government enforcement action • No judicial or regulatory interpretation so far • In addition to the narrow definition of willful misconduct, claimants must follow strict procedural requirements • Due process concerns? • Some commentators have suggested that a failure to fund the CICP deprives injured claimants of their right to a remedy

27. Compensation • No real implementation yet • No funding appropriated to Countermeasures Injury Compensation Program • No injury compensation table promulgated by HHS • HHS Secretary is given vast discretion under the PREP Act • Who should receive compensation • How much compensation should be received by claimants • The procedures for reviewing and deciding claims

28. Compensation • Will broad liability protection be politically viable without corresponding compensation programs? • When the threat of a pandemic is more obvious than the risks associated with the countermeasure, compensation may not be necessary to encourage people to get the countermeasure (Swine Flu 2009) • When the risks associated with the countermeasure seem higher and the threat seems more unlikely, a voluntary vaccination program may not succeed without a compensation fund (SEPPA) • Should compensation be provided as a matter of fairness only if the government compels people to take a given countermeasure?

29. VICP as a Possible Model for PREP Act Compensation • Reliance on Injury Tables to determine causation and eligibility for compensation makes VICP relatively speedy and non-adversarial, at least for Table claims • “Non-Table claims” are much more controversial and require far more resources to adjudicate • Provision of unlimited compensation for medical care but only strictly limited amounts for pain and suffering

30. Thank you202-626-2907jbucholtz@kslaw.com