Liability Issues Related to COVID-19 Vaccine Manufacturing and Global Distribution

Liability Issues Related to COVID-19 Vaccine Manufacturing and Global Distribution

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August 19, 2021
Liability Issues Related to COVID-19 Vaccine Manufacturing
and Global Distribution
Background
World Health Organization (WHO) and Chubb Limited, an
In March 2021, the United States announced efforts to
insurance company, signed an agreement on behalf of
donate Coronavirus Disease 2019 (COVID-19) vaccines
COVAX—a multilateral initiative for global COVID-19
abroad. In many high-income countries, vaccines and other
vaccine distribution—to create a No-Fault Compensation
medical countermeasures are playing a critical role in
program for those who suffer serious adverse events
controlling the spread of COVID-19. Vaccine distribution
associated with a vaccine administered through COVAX.
efforts in low- and middle-income countries (LMICs) have
For more on COVAX, see CRS In Focus IF11796, Global
been comparatively slow for a variety of reasons, raising
COVID-19 Vaccine Distribution.
concerns about how inequities may hinder pandemic
In May 2021, the Task Force on COVID-19 Vaccines,
control. Some vaccine manufacturers and others willing to
Therapeutics, and Diagnostics for Developing Countries
donate COVID-19 vaccines are concerned about legal
(the Task Force), composed of the International Monetary
exposure should there be adverse health events arising from
Fund, the World Bank Group, WHO, and the World Trade
COVID-19 vaccination outside of the United States.
Organization, called for $50 billion in additional funding to
support efforts to vaccinate 40% of all eligible people
In several countries, legal liability issues have slowed
worldwide by the end of 2021. The Task Force cited
or entirely stalled vaccine roll-out.
liability issues and insufficient indemnification schemes as
among the primary obstacles to achieving this goal.
For example, U.S. government vaccine donations to India
reportedly remain in a Delhi warehouse because the Indian
According to COVAX, as of July 31, 2021, approximately
government has not agreed to indemnify vaccine
5% of COVID-19 vaccines that were pre-purchased by or
manufacturers for vaccine-related injuries. Only a relatively
for LMICs have been delivered to these countries. The Task
small percentage of the Indian population is fully
Force indicated that the resolution of liability issues and
vaccinated against COVID-19; donated doses could
negotiation of indemnification agreements through the No-
potentially increase vaccination rates in the country. This In
Fault Compensation Program might incentivize additional
Focus discusses potential liability issues that vaccine
donations to COVAX and mitigate acute near-term vaccine
manufacturers and donors may face, and options Congress
supply shortages.
might consider while deliberating vaccine distribution and
Methods of Limiting Liability
liability issues.
Manufacturers may secure legal protection through a
Vaccine Distribution and Liability
variety of means, including legislation and contracts (Table
Concerns
1). Some legislation provides immunity for manufacturers
Due to the novelty of the therapeutics used to control the
or creates no-fault compensation funds that may apply to
COVID-19 pandemic, liability insurance is generally
injuries related to vaccines. In addition, some governments
unavailable for COVID-19 vaccine manufacturers. Many
and manufacturers have negotiated agreements to address
pharmaceutical companies have expressed concern about
distribution of COVID-19 vaccines, which vary by country
the costs they may face from vaccine-related injury
and manufacturer. The relevant legal regimes involved may
litigation, with some preventing governments from
also vary depending on how vaccines are acquired and
exporting vaccines to other countries without liability and
distributed, whether via COVAX or through other channels.
indemnification agreements in place. In February 2021, the
Table 1. Classification of Liability Regimes
Type
Description
Examples
Immunity
Prevents entities from being held legally
- U.S.: Public Readiness and Emergency Preparedness (PREP) Act
liable and generally prevents individuals
- Philippines: COVID-19 Vaccination Programme Act
from receiving compensation
Indemnification Requires a government to compensate
- Contractual provision between the EU and AstraZeneca
entities for damages the entities owe to
- Contractual provision between the Dominican Republic and
injured individuals
Pfizer
No-fault
Individuals apply for compensation to a
- U.S.: National Vaccine Injury Compensation Program
compensation
fund, and no liability attaches to the entities - COVAX mechanism
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Liability Issues Related to COVID-19 Vaccine Manufacturing and Global Distribution
Source: Created by CRS.

