Indemnifying vaccines makes for a sick health system

If firms are shielded from cost of side effects, why should problems during trials worry them?

It is becoming increasingly clear that only a vaccine can bring us to a position of zero Covid. Flatting a curve does precisely that – lowers the numbers at any one time – but it cannot banish the virus.

The experience even in New Zealand is that the virus will return as a country reopens its economy and borders.

Pharmaceutical companies have been working flat out to develop a vaccine for Covid-19. Billions has been spent by dozens of companies to provide a solution to a health crisis that has dragged the world towards a historically deep recession and disrupted every element of society.

In doing so, timelines have been squeezed and regulators have worked at record pace to expedite clinical trials.


Now we hear that the European pharma industry vaccines lobby is pushing the EU to exempt drug companies from lawsuits if a vaccine leads to unexpected side effects. This is not unusual, we are told. It should be.

Pharma companies must make a return on investment in vaccines and other drugs. They are private companies, undertaking highly risky research in pursuit of cures or vaccines at great cost. The nature of such research is that it comes with no guarantee that a commercial product will ever emerge.

Profits on the successful drugs and vaccines need also to cover the cost of other, failed projects.


But indemnifying drug companies unravels the raison d’etre for the industry model. If companies are to be shielded from the cost of unanticipated side effects or other problems that emerge, why should they worry too much about addressing issues that arise during trials? Why should they ensure that trials are sufficiently robust to be confident that they will identify potential problems in the development phase?

As Ireland and others have learned with Pandemrix and swine flu, undue haste in vaccine development can have unintended and costly outcomes. Ireland Inc indemnified GlaxoSmithKline as part of the deal to secure supplies of Pandemrix: over a decade later it is now facing 100 cases relating to serious side effects from the vaccine.

In a world where vaccine sceptics, or anti-vaxxers, are becoming a growing issue for health policymakers, cutting corners to deliver potentially risky vaccines seems a curious own goal for health authorities and pharma companies. And paying market price when the buyer assumes all the downstream financial risk makes no financial sense.