oversight

Vaccine Injury Compensation: Program Challenged to Settle Claims Quickly and Easily

Published by the Government Accountability Office on 1999-12-22.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                United States General Accounting Office

GAO             Report to the Chairman, Committee on
                Health, Education, Labor and Pensions,
                U.S. Senate


December 1999
                VACCINE INJURY
                COMPENSATION
                Program Challenged to
                Settle Claims Quickly
                and Easily




GAO/HEHS-00-8
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Health, Education, and
      Human Services Division

      B-281968

      December 22, 1999

      The Honorable James M. Jeffords
      Chairman, Committee on Health,
        Education, Labor and Pensions
      United States Senate

      Dear Mr. Chairman:

      Infectious diseases are responsible for nearly half of all deaths worldwide
      of people under the age of 44. In the United States, vaccinating children
      against such diseases is considered to be one of the most effective public
      health initiatives ever undertaken. Since vaccination programs began, the
      number of people contracting vaccine-preventable diseases in the United
      States has been reduced by more than 95 percent. In some instances,
      however, a vaccine can have severe side effects, including death or
      disabling conditions requiring lifetime medical care. In the 1980s, lawsuits
      stemming from such incidents threatened to affect the availability and cost
      of vaccines as well as the development of new ones.

      To address this issue, the Congress, beginning in 1986, created a different
      approach for compensating people injured by certain vaccines routinely
      provided in childhood. Instead of suing vaccine manufacturers and
      vaccine administrators, people—including adults—who believe they have
      been injured by these vaccines must first file a claim under the Vaccine
      Injury Compensation Program (VICP).1 VICP contains a vaccine injury table,
      which is designed to minimize difficulties petitioners have in proving that
      their injury resulted from a vaccine. The injuries listed on this table are
      presumed to have been caused by certain vaccines, unless the government
      can prove otherwise. By contrast, in a lawsuit filed under the civil tort
      system, the injured party bears the burden of proving that the vaccine
      caused injury.

      Administered by the Department of Health and Human Services (HHS), the
      program pays claims from a trust fund supported by an excise tax on each
      dose of vaccine that is covered by the program.2 As of February 1999, 5,355


      1
       When VICP became effective in October 1988, it covered vaccines required for immunizing children
      against seven infectious childhood diseases: diphtheria, pertussis (whooping cough), tetanus, polio,
      measles, mumps, and rubella (German measles). Vaccines against hepatitis B, hemophilus influenzae
      type b (Hib), and varicella (chicken pox) were added to the program in August 1997; and a vaccine
      against rotavirus was added, effective October 1998.
      2
       Claims arising from vaccinations administered prior to October 1, 1988, are paid from general fund
      appropriations.



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                       claims had been filed under VICP and close to $1 billion had been awarded
                       since October 1988, when the program became effective. The majority of
                       claims filed and compensation paid have been for neurological injuries
                       associated with the DTP (diphtheria, tetanus, and pertussis) vaccine.

                       Although VICP was created to provide compensation “quickly, easily, with
                       certainty and generosity,”3 there is debate surrounding how well the
                       program meets this purpose. Some contend that the claims process takes
                       too long and that recent changes to the program’s vaccine injury table
                       make compensation too difficult to obtain. Another concern is the VICP
                       trust fund, which had a balance of $1.3 billion at the end of fiscal year 1998
                       and has been collecting much more than it pays out in claims. To help with
                       congressional oversight of the management and financing of the program,
                       you asked us to determine

                   •   how long it takes to process a claim through VICP;
                   •   the extent that recent changes to the program’s injury table have made it
                       easier or more difficult for petitioners to obtain compensation for
                       vaccine-related injuries; and
                   •   why the trust fund continues to grow, and what budgetary effect proposed
                       options for addressing the growing trust fund balance would have.

                       Our work included analyses of claims data from HHS’ VICP database from
                       the inception of the program to February 1999. We supplemented our
                       analyses with interviews and information from the federal agencies
                       responsible for the VICP claims process and financial accounting of the VICP
                       trust fund, petitioner advocates, members of the scientific community, and
                       a pediatric physician professional organization. (See app. I for more on our
                       scope and methodology.) We conducted our work from January through
                       November 1999 in accordance with generally accepted government
                       auditing standards.


