The Indemnity Calculus For Covid-19 Vaccines, India’s Path Ahead

Source : IN VIVO

Developing nations like India should consider consenting to pharma’s indemnity demand, albeit with sharp drafting of the nuances and secure supplies of COVID-19 vaccines, given that a large part of the population is yet to get inoculated, an assessment by legal and other experts suggests.

These are, after all, extraordinary times and "indemnity hesitancy" may come at the cost of losing out on procuring the currently limited supplies of jabs, more so with talk around the need for booster doses in some rich nations threatening to widen the inequity of access.

Mark Pohl of the US-based Pharmaceutical Patent Attorneys, LLC maintained that big pharma may even be happy to provide vaccines at “cost (or even gratis),” but cannot bear the potential liability of having “every lawyer in Delhi filing a lawsuit” alleging COVID-19 vaccines cause “autism, male-pattern baldness, attention-deficit disorder” and other seemingly unrelated events.

“Which is exactly what big pharma fears will happen because it happened already in the 1970s in the US. So big pharma simply wants India etc. to provide it the same protection that the US does,” Pohl said. 

The legal expert added even “divorce” in jest, to drive home the point of the potential irrationality of some claims, though the other side of the story is that not all genuine claims get duly compensated either.

Indemnity issues – essentially who bears the liability in the event of serious adverse reactions or death from the fast-tracked products – has been a sticking point for the supplies of COVID-19 vaccines from foreign manufacturers including Pfizer Inc. and Moderna, Inc. in India.

Reports in the local media, however, earlier suggested that the issue was close to being addressed in the case of Moderna’s mRNA COVID-19 vaccine, cleared in India for restricted emergency use. Domestic company Cipla Limited is “supporting” Moderna with the regulatory approval and importation of vaccines to be donated to India.  Last week, Indian’s Minister Of State for Health And Family Welfare Bharati Pravin Pawar, however, maintained that “continuous dialogue” with Pfizer, Moderna and Johnson & Johnson is still underway to discuss and address “various issues including the issue of indemnity”. On 2 August, J&J was reported to have withdrawn its proposal seeking accelerated approval of its COVID-19 vaccine in India, though specifics on the issue are not immediately clear.

Other experts too suggested that India needs to rethink its stance on indemnity for vaccines that are already approved by regulatory agencies in the US, EU, UK, Japan and the WHO, which have well developed approval mechanisms in place.

Industry veteran Dr Ajit Dangi, president and CEO of Danssen Consulting, said that the government of India should indemnify vaccine manufacturers from any possible legal consequences arising from adverse safety events, given the prevailing emergency situation.

"The situation, however, needs to be carefully monitored from a pharmacovigilance point of view and appropriate action should be taken to remedy the situation if the need arises. The practical solution would be to insure vaccinated patients through a public sector insurance company or under the government of India's Disaster Management program," said Dangi, an ex-president of Johnson & Johnson in India. 

Pharmaceutical Patent Attorneys’ Pohl, meanwhile, explained the broader background of pharma’s historical indemnity demands, referring to the 1970s, when the US was keen to have children vaccinated for diseases such as measles, mumps, rubella and chicken pox. Parents of children with birth defects, sub-par height or other seemingly unlinked conditions, however, began suing firms, alleging that somehow it was the vaccine that had caused the harm. 

With the cost of such litigation untenable and profit margins on those vaccines thin, drug makers were reluctant to give the shots. The 1980s then saw the US put in place the National Vaccine Injury Compensation Program after lawsuits against vaccine companies and health care providers threatened to cause vaccine shortages and reduce vaccination rates and also fuel a resurgence of vaccine-preventable diseases.

Nevertheless, it’s not as if current COVID-19 vaccines haven’t seen any rare but serious side-effects. For instance, in April, the US Food and Drug Administration and Centers for Disease Control called for a pause in administration of the Johnson & Johnson vaccine after six reported cases in the US of a rare and severe type of blood clot called cerebral venous sinus thrombosis, seen in combination with low levels of platelets in individuals who received the jab.

