Pandemics and profits

Anne McMillanFriday 24 September 2021

​​​​​​​Governments around the world have invested billions of public funds with pharmaceutical companies to swiftly develop extensive vaccination programmes. As revenues mount, Global Insight assesses issues relating to liability, accountability and transparency.

How many people waiting in a queue for a Covid-19 vaccine have paused to consider what might happen in the extremely unlikely event that they suffered a serious injury from the injection? Who would pay the medical costs? What if they couldn’t work? How would they support their families?

Vaccines, like all drugs, carry risks of side effects, and very occasionally these are serious. Without sufficient public knowledge of compensation for serious vaccine injuries, there is not only a possible disincentive to get vaccinated, but also an increased risk of inadequate compensation schemes.

However, knowing that a generous ‘no fault’ government compensation programme exists as a safety net may be just what is needed to inspire increased confidence in Covid-19 vaccines.

Peter Todd is a UK vaccine injury lawyer. ‘If there was a package of generous support/compensation for very rare serious adverse reactions to vaccines in the UK I think this would decrease hesitancy’, he says.

Governments may fear that drawing attention to the extremely slim chance of suffering serious injury from a Covid-19 vaccine will discourage take-up of the vaccine and threaten the aim of achieving herd immunity. On the other hand, those opposed to vaccination may view any lack of transparency on potential vaccine issues as evidence that government information cannot be trusted.

In this context, a 2010 Resolution of the Parliamentary Assembly of the Council of Europe, concerning the 2009 swine flu pandemic now sounds prescient: ‘Lack of transparency and accountability will result in a drop in confidence in the advice given by major public health institutions. This may prove disastrous in the case of a next disease or pandemic, the scope of which may turn out to be much more severe than H1N1 influenza.’

Transparency International and the University of Toronto revealed in a joint study published this year that only 13 out of 183 contracts for Covid vaccines between pharmaceutical companies and buyers/suppliers have been made public. Two of these were leaked and of the 11 formally published contracts, ten contained a high number of redactions. So, what can be gleaned from these contracts about payment in the rare cases of serious vaccine injury?

Who pays and how do we know?

The supply contracts of several major vaccine companies, like Pfizer-BioNTech and Moderna, that have been published contain extensive liability waivers (which have also been partly redacted). Sources, some governmental, which are largely anonymous due to confidentiality clauses surrounding the negotiations and contracts, suggest that these waivers also exist in many of the unpublished contracts. Such clauses require governments to pay indemnities to the vaccine companies if they are sued for injury.

Dr Markus Beham, the IBA Human Rights Law Committee’s European Regional Forum Liaison Officer, questions whether such an extensive shifting of the risk away from companies weakens accountability. ‘Liability regimes are a policy instrument that goes beyond the mere question of compensation’, he says. ‘While it is true that corporations stand under greater pressure to perform, blanket waivers might lead to more rash decisions [by the companies] that would otherwise not have been made […] In balancing the necessity to quickly produce vaccines and medication, it may prove a useful policy tool. However, more nuanced approaches may be warranted.’

While it is true that corporations stand under greater pressure to perform, blanket waivers might lead to more rash decisions

Dr Markus Beham
European Regional Forum Liaison Officer, IBA Human Rights Committee

The counter argument to the proposition that such waivers create a liability shield for pharmaceutical companies is that, without such governmental protection, the companies would not have been willing to accept the increased financial risk of rapidly developing Covid vaccines, given the potential for widespread damage claims.

But did the drug companies really take major risks? Exact figures vary, but it is clear from all estimates that larger amounts of public money also went into vaccine development, including preclinical development and clinical trials, which allowed companies to produce Covid vaccines at such speed.

The Global Health Center estimated that public investment in Covid-19 vaccines (including advance purchase deals) exceeded $50bn. Moderna, Johnson & Johnson, Pfizer-BioNTech, CureVac and the University of Oxford/AstraZeneca partnership were major recipients of research and development funding.

