Liability and Protection of Vaccine Manufacturers: International Experience and Georgian Perspective

The release of the COVID-19 vaccine has been topping the list of the most anticipated events this year. Considering the global damage that the pandemic has inflicted, international community agrees on the urgency of the vaccine. As of December 2020, more than 190 vaccines have been reported at various stages of clinical evaluations. Out of these, pharmaceutical company Pfizer and Moderna were among the first to cross the finish line and to conclude purchase agreements with multiple countries, including the Advance Purchase Agreement with the European Union (EU).

As the timeline of vaccination trials has decreased from 10 years to 11 months and the large number of people will be vaccinated, pharmaceutical companies have been especially keen on requesting indemnity from the governments. Due to the economic damage, the pandemic has caused, most states have been inclined towards providing such indemnity. Once the vaccines are supplied to Georgia it is highly likely that manufacturers will require the same guarantees that they have received in other jurisdictions where the vaccination programmes have already been launched. The mechanics of providing indemnities are varied depending on the legislation of the country and the contractual framework of supplying the vaccines.

United Kingdom

The United Kingdom (UK) has already provided Pfizer and Moderna with a statutory indemnity that shields these manufacturers from the potential civil claims brought by the general public. The statutory indemnity was implemented on the basis of Human Medicines Regulations 2012 (HMR), that pertains to the use of the pharmaceutical products in the UK. Regulation 174 of the HMR (Regulation 174) was exploited as a basis for the introduction of an unlicensed vaccine and Regulation 345 of the HMR (Regulation 345) was amended to allow for such statutory indemnity.

Limitation of Manufacturer’s Liability

In the UK, multiple legislative sources establish a manufacturer’s civil liability for products and, therefore, are applicable to COVID-19 vaccine manufacturers as well.

In order to indemnify COVID-19 manufacturers, the UK has provided immunity from civil liability through the amendments to Regulation 345. This means that in case the sale of the vaccine is authorized by the government, manufacturers, sellers or any other relevant parties will not be liable for the potential damages arising from the use of the product. Nevertheless, this provision should not be construed as an absolute protection for manufacturers. As specified in the Regulation 345, a manufacturer may still be subject to civil liability for the vaccine side effects and its consequences under Section 2 of the Consumer Protection Act 1987 (CPA), if it were to be established that the safety of the product did not coincide with general expectations. Under the CPA requirements, manufacturers like Pfizer will have to prove that the product has been tested with the highest applicable scientific standards during which purported defect was not encountered. Since specific criteria in terms of the COVID-19 vaccine safety standards have not been legislated, in case of dispute the courts will have to interpret the scope of manufacturers’ liability. Notably, the CPA will not be applicable if standard vaccine-related side effects are present or the product merely fails to work. In summary, a vaccine manufacturer could be liable in case the vaccine produces significantly greater side effects than generally expected.

Alternative Routes for Compensation

Apart from limiting the scope of liability, the COVID-19 vaccine has also been included in the state funded compensation package commonly known as Vaccine Damage Payments Scheme (VDPS). If the causal link between the usage of the COVID-19 vaccine and the disability is established, VDPS will allow for a one-time compensation of tax free 120,000 British Pounds to anyone who suffers severe disability due to the vaccine (at least 60% disabled).

US

Similar to the UK, the US law allows for the so-called Emergency Use Authorization (EUA). Section 564 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) provides for the use and sale of an unapproved medical product in cases when public health emergencies call for it and no alternatives are found. EUA itself does not limit manufacturers’ liability. For this, the US government relies on Public Readiness and Emergency Preparedness (PREP) Act. Within the framework of the PREP Act, COVID-19 manufacturers have a complete immunity unless cases of wilful misconduct are established. Under the PREP Act, in the last decade, the interested parties (including manufacturers) were found liable only in 6% (six per cent) of the cases.

Liability Regime under Georgian Law

Georgian legislation envisages both general and specific provisions that may potentially apply to the responsibility and indemnification of vaccine manufacturers.

General Provisions Relating to Potential Liability of Manufacturers

Potential grounds for bringing a claim against vaccine manufacturers can be found in the tort law provisions of the Georgian Civil Code. In these cases, it is accepted that claimants, i.e. those that have suffered from the vaccine will have to prove that such damage has been incurred as a result of the pharmaceutical company’s unlawful, intentional or negligent actions. Claimants will have to show a quantifiable damage to their health and may potentially seek compensation of moral damages as well.

Special Liability Regime for Pharmaceutical Products

In Georgia, the sale of pharmaceutical products as well as the allocation of responsibility for their safety is regulated by the Law of Georgia on Medicines and Pharmaceutical Activities (the MPA Law). Article 371 of the MPA Law provides the legal ground of liability in relation to safety and quality of pharmaceutical products authorized for use on the Georgian market. Article 371 of the MPA Law differentiates between two registration regimes of pharmaceutical products in Georgia: (1) Recognition Regime (applicable when the product is already licensed in another country and registration occurs based on that permit) and (2) National Regime (mostly applicable to the new pharmaceutical products). The relevant parties’ liability for the quality, safety and efficacy of pharmaceutical products differs accordingly. The law clearly states that under the Recognition Regime the State shall be responsible. Notably, the MPA Law does not exclude or further clarify the basis or the degree of responsibility under the Recognition Regime of other interested parties, including the manufacturers. Under the National Regime, responsibility for the safety of the pharmaceutical product lies both with the State and the authorization holder (manufacturer, business owner etc.).

In addition, the liability regime for vaccines administered under the National Immunisation Schedule is specifically established under the Law of Georgia on Public Health (the Public Health Law). Article 42.2 of the Public Health Law provides that the State shall provide free medical rehabilitation services to those affected by side effects of the vaccines scheduled and administered under the National Immunisation Schedule. This rule does not apply if any of the complications were caused by mistake from medical personnel that administered the vaccine.

Lastly, if we were to consider that the Product Safety and Free Movement Code (Product Safety Code) is applicable to the vaccines, it will further help define responsibilities of the manufacturers. Namely, Article 6(5) of the Product Safety Code provides exemption from the liability if the manufacturer were to prove that scientific expertise existing at the time did not allow detection of a particular defect (similar provision is provided in the Georgian Civil Code, Article 1009(1.e.)). Additionally, Article 1009(1.d) of the Civil Code excludes liability in case the product complied with the standards applicable to those that were in force at the time when the product was authorized.

Potential Ways of Indemnification or Limitation of Manufacturers’ Liability

The Georgian Government may grant special protection to Pfizer and Moderna or other COVID-19 vaccine manufacturers by choosing any of the approaches adopted in the UK and elsewhere, with necessary modifications to comply with the Georgian law.

These protection measures could notably include special contractual arrangements in the form of contractual indemnities given to manufacturers by the state under the vaccine purchase agreements. Although, Georgian law does not specifically envisage the concept of indemnity or an equivalent notion, it recognizes the freedom of contract. Thus, the parties to an agreement are generally free to define their own terms and conditions. Moreover, certain Civil Code provisions, such as Article 395(1) and Article 1002 permit limitation of civil liability in specific cases. Application of contractual indemnity provisions could be actively discussed and negotiated by the State providing vaccine manufacturers with a necessary safety net against potential liability arising out of the use of their vaccine in Georgia.

In addition to the contractual route, Georgia could opt for adoption of specific regulations shielding manufacturers from possible court disputes and ensuing consequences.

The State could further discuss the possibility of introducing a specific compensation plan with guidance from the experience of other countries, like the UK, the United States, Austria, Switzerland and Canada.

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