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LEDERLE (ITALICS)TRI-IMMUNOL DTP VACCINE PRICE INCREASE

Executive Summary

LEDERLE (ITALICS)TRI-IMMUNOL DTP VACCINE PRICE INCREASE stems from the firm's difficulty in obtaining liability coverage, Lederle President Robert Johnson testified before the Senate Labor and Human Resources Cmte.'s July 18 hearing on vaccine injury compensation legislation. Johnson stated that the 53% price increase, effective July 24, will bring the average selling price of the product up from $2.80 per dose to $4.29 per dose. The increase is necessary to provide funds to "cover the projected costs of liability suits," he asserted. Johnson noted that Lederle is also raising the price of its Orimune oral polio vaccine. A 22.5% price increase for the vaccine, also effective July 24, will raise the average selling price from $5.11 to $6.26 per dose. Explaining that the price increases are necessary to cover liability expenses, Johnson testified that "based on recent trends for vaccine associated litigation, we must reluctantly face the fact that last year's vaccine pricing is inadequate to cover the projected cost of liability during the coming year. In addition, we have to set aside funds for suits filed that may not be settled for several years." The hearing focused on two childhood vaccine injury compensation legislative proposals: S. 827, introduced by Sen. Hawkins (R-Fla.), and H.R. 1780, introduced by Reps. Madigan (R-Ill.) and Broyhill (R-NC). H.R. 1780, which Lederle is backing, establishes a no-fault compensation system whereby 11 regional panels, each comprised of three members and drawn from an HHS list, decide the amount of compensation a victim should receive with a ceiling limit of $1 mil. Claimants who reject a panel decision are free to file follow-up civil suits for damages up to a maximum of $1 mil. There is no cap on civil awards if a respondent refuses to participate in the administrative hearings ("The Pink Sheet" April 1, T&G-5). Lederle told the cmte. that it is in favor of H.R. 1780 because the bill's ceiling on awards provides "the predictability that manufacturers need in order to get sufficient insurance." Lack of predictability in costs, Johnson said, is one of the "problems" Lederle has with Hawkins' bill. "The most important defect in S. 827 is that it does nothing to address the problem of excessive and unpredictable judgments awarded in vaccine cases processed through the tort system," Johnson stated. Connaught Labs, in testimony before the cmte., also announced that it would be raising the price of its DTP vaccine to cover increased costs in product liability insurance. Noting that the "catalog price" for DTP has been $42 per 15-dose vial since May 1983, Connaught said "that a significant price increase is expected in the very near future." Connaught VP David Williams' statement to the cmte. explained: "During the next few weeks we will be finalizing the cost of our new insurance agreements and will be adjusting our selling price upward to reflect those increased costs." Connaught, like Lederle, favors H.R. 1780 over S. 827. Williams said that by "requiring a manufacturer to contribute to a trust fund designed to provide compensation for those childhood vaccine related injuries while continuing to permit the manufacturer to be exposed to liability under the tort system. . .would in effect be double jeopardy and the anticipated increased cost would be a further threat to the supply of vaccines at a reasonable price." The Madigan/Broyhill bill is also "not without its shortcomings," Williams maintained. "Under this proposal, any person who participated in manufacture, distribution, sale, or administration of the dose or doses of the vaccine alleged to have caused the claimant's injury could be named as a respondent in the hearing panel proceeding and, in fact, be found jointly and severally liable to the claimant." This statutory language, Williams continued, "results in creation of enterprise liability for those entities who have market presence." Connaught feels that mfrs. "should not be required to relinquish the requirement that a claimant establish product identification as a condition precedent to a successful claim," Williams stated.

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