                       Overall, while the program appears to provide an easier process for
Results in Brief       obtaining compensation than the traditional civil tort system, the process
                       has not been as quick or as easy as expected. Processing most VICP claims
                       takes more than 2 years. The Congress expected the program to process
                       claims in 1 year or less, but only about 14 percent of claims met this
                       expectation. In 1988 and 1989, the program received about 200 claims and
                       processed nearly all of them within 2 years. But in 1990, when a filing

                       3
                        Report of the House Committee on Energy and Commerce accompanying the legislation establishing
                       VICP, H.R. Rep. No. 99-908, p. 3 (1986).



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deadline neared for injury claims relating to vaccinations received before
October 1988, the number of claims filed jumped to over 3,200. This influx
created an immediate and large backlog of claims, which HHS is still
working to resolve. Another factor significantly increasing processing
times is that as the program received additional funding for staff and
experts to defend claims, the government increasingly challenged claims
in which the cause of injury was in doubt. As a result, petitioners needed
more information and time to prepare cases, which resulted in processing
times that were much longer than envisioned when the program began.

HHS’ recent changes to the vaccine injury table will make the process
easier for some people to obtain compensation, but will make it more
difficult for a larger number to do so. This is because far more claims have
historically been associated with injuries HHS removed from the table than
with injuries HHS added to it. For example, about half of the awards made
since the program’s inception have been for neurological injuries that HHS
later removed from the table in 1995 and 1997. Removing these injuries
shifts the burden of proof to the petitioner, making it more difficult to
qualify for compensation under VICP. HHS based its decisions to add or
remove table injuries on various factors but did not have a clear and
transparent methodology to demonstrate that these factors were
consistently applied for each injury table change. Without such
transparency, changes that make compensation more difficult for
petitioners may continue to be questioned by some, regardless of their
merit. We are making a recommendation to HHS to develop and apply a
consistent methodology for its decisionmaking process for making
changes to the vaccine injury table.

The VICP trust fund has grown to $1.3 billion, primarily because the income
from vaccine excise taxes has been higher than payments for claims and
associated administrative costs and interest has been accruing on the fund
balance. The excess tax revenue—$948 million, as of 1998—has been
loaned to the Treasury and used for other federal programs and activities.
Vaccine manufacturers, federal agencies, and petitioner advocates have
expressed concerns about the rising balance and have proposed options to
decrease the vaccine excise tax or increase trust fund spending.
Exercising these options, however, would have implications for the overall
federal budget, possibly requiring new or higher taxes elsewhere or a
decrease in spending for other programs and activities.




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             All 50 states require that virtually all children be vaccinated against
Background   common childhood diseases before they enter school,4 and HHS reports
             that over 12 million vaccinations are given to children each year. These
             laws have dramatically reduced many infectious diseases in the United
             States. For example, the number of reported cases of measles, which can
             lead to brain damage and death, has dropped from about half a million in
             1960 to about 100 in 1998. For most children, freedom from the effects of
             measles, diphtheria, polio, tetanus, pertussis, and other diseases is a
             decided benefit. But immunization programs also carry a human cost. A
             small number of children who receive immunizations have serious and
             unexpected reactions to them. These reactions can be devastating—
             paralysis, permanent disability, and even death. Affected families without
             adequate insurance coverage may face significant expenses, because the
             costs for residential or home care, therapy, medical equipment, and drugs
             needed to care for an injured child over a lifetime can exceed several
             million dollars. Prior to VICP, families could seek compensation for
             damages only through the civil tort system or through a settlement
             agreement with the vaccine manufacturer or health care provider.

             Filing a lawsuit in the civil tort system was considered to be unsatisfactory
             for those claiming to have suffered an adverse reaction to a vaccine.
             Petitioners had difficulty proving vaccine-related injuries because studies
             and medical evidence needed to definitively link vaccines with various
             medical conditions were often insufficient to establish the level of proof
             required for compensation in the legal system.5 Establishing this link can
             be difficult because most injuries that can be caused by vaccines can be
             caused by other things as well. For example, symptoms of neurological
             disorders often show up in the first year of life, which is the same time that
             most vaccines are administered.

