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Statement on National Vaccine Injury Compensation Program by Thomas E. Balbier, Jr.
Director, National Vaccine Injury Compensation Program
U.S. Department of Health and Human Services

Before the Committee on Government Reform, Subcommittee on Criminal Justice, Drug Policy, and Human Resources
September 28, 1999

Good morning Mr. Chairman and members of the Committee. I am pleased to be here this morning to talk with you about the National Vaccine Injury Compensation Program (the Program), one of the most unique and innovative programs ever created by Congress. With me to provide additional information if needed, are Dr. Geoffrey Evans, Medical Director for the Program, and Mr. David Benor from our Office of the General Counsel.

In the United States , the health of our Nation's children takes a high priority. In the recent past, our children faced serious, debilitating, and deadly diseases with little protection and parents lived in constant fear that their children would contract infectious diseases such as polio. The modern miracle of vaccines has changed this by eliminating smallpox and reducing the incidence of many childhood diseases to almost zero. This is a tremendous accomplishment, but we often overlook one very significant component which has been critical to the success of our Nation's immunization program over the past decade. This is the National Vaccine Injury Compensation Program.

As recently as 1986, this country was on the verge of losing the battle against preventable childhood diseases. The companies that produced vaccines were under serious threats of legal action because of media reports of serious injuries or death thought to be related to adverse reactions to vaccines. The potential costs of such lawsuits were more than many vaccine companies were willing to risk, so some companies simply stopped making vaccines, resulting in serious vaccine shortages throughout the United States . Demanding a national solution, a coalition made up of physician and public health organizations, industry, government, and private citizens developed the idea for a no-fault alternative to the tort system. This new system would reduce the tension associated with traditional civil court proceedings by having the Federal Government assume liability for injuries and deaths thought to be vaccine-related, and by allowing payment of attorneys' fees and costs to petitioners regardless of whether compensation was awarded. This became the National Vaccine Injury Compensation Program (the Program), which has been hailed by Secretary Shalala as the cornerstone of our Nation's successful childhood immunization program.

The National Vaccine Injury Compensation Program provides a unique service to families suffering through one of the most difficult experiences imaginable. It makes a system available through which families can receive financial help in the most efficient and fair manner possible, while still preserving their rights to file suit in the tort system. The Program significantly reduces, but cannot eliminate, the tension and adversity inherent within any litigation process for resolving claims arising from conditions or injuries thought to be related to childhood immunizations. The key words here are, "the most efficient and fair manner possible." As with every Federal benefit program, even those subject to an administrative review, there are going to be eligibility requirements which seem unfair to some applicants. I can assure you that everyone involved in the administration of the Program makes a concerted effort to ensure that fairness is the operative principle in dealing with every family filing a claim under the Program. Petitioners are provided with every opportunity to document and present their claims to Special Masters in the U.S. Court of Federal Claims (the Court), who provide a great deal of flexibility to petitioners in meeting deadlines. More than 1,400 families have received compensation under the Program through awards totaling in excess of $1 billion. Currently, 42 percent of petitions adjudicated under the Program have been awarded compensation. This compares to a compensation rate of only 23 percent for those who file medical malpractice lawsuits through the usual tort system. On average, it takes only two years to resolve claims and issue any appropriate payments.

We have been listening to concerns raised by those who may feel the system has been unfair and more adversarial than they had expected. It is critical to remember that although the Program is far less adversarial than the tort system, which it was designed to replace, it was established for a very specific group of intended beneficiaries. The Program encourages anyone who believes they have a condition caused or aggravated by a childhood vaccine to file a petition for compensation. Petitioners' rights are vigorously defended and advocated by their attorneys, who are paid regardless of whether petitioners are compensated. However, the Program was never intended to serve as a compensation source for a wide range of naturally occurring illnesses and conditions, which unfortunately, affect many of our children.