All six cases occurred among women between the ages of 18 and 48 and symptoms occurred six to 13 days after vaccination. The pause was lifted on 23 April and the agencies said that the use of the vaccine should resume. ("With JJs COVID Vaccine Pause Now Lifted The Question Is How Well The System Worked" "Pink Sheet" )

The risk of blood clots has also been reported with AstraZeneca PLC's COVID-19 vaccine, while in June the FDA announced revisions to the patient and provider fact sheets for the Moderna and Pfizer-BioNTech SE COVID-19 vaccines pertaining to the suggested increased risks of myocarditis and pericarditis post vaccination.

Last month, the FDA said that surveillance detected four potential adverse events of interest in the Medicare healthcare claims database of persons aged 65 years and older who had received the Pfizer/BioNTech COVID-19 vaccine, including pulmonary embolism and acute myocardial infarction. ("COVID19 Vaccine Safety Now Soft Rollout Not Pause After Reports Of GuillainBarr Syndrome" "Pink Sheet" )

Several other legal eagles also believe that assenting to the pharma industry's indemnity demands may be the pragmatic way forward, given the evolving dynamics amid the pandemic, where vaccine makers rule the roost, at least for now.

Krishna Sarma, managing partner of the New-Delhi-based Corporate Law Group, underscored that extraordinary circumstances require extraordinary measures by governments and this should apply to the Indian administration as well.

“In the event India permits an indemnity provision for COVID-19 vaccines manufactured not only by foreign companies but also for those manufactured by indigenous manufacturers, it will only expedite the immunization process that will be critical for combating the pandemic before the country gets engulfed by the third wave,” Sarma said.

Murali Neelakantan, principal lawyer at Amicus, recently discussed various aspects around the indemnity clause, noting that while it may seem like an onerous and ominous provision, it is not – it simply means protection from legal liability arising from one’s actions. Moreover, with the global scarcity of COVID-19 vaccines, if India chooses to be picky about the terms of the contract, Pfizer will simply move on to the next prospective buyer, of which there are numerous.

“Our recommendation, therefore, would be to treat this just like any other business contract and secure a supply of these vaccines as quickly as possible. If that means giving in to their request for granting indemnity, so be it,” Neelakantan, said in a recent opinion piece in The Wire with Ashish Kulkarni, an assistant professor at the Gokhale Institute of Politics and Economics, Pune.

If India grants an indemnity to Pfizer against claims for injury or death caused by the vaccine, then the purchase price of the vaccine would be lower for the government, they explained.

Neelakantan and Kulkarni also suggested that in the unlikely event of India deciding against providing indemnity to Pfizer, the US firm could either buy product liability insurance against claims in India and overseas or then self-insure (set aside a sum to pay for any compensation), though in both instances these costs of taking on the risk would be built into negotiated prices for the vaccine.

Pharmaceutical Patent Attorneys’ Pohl, however, argued that third party insurance of this magnitude is not available. “Self-insurance is possible theoretically, but in practice it is impossible to quantify this [new] risk and thus price it properly.  Which is why the US opted for a third option, i.e., the insurer is not Lloyd's of London nor Pfizer, but the government,” he asserted.

On whether indemnity provisions have caveats built in around circumstances when the party being indemnified (pharma) can also be liable – for instance if there is a manufacturing issue as was seen in one of the vaccines - Pohl stated that the law typically says indemnity applies only to “standard-quality product,” not contaminated product. 

Danssen’s Dangi underscored that indemnity liability text needs to be carefully drafted so as to cover only possible adverse reactions and not issues like “carelessness of the manufacturer due to GMP violations or faulty storage and distribution.”

Referring to the contamination at J&J’s manufacturing partner Emergent BioSolutions, Inc., that led to the destruction of a million doses of COVID-19 shots, Dangi said: “In such cases, undoubtedly, the vaccine manufacturer should be held liable.”

Interestingly, legal experts appeared divided on whether Article 294(b) of the Indian Constitution could apply to establish liability out of the contracts the government has with the vaccine manufacturers.

Amicus’ Neelakantan, who has held leadership positions at international law firms including Arnold & Porter and Ashurst LLP, believed that Article 294 has no application in this case. It simply confirms that the Union of India will succeed to everything that was previously with the dominion and everything will not need to be “novated.”

“It’s a customary provision to ensure succession and continuity,” he explained.

