Corporate Handouts

In the NY Times article about the military budget that was passed by the House this morning that includes drilling in ANWR, there is also another corporate handout that Senator Frist has been pushing for months. It would provide a sheild for vaccine makers from lawsuits, specifically targeting those vaccines that protect against avian flu. As a post on Slingshot.org notes, this will protect the investments of Donald Rumsfeld, Secretary of Defense, who has significant holdings in Gilead Sciences, the company that manufactures Tamiflu in the U.S. As the NY Times reports:

"The government would pay medical expenses and benefits to those injured or killed by vaccines. Mr. Frist contends that the provision is necessary to encourage drug companies to make vaccines. But it is likely to draw criticism, with some arguing that it would be a windfall for those companies."

It certainly would be a windfall for those companies, with the bill being passed onto the taxpayers, providing a situation in which there is a moral hazard problem. Because the drug manufacturers will not be liable for lawsuits, except where they exhibit "willful misconduct", there will be less money spent on trials to make sure the vaccines are safe, as well as less monitoring of the manufacturing process. There will not be enough evidence of "willful misconduct", but more people will be injured or killed by the vaccines than they would if the incentive to safety were provided by allowing lawsuits against the vaccine makers.