A dose of reality: revisiting pharmaceutical manufacturer liability for an HIV vaccine.

• Author: Eisele, Erik Volker Ernst

1. INTRODUCTION II. BACKGROUND: HIV AND THE MANUFACTURING CONTEXT A. The Vaccine Production Process B. Research Partnerships III. THE LIABILITY CONTEXT A. Tort Liability in the United States IV. EXAMINATION AND CRITIQUE OF CURRENT PROPOSALS TO INCENTIVIZE MANUFACTURERS A. Push Programs B. ... Are Not Enough C. Pull Programs D. ... Are Also Not Enough V. FACTORS CONTRIBUTING TO A NEBULOUS LITIGATION ENVIRONMENT A. Size and Scope B. Flu Scare C. Forum non conveniens D. Scientific Difficulties E. Mass Immunization Context F. Regulatory Process VI. SOLUTIONS AND AN INTERNATIONAL COMPENSATION FUND VII. CONCLUSION "My fellow Americans, if the 21st Century is to be the century of biology, let us make an AIDS vaccine its first great triumph."

   --President Bill Clinton (1)

1. INTRODUCTION

   The importance of vaccines in improving public health cannot be overstated. According to the Centers for Disease Control and Prevention (CDC), vaccines are among the greatest public health achievements of the twentieth century, if not one of the greatest achievements ever. (2) Widespread use of vaccines has smashed morbidity and mortality rates associated with preventable infectious diseases such as polio, smallpox, and influenza. (3) Vaccines also account for substantial economic gains by reducing lost work time, enhancing productivity, and protecting the most valuable economic benefit of all--future workers. (4)

   Nevertheless, instead of rushing to produce and distribute vaccines for the good of mankind, pharmaceutical manufacturing companies fled the market to such a degree that today there are only five pharmaceutical manufacturers for the five basic vaccines recommended in the United States. (5) Furthermore, pharmaceutical companies have been slow to invest in research for vaccines that will not be rewarded with paying customers, thus largely excluding vaccines for diseases that primarily affect developing countries. (6)

   Unfortunately, the lackluster vaccine market has coincided with "one of the most formidable challenges to human life and dignity:" HIV/AIDS. (7) With an estimated 33.2 million individuals around the world living with HIV, (8) great hope is placed on the fact that an HIV vaccine (9) will be developed. It will. (10) But this is not the end of the struggle. (11) Once an HIV vaccine is developed, it must be produced, distributed, and properly administered. Since even the most fastidious scientific research will be unable to develop a perfect vaccine without any side effects, it is likely that the HIV vaccine will give rise to a certain unavoidable number of injuries and deaths. (12) These unfortunate consequences will inevitably give rise to a barrage of tort suits from injured vaccinees and the families of deceased vaccinees seeking compensation. (13) Neither "the elaborate testing and review procedures mandated by the FDA, [nor] the lure of profit, [nor] the dictates of urgent medical necessity" can overcome the concern about liability exposure. (14) Liability threatens manufacturers, and it threatens our public health. (15)

   While the world is not facing a liability crisis like it did in the 1980s, (16) this Comment argues that novel factors have emerged since then that make vaccine production and distribution so problematic that unless swift action is taken, an HIV vaccine, fully developed and effective, will sit unused in a science lab. The Author concludes that an International Compensation Fund is the crucial solution to ensure that manufacturers will produce an HIV vaccine in a time of uncertainty, while providing compensation for injured claimants.

   Part II of this Comment provides an overview of the HIV/AIDS epidemic and the vaccine market. Part III introduces the liability context that confronts vaccine manufacturers. Part IV presents and critiques the current proposals for incentivizing manufacturers. Part V analyzes the factors that contribute to a nebulous liability context. Part VI explores solutions to the liability crisis and advocates the creation of an International Compensation Fund. Part VII concludes and advocates that immediate action be taken.