Ranjan Narula, founder and managing partner of RNA, Technology and IP Attorneys, said, however, that Article 294(b) of the Indian constitution invokes liability on the government as well as on account of any contract or otherwise. “This means the government can be held liable for the contract signed with the vaccine manufacturers. Here the manufactures are working on behalf of the government and have an exclusive supply agreement with them,” Narula said.

He elaborated that the sale, approval, quantity, quality and other aspects of vaccines are controlled by the government and thus the vaccine manufacturers work as an agent of the government, effectively performing sovereign duty. “The view of the Apex Court [in India] is clear and in the past it has held State vicariously liable of an act which was done on behalf of them by its agent State of Rajasthan vs Vidhyawati [1962 AIR 933],” Narula added.

Furthermore, another point of view is that an agreement signed between the Indian government and a vaccine manufacturer is a commercial contract. Narula referred to the case of Peninsular and Oriental Steam Navigation Co. vs Secretary of State for India, where the Apex court held that the Secretary of the State would be liable for only the commercial functions and not for its sovereign operations.

“Thus being a commercial contract, it can be argued that sovereign immunity will not be available to the government, and an aggrieved person can sue them. Also, the contract entered between the government and vaccine manufacturer will need to be seen to determine if they have shifted the liability to manufacturers,” he explained.

Nevertheless, no matter which way the indemnity issue heads, experts concurred that pursing vaccine claims isn’t easy, though that would hold for any vaccine, not just COVID-19 jabs. ("Compensation For COVID-19 Vaccine Injuries In India Stark Fault Lines" "Scrip" )

Pohl said that it is tough because it is difficult to prove causation. “To prove that a vaccine causes harm is extremely difficult. So pursuing legal claims for harm is, by design, difficult.”

On whether the seeming inadequate pharmacovigilance for COVID-19 vaccines in India by default weighs in favor of pharma, should an aggrieved patient pursue legal action, Amicus’ Neelakantan said that the lack of information and the poor investigation of adverse events following immunization mean that patients/victims have limited access to data to be able to establish causation.

“This has been an issue in other cases as well. See the J&J hip implant cases, where the Indian victims still haven’t been compensated despite the Indian government forming a committee about two years ago,” he said. ("Hips Dont Lie JJ Faces Compensation Maelstrom In India Over Faulty ASR Implants" "Medtech Insight" ) (In Vivo could not immediately verify the updated specifics on the J&J compensation issue over allegedly faulty' ASR hip implants in India.)

Corporate Law Group’s Sarma said that India has robust pharmacovigilance guidelines which are statutorily mandated as a part of the drug safety requirement. “However, compensation for adverse drug reactions is not linked to the pharmacovigilance guidelines. Under the Indian law, causality has to be established to be successfully compensated for ADRs,” she pointed out.

The legal experts also believe that India might draw from the UK’s Vaccine Damage Payment Scheme (VDPS), which provides those severely disabled as a result of vaccination against certain diseases (including COVID-19) with a one-off tax-free specified payment, to address the compensation issue.

Sarma, though, noted that from the information available it appears that VDPS requires applicants to prove causation on the “balance of probabilities” - that is, to show that it is more likely than not that the vaccination caused the injury reported.

Therefore, while the VDPS is expected to encourage vaccine confidence, enabling anyone who experiences adverse side effects to apply to receive compensation, the applicants “apparently have to effectively discharge the same civil law burden of proof that any claimant must in the course of litigation,” Sarma said. Data indicate that very few applicants are successful, she added.

RNA, Technology and IP Attorneys’ Narula said the Indian government should consider a scheme on similar lines with the VDPS to overcome vaccine hesitancy and act as an assurance to the citizens. “More so as they roll out the vaccination program for pregnant women and children.”

Others suggested that India could pursue either the VDPS or the US compensation program model, though Amicus’ Neelakantan claimed that the Indian legal system and the reluctance of Indian insurers and even the government to pay any compensation may “scuttle” even the best laws.

“A good example is the failure to compensate to the victims of the Bhopal gas leak disaster even after almost 40 years,” the legal veteran added. The 1984 gas leak incident at the Union Carbide India Limited pesticides plant in Bhopal in the state of Madhya Pradesh is counted among the world's worst industrial disasters and is said to have claimed over 15,000 lives.

This article was first published by Scrip in July 2021. 

By Anju Ghangurde