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LEDERLE-PRAXIS' DTP VACCINE PRICE DROPS 52% DUE TO DECREASED LIABILITY SINCE 1986 VACCINE INJURY LAW; CONNAUGHT PRICES DROP 59%; MERCK PRICES UP

Executive Summary

The price of Lederle-Praxis' diphtheria-tetanus toxoids-pertussis (DTP) vaccine has declined by 52%, company president and CEO Ron Saldarini told the Health Resources and Services Administration Advisory Commission on Vaccine Compensation at the group's Nov. 29 meeting. "Lederle has reduced the price of its DTP vaccine four times," Saldarini reported, from a high in 1986 of $11.40 per dose to "Lederle's current list price per dose [of] $5.41." Saldarini maintained that "the price reductions in every instance were made because of the decline in federal lawsuits filed and the existence of the federal compensation program." Even with the addition of the federally mandated $4.56 excise tax, the price of DTP vaccine is still 13% less than in 1986, Saldarini noted. "Lederle's price optimistically assumes that the federal compensation program will successfully take care of virtually all childhood vaccine claims," Saldarini said. "If the program falters, you can expect to see a return to the vaccine liability of the early 1980s," he cautioned. The 1986 National Childhood Vaccine Injury Act seems to be reducing litigation, Saldarini observed. From a high in 1986 of 255 complaints, "in 1989 only 50 new suits were filed against DTP suppliers, [and] in 1990 the number of suits to date might be less than 25," Saldarini remarked. Approximately 80% of claimants in pending DTP lawsuits have elected to file under the compensation program, he said, and 160 have dropped cases against Lederle alone. Connaught Government Affairs Director Steven Lang testified at the meeting that his company has reduced its DTP vaccine price by 59% since 1987, "principally due to the perceived reduced litigation liability." Furthermore, 30 pending legal complaints against Connaught have been withdrawn and filed with the federal compensation program. Despite the optimistic news, Lederle has some concerns about the program's continued ability to absorb liability of the manufacturers. Saldarini reported that "50 DTP claimants have elected not to file under the program and are still pursuing lawsuits." In addition, two claimants recently withdrew from the federal program and reinstated their lawsuits. In the last three years, Lederle has spent $48 mil. settling lawsuits. "The question remains whether annual appropriations will be sufficient to pay all [the claims]," Saldarini said. The company also is concerned that claimants will withdraw from the program and resume litigation if a serious backlog develops because of lack of resources. "Also of concern are attempts by certain claimants to file the infant's claim in the compensation program and then to file a separate lawsuit on behalf of the parents against the manufacturers," he observed. Merck Sharp & Dohme Assistant General Counsel Dominic Costa reported that "there is no doubt that the passage of the act has created an improved litigation climate." Of the first 1,000 petitions filed under the act, 72 involve Merck's measles-mumps-rubella (MMR) vaccine and eight lawsuits have been dropped. However, Merck's price for the vaccine has not experienced a corresponding reduction despite the improved liability climate. Since 1986 the price for MMR vaccine has increased from $15.15 to $24.11 per dose. The price has remained stable over the last three years. "We have not specifically appended to our product a liability premium in the first instance as it is my understanding other vaccine manufacturers may have done," explained Merck Counsel and commission member Timothy Proctor. Meanwhile, "Merck has indicated since 1988 that it intends to keep its price increases within the [Consumer Price Index]." Centers for Disease Control Immunization Prevention Division Director Walter Orenstein, MD, took issue with Merck's MMR pricing policy. The cost of MMR to the government should drop significantly since the demand has doubled due to a recommendation for second administration of the vaccine as children grow older, Orenstein indicated. "We anticipate a major increase in the amount of demand, leading to what we were told would only be a 12.5% drop in price...and no drop in the private sector," he said.

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