             Petitioners are not the only ones who found the legal system difficult. As
             the number of lawsuits increased, particularly for the DTP vaccine, vaccine
             manufacturers became concerned not only with problems of time and
             expense but also with the availability and affordability of product liability
             insurance. The federal government, in turn, became concerned that if


             4
              States generally require vaccination against each of the original seven childhood diseases covered by
             the program, but there is some variation. Six states, for example, do not require the pertussis vaccine
             and six others do not require the mumps vaccine.
             5
              For example, the Institute of Medicine studied 75 specific relationships between vaccines and adverse
             events and concluded that medical evidence was insufficient to prove or disprove a relationship in
             two-thirds of the cases. See a discussion of Institute of Medicine studies in Research Strategies for
             Assessing Adverse Events Associated With Vaccines: A Workshop Summary (National Academy Press,
             1994).



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                             manufacturers withdrew from the market, vaccine shortages would result
                             and infectious diseases would reemerge as serious health threats.


VICP Represented a New       VICP established a new system for vaccine injury compensation that was
Approach to Injury           expected to be fair, simple, and easy to administer. Rather than filing a
Compensation                 lawsuit against the vaccine manufacturer or vaccine administrator in the
                             civil tort system, an individual claiming injury from vaccines covered by
                             the program must first file a petition for “no-fault” compensation with the
                             U.S. Court of Federal Claims.6 Special masters of the court—attorneys
                             appointed by the judges of the court—conduct informal hearings as
                             necessary to determine whether the petitioner is entitled to compensation
                             from VICP, and if so, how much. HHS, as overall administrator of VICP, is
                             represented by Department of Justice (DOJ) attorneys, while the petitioner
                             may be represented by a private attorney.7 (See app. II for a description of
                             the claims process.)

                             To ensure access to the program, VICP pays attorney fees and costs for the
                             petitioner, regardless of whether the petitioner is awarded compensation.8
                             VICP features designed to expedite the process include a relaxation of the
                             rules of evidence, discovery, and other legal procedures that can prolong
                             cases in the legal system. Features designed to control costs include a
                             legislated $250,000 payment for compensable deaths. For compensable
                             injuries, the program purchases annuities covering the lifetime costs of
                             care not covered by insurance and compensates for pain and suffering and
                             lost wages. VICP does not pay punitive damages. Compensation is available
                             for reasonable attorney fees and costs, which generally reflect the actual
                             time and expense devoted to the case.


Program’s Injury Table Is    There are two ways a petitioner can qualify for compensation under VICP.
Its Most Important Feature   Similar to the civil tort system, petitioners must be able to prove that a
                             vaccine caused an injury or, unique to VICP, the petitioner must have an
                             injury listed on the program’s injury table. The number of vaccines and
                             injuries listed on the table have changed over time. Legislation establishing


                             6
                              Lawsuits may be filed against manufacturers or health care providers if a petition is dismissed or
                             judged noncompensable under VICP and the judgment is rejected by the petitioner, if the award
                             granted by VICP is rejected by the petitioner, or if the vaccine is not covered under VICP.
                             7
                              The vaccine manufacturer and whoever administered the vaccine are not involved as parties to the
                             proceedings.
                             8
                              Attorney fees and costs are paid if the court determines there is a reasonable basis for the petition and
                             the petition was filed in good faith.



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                                         the original injury table included five different medical conditions related
                                         to vaccines against seven diseases (see table 1).

Table 1: Original Vaccine Injury Table
                                         Vaccine and injurya                                                                               Time periodb
                                         Vaccines against diphtheria,c tetanus, and pertussis
                                         Anaphylaxis                                                                                           24 hours
                                         Residual seizure disorder                                                                               3 days
                                         Shock-collapsed                                                                                         3 days
                                         Encephalopathy                                                                                          3 days
                                         Vaccines against measles, mumps, and rubella
                                         Anaphylaxis                                                                                           24 hours
                                         Residual seizure disorder                                                                             15 days
                                         Encephalopathy                                                                                        15 days
                                         Vaccines against polio
                                         Paralytic polioe                                                                         30 days/6 monthsf
                                                          g
                                         Anaphylaxis                                                                                           24 hours
                                         Note: For current vaccine injury table, see app. III.
                                         a
                                             Injuries are defined in “Qualifications and Aids to Interpretation,” reprinted in app. III.
                                         b
                                             For first symptom, onset, or aggravation of injury after vaccination.
                                         c
                                             Administered with tetanus and/or pertussis vaccines.
                                         d
                                             For vaccines against pertussis.
                                         e
                                             Injury related to oral polio vaccine.
                                         f
                                         Time intervals are for immunocompetent/immunodeficient individuals who receive oral poliovirus.
                                         Contact cases have no limit.
                                         g
                                             Injury related to inactivated polio vaccine.