Advance Purchase Agreements, which guarantee fixed prices before effective vaccines have even been developed, are another common way market risk has been minimised for companies. And in some instances, public investment in research had been going on for several years even before the pandemic began, such as with the mRNA technology used in the Pfizer and Moderna Covid vaccines.

Large sums of taxpayer money went into the coffers of pharmaceutical companies to create Covid vaccines. According to an Oxfam analysis of Forbes’ ‘The World’s Billionaires for 2021’, Covid vaccine development has created nine new billionaires. These include the CEOs of BioNTech and Moderna, along with others associated with the major Covid vaccine developers. An additional eight existing billionaires saw their combined wealth increase by $32.2bn due to Covid vaccine development.

Eleonora Rajneri is a Member of the Expert Group on Product Liability at the European Commission and Professor of Private Law at the University of Eastern Piedmont. ‘On one hand’, she says, ‘you have the privatisation of profit, all of the profit, from Covid vaccines – and we are not talking about profits which are derived from a competitive market, but profits which are being facilitated by patent law. On the other hand, all of the risk has been transferred to the public sector and, in the final analysis, the cost is being borne by the public’.

On one hand, you have the privatisation of profit […] on the other hand, all of the risk has been transferred to the public sector and the cost is being born by the public

Eleonora Rajneri
Member of the Expert Group on Product Liability, European Commission

Could the cost have been spread more widely, if not in research, then at least in compensation? Probably yes. For example, compensation for Covid-19 vaccine injury programmes in Finland and Sweden are backed by ‘insurance funds’, which are in turn paid for by voluntary contributions from drug companies. The involvement of Chubb, a global insurance company, in the World Health Organization (WHO)/COVAX compensation programmes is another example. As Anne Buhl Bjelke, Co-Chair of the IBA Insurance Committee says, it should not, to her knowledge, be more difficult to obtain insurance for injury from vaccines than other drugs. It also seems that as Covid vaccines are rolled out globally, and certain serious side effects are identified as rare, insurance would become cheaper.

‘Generally, when the risks associated with a particular drug or vaccine becomes more known the insurance premium tends to be affected accordingly’, says Buhl Bjelke.

For pharmaceutical companies, it seems to have been, and remains, a ‘win-win’ situation –governments fund the research, guarantee to buy the product at an agreed price, and if something goes wrong, the governments pay again. But is it necessary for public money to cushion the risk to pharmaceutical companies from every angle like this?

Vaccine compensation

Broadly speaking, there are three approaches to vaccine compensation. It is provided by governments only on a ‘no fault’ basis (with or without an option to sue in the courts being available additionally). There are hybrid systems, where a government compensation programme is funded (or complemented) by pharmaceutical companies. Finally, where there is no government compensation programme, the only option may be to take legal action.

According to a 2021 report by the Library and Research Service, Vaccine Injury Compensation Programmes: An Overview, there are 25 such ‘no fault’ programmes globally covering Covid-19 vaccine injury (either by expansion of existing programmes or creation of a new dedicated programme). The majority are in Europe, with a handful in Asia, Canada and the US.

The WHO/COVAX initiative has set up the first ever compensation programme of its kind to cover the 92 low and middle-income countries eligible to benefit from vaccines supplied via its programme. The WHO has not sought financial contributions from Covid-19 vaccine producers to the programme.

National self-interest?

Why did governments agree to such generous terms for the pharmaceutical companies, particularly as many contracts were negotiated before effective vaccines had been developed?

Perhaps the answer lies partly in the competitive rush by governments to secure vaccines for their own citizens, but it is difficult to determine exactly why this happened, due to the secrecy surrounding Covid-19 vaccine negotiations and contracts. In the context of accountability for the billions of taxpayer money spent, it is not clear why entire contracts need to be kept under wraps.

The phrase ‘commercial sensitivity’ is often used to justify non-publication or redaction of the contracts. The Centre for Global Development’s (CGD) Principles on Commercial Transparency in Public Contracts states that: ‘Information should only be redacted for reasons of commercial sensitivity when the public interest in withholding information is greater than the public interest in disclosure.’