This Program was established by the National Childhood Vaccine Injury Act of 1986 (the Act). At the time of enactment, the Congress recognized that there was public debate over the incidence of illnesses that coincidentally occur within a short time of vaccination and that the deeming of vaccine-relatedness adopted in the Act might result in the provision of compensation to some children whose conditions or illnesses were not, in fact, vaccine-related. In creating the Program, the Congress drew the original list of injuries on the Vaccine Injury Table broadly to ensure that all injuries believed to be vaccine-related at the time would be compensated. At the same time, scientific studies were mandated to ensure that injuries related to vaccines were identified and that only those with a scientific basis eventually would be compensated. The completion of these studies and application of their findings were essential, because without scientifically based evidence upon which to establish award decisions, countless unjustified awards might be made. Potentially, this could lead to the exhaustion of the Vaccine Injury Compensation Trust Fund (the Trust Fund), putting at risk the ability to compensate those with demonstrated vaccine-related injuries. Coupled with the mandate in the original Act for the Secretary of HHS to modify the Vaccine Injury Table to bring it in line with science, the Internal Revenue Code, which governs payments out of the Trust Fund, is very specific in requiring that no payments may be made from the Trust Fund except for the compensation of vaccine-related injuries or deaths and for the administration of the Program.

The process of determining whether, and at what level, compensation should be awarded will always involve conflicting opinions, and a natural tension. This has been recognized by everyone involved in day-to-day administration of the Program as well as by the Advisory Commission on Childhood Vaccines (ACCV), which was established by the Act to "advise the Secretary (of HHS) on the implementation of the Program." The members of the ACCV include parents of children injured by vaccines, their attorneys, representatives of vaccine companies, and recognized medical experts in childhood diseases. This diverse body has provided constant oversight of the operation of the Program, advised the Secretary on each and every modification of the Vaccine Injury Table, and has made numerous legislative and administrative recommendations over the years aimed at improving the operation of the Program. Most recently, it developed and approved a series of recommendations that form the basis for legislation recently proposed by the Secretary of HHS. These legislative proposals include many enhancements aimed at making the Program more streamlined and less adversarial for its intended beneficiaries. The proposals would double the statutory time limit for filing a claim, expand compensation to families, and simplify the process for adjudicating claims. A draft bill titled, the "Vaccine Injury Compensation Program Amendments of 1999" was sent to the Congress on June 14, and will hopefully receive expeditious and favorable consideration.

I would like to talk for a minute about concerns related to the Vaccine Injury Compensation Trust Fund. The Trust Fund was established to ensure that a constant source of funding would be available for the payment of compensation for vaccine-related injuries and deaths, as well as for attorney fees and costs incurred by families in presenting their case to the Special Masters who adjudicate petitions. The Trust Fund is financed by excise taxes of 75 cents per dose imposed on each vaccine covered under the Program. At this time, the Trust Fund balance is in excess of $1.4 billion. During FY 1998, the Trust Fund received total income of $183 million, with $116 million coming from excise tax revenue. The remaining $67 million came from interest on the balances in the Trust Fund and more than covered the FY 1998 outlays for awards, and for attorneys' fees and costs, of just less than $50 million. The Trust Fund should be viewed as a specialized public health insurance fund, maintained with adequate reserves to handle liability exposure as new childhood vaccines come to the market and as important ongoing surveillance activities of the Public Health Service spawn new scientific studies of theoretical vaccine-related adverse events. Recently, coverage under the Program was expanded to include four additional vaccines (hepatitis B, Haemophilus influenzae type b, varicella, and rotavirus) for which 279 petitions have been filed. In addition, there are more than 300 vaccines in various phases of research and development, some of which may eventually be added for coverage under the Program and result in increased liability.

There is good reason for the public to have confidence in the overall operation of the Program. Just last year, the Federal Judicial Center completed a report on the Program entitled "Use of Expert Testimony, Specialized Decision Makers, and Case-Management Innovations in the National Vaccine Injury Compensation Program." This report concluded in part, that ". . . the case-management innovations and handling of expert testimony . . . function well in the VICP." Currently, the General Accounting Office (GAO) is conducting a review of the Program at the request of Senator Jeffords, Chairman of the Senate Health, Education, Labor and Pensions Committee. The GAO has indicated that the results of the review should be released by the end of this year.

All indications are that this Program is working very much as intended by Congress. There will always be program areas that can be improved, and we continue to implement initiatives to address these areas. The Program has always been open to advice from all interested parties, and mechanisms are in place to assure that the varied interests of families, health care professionals, attorneys, and the vaccine industry are represented in a regular public forum. The ACCV, with its widely diverse membership, brings a good balance of perspective and has been instrumental in identifying program improvements that have consensus support. With strong ACCV support for the Administration's proposed legislative agenda to make this innovative program even better, it is now up to Congress to move these important changes forward as quickly as possible so that our children can reap the benefits of the Program in "...the most efficient and fair manner possible."

Thank you once again for allowing me to come here today to tell you about the National Vaccine Injury Compensation Program. I will be pleased to answer any additional questions which you may have.

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