                                         Filing a claim using the injury table relieves petitioners from some of the
                                         uncertainty caused by gaps in medical knowledge. Under VICP, vaccines on
                                         the injury table are presumed to have caused the listed injury if incurred
                                         within specific time periods. For example, under the original table,
                                         someone suffering neurological damage from seizures within 3 days after
                                         receiving a vaccine against pertussis would receive compensation if HHS
                                         could not prove that the condition was due to factors unrelated to the
                                         administration of the vaccine. Thus, for the petitioner, VICP’s injury table
                                         may provide a benefit over the civil tort system.




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Funding for Compensation            VICP finances awards and attorney payments differently, depending on
Has Come From Two                   when the vaccine causing the alleged injury was administered. For
Sources                             vaccines administered prior to October 1, 1988, payments are made from
                                    general revenues appropriated by the Congress each year. For vaccines
                                    administered on or after this date, payments are made from the VICP trust
                                    fund, which is supported by a $.75 excise tax on each dose of vaccine sold9
                                     and interest accumulating on the trust fund balance. As of February 1999,
                                    VICP had paid close to $1 billion for awards and attorney payments—
                                    75 percent from appropriated general funds rather than from the trust fund
                                    (see table 2).

Table 2: Financing for VICP Claim
Payments                                                                                                    Number of             Awards/
                                                                                                           claims filed           attorney
                                                                                                             as of Feb.      paymentsa as
                                    VICP claims              Filing deadline Funding source                       1999        of Feb. 1999
                                    Vaccines                 Jan. 31, 1991       Annual                           4,245       $742,244,679
                                    administered                                 appropriations
                                    prior to Oct. 1,
                                    1988
                                    Vaccines                 Within 24        Vaccine excise tax                  1,110b        250,296,568
                                    administered on          months from
                                    or after Oct. 1,         date of death or
                                    1988                     36 months from
                                                             date of injury
                                    a
                                        The maximum award paid was close to $8 million while the median paid was $318,943.
                                    b
                                        Includes five cases where the data field for date of vaccination was blank.




                                    Processing VICP claims continues to take longer than expected. When the
Processing VICP                     Congress established VICP, the expectation was that the court would take 1
Claims Takes Longer                 year or less10 to judge whether a claim was entitled to compensation and,
Than Expected                       if so, how much that compensation would be. The program became
                                    effective on October 1, 1988, and as of February 1999, 5,355 claims had
                                    been filed. Of this number, about 14 percent received judgment within 1
                                    year (see fig. 1). Most did not receive judgment within 2 years. Of the total

                                    9
                                     This uniform rate of taxation became effective Aug. 6, 1997 (P.L. 105-34). Prior to this date, the excise
                                    tax rate varied by vaccine in accordance with the expected compensation payments associated with
                                    each covered vaccine.
                                    10
                                      The original legislation required a judgment on claims no later than 365 days after the claim was filed.
                                    This was subsequently amended to require a judgment by the special master within 240 days exclusive
                                    of suspended time. Either party may appeal the decision to a judge of the court, which would add time
                                    to the process. (See app. II.) If the special master fails to make a decision within 240 days or if
                                    appealed and a judgment is not rendered within 420 days, petitioners are allowed to withdraw from
                                    VICP and sue the manufacturer or health care provider directly.



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                                  claims filed during this period, 10 percent had not received a judgment as
                                  of February 1999 and remained open.


Figure 1: Status of VICP Claims
                                                                                              1 Year or Less




                                                      19%                                     Between 1 and 2 Years


                                           14%


                                                                        39%                   Between 2 and 5 Years

                                           10%


                                                    18%                                       5 Years or More




                                           Pending Casesa

                                           Closed Cases



                                  Note: Data are for cases filed as of February 1999.
                                  a
                                   The length of time pending cases had been in process ranged from less than 1 month to more
                                  than 8 years.