And it is not only government contracts that lack transparency. The WHO/COVAX agreements with Covid vaccine suppliers under the vaccine compensation programme have also not been published, nor has the agreement with Chubb, the insurance company supporting the programme.

Redactions can be made where necessary but, as the CGD principles state, there should be a clear process to determine what is redacted, why, and for how long, with an appeal possible.

Rights signed away

Thus under arrangements which are often unclear, governments have restricted the options available to citizens with a grievance against pharmaceutical companies. Can governments sign away, or limit, our legal rights to sue for damages in this way? Is there any recourse in national constitutions or under international human rights law?

The answer depends on the situation in individual countries and would involve detailed scrutiny of the Covid-19 vaccine supply contracts, possible compensation programmes, as well as national and international law. Beham refers to rights granted under the European Convention on Human Rights, which may be relevant:

‘The argument would have to be made that such blanket exceptions are either unconstitutional or violate the – international human – right to life or the right to a fair trial and an effective remedy. The right to life includes a duty to ensure that might be impaired by loosening the regulatory framework surrounding pharmaceutical companies. As to the question of a fair trial or an effective remedy, it must be borne in mind that fundamental and human rights are owed by the state, but in principle not by individuals or corporations. By granting immunity, the state may be found to have engaged in discriminatory conduct or failing to provide alternative redress. As to funds put in place, the fact that these are fed by tax payers’ money will have to be considered.’

The UK scheme, for example, offers a fixed, one-off payment of £120,000 – no more, no less – and requires proof of a 60 per cent disability arising from the vaccine. Considering this fixed figure thus represents an absolute maximum, regardless of the severity of injury (or even death), it seems ungenerous at best. To a person disabled for life it would seem paltry. This is particularly so when compared to the amounts available under European or US vaccination compensation programmes, or the level of damages which might be expected to flow from successful court action.

Legal systems however, have often proved ill-adapted to compensating for vaccine injuries. Showing a link between a serious injury and a vaccine that meets the required standard of proof in court (either in negligence or under product liability law) is frequently unachievable. Todd encapsulates the problem of suing under product liability legislation in the UK.

‘In the case of Covid’, he says, ‘where there is a devastating dangerous virus which has killed tens of thousands in the UK, such claims are much more difficult because the reasonable safety of a product has to be judged based on the benefits to be obtained from it. Here the benefits of the vaccine are significant in reducing deaths and serious injuries. All medicines including vaccines contain risks of adverse effects so the mere fact an adverse effect occurs does not make the medicine/vaccine defective’.

I would happily give up the right to sue manufacturers for a decent government compensation scheme

Peter Todd
UK vaccine injury lawyer

Given such hurdles, claiming under a vaccine compensation programme, eschewing court action in exchange for a quick resolution and a decent payout for vaccine injury, seems a reasonable trade-off. But the amount awarded must adequately reflect the loss. It should also, ideally, be sufficient to dissuade victims from resorting to the legal system in addition to, or instead of, using the programme (should this be possible under national law).

‘I would happily give up the right to sue manufacturers for a decent government compensation scheme’, says Todd.

If vaccine compensation schemes are currently the most practical and effective way to support the vaccine-injured, then they must be transparent, properly funded and offer fair compensation. And it is hard to justify why this funding should come solely from the taxpayer who has also partially funded the vaccine development.

‘To require a contribution from pharmaceutical companies towards compensation funds may be a way to rebalance a system in which the division between privatisation of profit and the burden of risk is unfairly skewed’, says Rajneri.

We have much cause to be grateful to those hard working and innovative scientists, and others, who helped to develop crucial life-saving vaccines against Covid-19. However, many of these people did not profit at all from their efforts. This pandemic seems to offer an opportune moment to examine more closely the enormous profits generated for certain vaccine developers and to restore transparency, accountability and, hopefully, increased public confidence in the safety of the vaccine programmes.

Anne McMillan is a freelance journalist and author. She can be contacted at

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