Unlike distributions made via COVAX, arrangements
Liability Issues for Doses Delivered via COVAX
between governments and manufacturers are not part of a
To address liability and compensation issues related to
global legal regime that addresses vaccine manufacturers’
serious adverse events, COVAX created the No-Fault
potential liability. Instead, to limit their legal liability or
Compensation program. Through the program, individuals
financial responsibility, pharmaceutical companies
who sustain qualifying injuries after being vaccinated
generally have to rely on domestic immunity laws, no-fault
through COVAX may apply for compensation through a
compensation laws, or contractually negotiated provisions
centralized online portal. While their claims are pending,
(although not all companies have sought indemnification
individuals may not file claims in courts or other fora.
clauses in their contracts).
Applicants whose claims receive approval may obtain
Considerations for Congress
compensation from a centralized fund; if they accept the
compensation offered, they must agree not to pursue any
Some Members of Congress have raised questions about the
other claims in relation to the same vaccine-related injury.
variables affecting global distribution efforts for COVID-19
If an applicant’s claim is rejected, the individual may then
vaccines. Such questions include whether manufacturers
file a claim in a court or other forum. The Task Force hopes
can receive liability protection in the United States and
that the No-Fault Compensation program might avert a
abroad, and whether liability issues are restricting or
potentially burdensome caseload of COVID-19 vaccine-
delaying vaccine shipments. As described, there are
related claims, particularly in resource-limited countries.
international and bilateral efforts to address liability
concerns in place. Some stakeholders remain concerned
Although this arrangement seeks to balance concerns about
about whether countries receiving COVID-19 vaccines
liability and responsibility to injured parties, there remain
outside of COVAX will be able to cover future legal costs
some concerns within the international community about
they may incur under indemnification clauses.
claims settled outside of the COVAX program. In
Congress may consider a variety of actions related to these
particular, WHO has raised concerns about whether lower-
issues, including
income countries will be able to pay indemnification costs
owed to manufacturers under contracts or other agreements.
 whether to amend the PREP Act to address the scope of
COVAX is currently involved in ongoing discussions about
immunity provided to manufacturers for claims brought
the potential to provide loans to those countries through
in the United States (for more on the PREP Act, see
entities such as the Multilateral Investment Guarantee
CRS Legal Sidebar LSB10443, The PREP Act and
Agency, which is a member of the World Bank Group.
COVID-19: Limiting Liability for Medical
Countermeasures);
Vaccine Distribution in Humanitarian and Conflict
Settings. In March 2021, COVAX agreed to set aside 5%
 whether to authorize funds in future foreign assistance
of its vaccine doses to the COVAX Buffer for “high-risk
legislation to assist LMICs required to indemnify
groups in humanitarian settings,” recognizing these groups
vaccine manufacturers, or provide technical assistance
may be hard to reach. According to the United Nations, 167
to governments working on laws or agreements
million people are at risk of exclusion from COVID-19
addressing liability concerns;
vaccination. The majority of those at risk are in COVAX
Advanced Market Commitment (AMC)-eligible economies.
 whether to encourage the Biden Administration to
AMC is a financial mechanism used by Gavi, the Vaccine
engage in additional efforts, bilaterally or multilaterally,
Alliance, a multilateral public-private partnership that co-
to mobilize private investments, public-private
leads COVAX, to leverage high-income countries’ large-
partnerships, or other such agreements, to help countries
scale purchases of COVID-19 vaccines to assure LMIC
cover potential costs associated with indemnification
participation. However, roughly one-third of those in the
agreements; and
high-risk group reside in areas not covered by COVAX’s
No-Fault Compensation Program. Humanitarian
 whether to encourage the Administration to engage with
organizations have voiced concern about their ability to
other developed countries about how to contribute
administer vaccines because they cannot afford to shoulder
collectively to meet the financial needs of countries
the cost of indemnification agreements. COVAX is
required to indemnify manufacturers, potentially
reportedly in discussions with manufacturers to address
through the Task Force, World Bank, the Group of 7
these issues.
(G7), or Group of 20 (G20), to hasten the pace of
vaccine distribution.
Bilateral Agreements
Outside of COVAX, doses are exported and distributed to
Sara M. Tharakan, Analyst in Global Health and
recipient countries through several mechanisms. The United
International Development
States and other countries have donated vaccine doses on a
Nina M. Hart, Legislative Attorney
bilateral basis, and governments have purchased doses
IF11905
directly from manufacturers to be imported into their
territories.

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Liability Issues Related to COVID-19 Vaccine Manufacturing and Global Distribution

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