                                  Two interrelated reasons are central to explaining these longer than
                                  expected processing times. The first was a large influx of claims filed a
                                  few years after the program began. The second was that as more funding
                                  became available to defend claims, HHS increasingly challenged the ones it
                                  regarded as not clearly meeting the statutory criteria.




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Delays Due to Volume                    When VICP took effect on October 1, 1988, it gave claimants 2 years and 4
                                        months (until January 31, 1991) to file claims on injuries for vaccines
                                        administered prior to October 1988. As people began responding to the
                                        deadline, the number of claims filed under VICP jumped from 125 claims in
                                        1989 to 3,263 claims in 1990. Nearly 800 more claims were filed in the
                                        month before the deadline. As table 3 shows, this large influx of claims
                                        created an immediate backlog. The number of pending claims rose to as
                                        high as 3,548 at the end of 1991 and remained above 1,000 until the end of
                                        1995.

Table 3: VICP Claims Filed,
Adjudicated, and Pending, by Calendar   Year                         Claims filed   Claims adjudicated Claims pending
Year                                    1988                                  79                     0              79
                                        1989                                 125                    61             143
                                        1990                               3,263                  153            3,253
                                        1991                                 968                  673            3,548
                                        1992                                 174                  735            2,987
                                        1993                                 119                  637            2,469
                                        1994                                 121                  612            1,978
                                        1995                                 164                  707            1,435
                                        1996                                  92                  573              954
                                        1997                                 107                  332              729
                                        1998                                 131                  309              551
                                        1999a                                 12                    25             538
                                        Total                              5,355                 4,817
                                        a
                                        Data as of February 1999.



                                        As might be expected, processing times began to increase as HHS worked
                                        to respond to the influx of claims. Before 1990, nearly all claims were
                                        processed within 2 years. Starting in 1990, however, only about 30 to
                                        40 percent of claims filed each year have been processed this quickly (see
                                        fig. 2).




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Figure 2: Percentage of Claims Filed in
Calendar Years 1988 to 1997 With          100
Judgment Received Within 2 Years
                                           90

                                           80

                                           70

                                           60

                                           50

                                           40

                                           30

                                           20

                                           10

                                            0

                                                     1988    1989      1990      1991      1992      1993      1994   1995   1996   1997

                                                            Percentage with judgment received in first year

                                                            Percentage with judgment received in second year



                                          Note: Second-year data for 1997 are incomplete. In addition, only data for 1988 through 1991
                                          include claims for vaccinations given prior to October 1988 because the filing deadline for such
                                          claims was January 31, 1991. Data for 1992 through 1997 include claims for vaccinations on or
                                          after October 1988.




Delays Due to Change in                   As figure 2 shows, the percentage of claims processed within 1 or 2 years
Program Implementation                    changed somewhat from year to year but has not increased much since
                                          1992. Although table 3 shows that the number of claims filed since the
                                          1991 deadline dramatically decreased, the number of claims adjudicated
                                          generally declined in following years. A key reason is because in 1990, HHS
                                          and DOJ began to increasingly scrutinize claims of vaccine injury as funding
                                          to fully implement their legislated authority under the program became
                                          available. DOJ established a cadre of attorneys specializing in vaccine
                                          injury to represent HHS in hearings, and HHS established an expert witness
                                          program to help assess whether alleged vaccine injuries such as seizure
                                          disorders may have been present from birth or were due to other causes.

                                          Full implementation of HHS’ statutory authority to defend claims had
                                          implications for claims processing times, making it more difficult for




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                              claims to be processed within the 1-year period originally envisioned or
                              even a 2-year period. For example, HHS data show that more than half of all
                              petitioners were requested to provide supplementary medical records or
                              other information, and most took at least a year to do so. Both sides often
                              made use of expert witnesses to review the evidence and report on their
                              findings. After all the information was received, in most cases, it took the
                              court over another year to reach its decision.