2. BACKGROUND: HIV AND THE MANUFACTURING CONTEXT

   It has been over twenty years since the HIV virus was first identified and nearly as long since a vaccine has been promised. (17) An astounding 4.3 million people became infected with HIV in 2006, while some 2.9 million died of AIDS in 2006. (18) An overwhelming majority (95%) of those newly infected live in developing countries, most especially in sub-Saharan Africa, South Asia, and the former Soviet republics. (19) In sub-Saharan Africa, women aged 15-24 are disproportionately affected by HIV/AIDS, (20) and children suffer both from the infection itself and the loss of one or both parents. (21)

   Despite the gravity of the epidemic, only 24% of people in developing countries, or 1.6 million individuals, were being treated for HIV/AIDS as of June 2006. (22) While the percentage of those being treated in sub-Saharan Africa rose from 2% in 2003 to 23% in 2006, the region still hosts 70% of unmet treatment in the developing world. (23) There are numerous difficulties burdening the treatment process, including high cost, the requirement of taking a multi-drug cocktail every day, lack of infrastructure, and the stigma of having HIV/AIDS. (24) The need for an HIV vaccine is clear: it offers the best hope for those at risk of infection and the community as a whole. (25) Developing a vaccine, however, is no easy task.

   First and foremost, the scientific obstacles are daunting and have largely thwarted research efforts until now. (26) Second, the HIV clade (27) most prevalent in the developed countries is not the same clade that is most prevalent in sub-Saharan Africa and much of the developing world. (28) Consequently, most of the vaccine research has focused on the clades most prevalent in developed countries, despite the greater need elsewhere. (29) This is problematic because any successful HIV vaccine for developing countries must "be appropriate for use in those environments" and thus must involve scientists and policymakers in the developing countries. (30)

   Third, the global market for vaccines is simply too small to draw significant interest from large pharmaceutical manufacturers: the $6 billion annual revenues from vaccines represent a mere 1.5% of the $535 billion global pharmaceutical market. (31) Ironically, vaccine sales are destined to remain only a tiny fraction of the market because of the very benefit they seek to confer: prevention, not treatment. (32) Many drugs serve a repeat--even lifetime--market, but vaccines are only administered once or a handful of times, thus limiting their potential to reap economic rewards. (33)

   1. The Vaccine Production Process

      A larger market, though more attractive financially, would not necessarily make vaccine development any easier because of the inherent difficulties in the research and development process. (34) Funding and investment are hard to come by, government regulations are nightmarishly complex, and bulk purchases by governments depress the sales price such that the value of vaccines is underappreciated. (35)

      Still, the greatest barrier to entry is the incredibly high cost involved. (36) It costs an estimated $800 million to bring a single vaccine to market, excluding the marginal production costs of additional doses and the costs of continued compliance and monitoring. (37) Three main factors contribute to the high and rising costs of research and development. (38) First, the inputs--including scientists, capital equipment, and animal and clinical trials--are highly technical, highly specialized, and thus highly expensive. (39) Second, the regulatory process involves stringent requirements that lead to high failure rates: only one in five products reaching the phase of clinical testing in humans is approved by the FDA. (40) Third, the opportunity cost of capital during the investment period is incorporated into the cost figures. (41) The process is not only incredibly costly but also lengthy: it takes an astounding thirty-five years or more for two-thirds or less of the individuals in developing countries to receive a vaccine. (42)

      Nonetheless, the basic paradigm of vaccine development has begun to shift in favor of increased participation by developing countries. (43) While most of the pharmaceutical research, development, and production in the past took place in the United States, the European Union, and Japan--a paradigm that has arguably "served the process of product development well"--many developing countries, notably Brazil, India, and Singapore, are "initiating a new wave of fundamental research institutions." (44)

   2. Research Partnerships

      Research investment comes from both the public and private sectors. (45) Public sector research largely focuses on basic research that advances understanding of underlying diseases. (46) Some of the largest research efforts to date have been government-funded, including the National Institute of Health's record $620 million 2007 budget for HIV vaccine research. (47) In fact, George W. Bush's President's Emergency Plan for AIDS Relief (PEPFAR) represents the "largest commitment ever by any nation for an international health initiative dedicated to a single disease." (48) Public sector research, however, is less likely to result in a marketable product, such as a vaccine, because of the emphasis on basic, not product-specific, research. (49)

      In contrast, private sector research is much more disease-specific and focuses narrowly on developing a product. (50) Pharmaceutical companies are much more likely, and generally better suited financially, to develop a vaccine; however, unlike the government, they must provide a competitive return to their shareholders and investors. (51) To this end, pharmaceutical companies focus on satisfying the paying market in developed countries. (52)

      Developing countries will...