Steps Taken to Expedite       HHS, DOJ,and the U.S. Court of Federal Claims have taken some steps to
Claims Processing             expedite the claims process, including the following:

                          •   Since 1990, HHS has cut its average time for completing its medical review
                              and submitting its recommendation to the court from nearly 6 months11 to
                              about 3 months.
                          •   In 1990, the court produced a guide for petitioners and their attorneys
                              explaining how to process claims through VICP, and in 1994, DOJ published
                              steps to expedite the resolution and payment of compensation and
                              attorney fees.
                          •   Starting in the fall of 1997, the court initiated a practice of holding
                              conference calls between the special masters and attorneys within 30 to 45
                              days after the filing of a petition to discuss any deficiencies in the petition,
                              such as absence of pertinent medical records, and ways to remedy them.12

                              The chief special master said that while the court could process claims
                              more quickly, delays are granted primarily to benefit petitioners who need
                              more time to gather information, have medical tests performed, or identify
                              costs related to an injured child’s developmental needs. If a judgment is
                              not received within 240 days, petitioners can withdraw their claim from
                              VICP and file a lawsuit in the civil tort system. Yet HHS, DOJ, and court
                              officials stated that none have done so.




                              11
                                Data for 1990 are for claims relating to vaccines administered after Sept. 30, 1988. The 1990 average
                              for all claims is over 2 years.
                              12
                               For example, DOJ states that where appropriate, it will subpoena medical records on behalf of the
                              petitioner.



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                                   Of the 4,817 petitioners receiving judgment under the program as of
Injury Table Changes               February 1999, close to 30 percent received compensation for a family
May Increase                       member’s injury or death. Most compensated claims alleged injuries listed
Difficulty Petitioners             on the program’s vaccine injury table. Since the program began, HHS has
                                   made two sets of changes to the table, removing some injuries and adding
Face in Obtaining                  other injuries and vaccines. However, far more claims are associated with
Compensation for                   injuries removed from the table than with injuries that were added. As a
                                   result, more petitioners now must prove that a vaccine caused the injury,
Vaccine-Related                    rather than HHS having to prove that the injury was due to factors
Injuries                           unrelated to the vaccine.


Number of Petitioners              Most of the petitioners who filed claims and received awards under VICP
Potentially Covered by the         alleged injuries listed on the program’s vaccine injury table. Petitioners
Vaccine Injury Table Has           who did not claim injuries listed on the injury table—about
                                   28 percent—had the burden of proving that a vaccine caused the injury; of
Decreased                          these petitioners, only 13 percent were able to obtain compensation. The
                                   remaining 72 percent claiming injuries on the table had compensation
                                   rates nearly three times higher.

Table 4: VICP Petitions Claiming
Table/Off-Table Injuries                                                Percent table claims       Percent off-table claims
                                   Vaccine                              Filed   Compensated          Filed   Compensated
                                   Vaccines against diphtheria,            83              32          17               15
                                   tetanus, and pertussis
                                   Vaccines against measles, mumps,        53              43          47               25
                                   and rubella
                                   Vaccines against polio                  39              60          61                3
                                                                                               a                              a
                                   Vaccines against hepatitis B             7                          93
                                                                                               b                              a
                                   Vaccines against varicella               0                         100
                                                                                               b
                                   Unspecified/nonqualifying                0                         100                0
                                   Total                                   72              35          28               13
                                   a
                                   Judgment pending.
                                   b
                                       Not applicable.



                                   Under the act that created VICP, HHS has rulemaking authority to change the
                                   injury table and has done so on two occasions. The act established the
                                   first injury table, with HHS to make future changes as more information
                                   became available. The act further called for the Institute of Medicine, of
                                   the National Academy of Sciences, to assist HHS in this regard by reviewing
                                   existing medical studies and literature related to a set of specific



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                                 conditions that might be related to vaccines covered by the program. After
                                 the reviews were completed in 1991 and 1994, the Institute of Medicine
                                 identified certain conditions that were consistent or inconsistent with a
                                 causal relationship, those that favored or did not favor a causal
                                 relationship, and those where evidence was insufficient to indicate the
                                 presence or absence of a causal relationship.13 HHS used these findings—in
                                 conjunction with public policy considerations provided by the Advisory
                                 Commission on Childhood Vaccines, scientific issues raised by its National
                                 Vaccine Advisory Committee, and input from the public—to add seven
                                 injuries and remove three others from the table in 1995 and 1997 (see table
                                 5).14 In addition, HHS refined the supporting guidance to the table,
                                 “Qualifications and Aids to Interpretation.” This document provides
                                 definitions for injuries and the specific circumstances under which the
                                 table injuries must occur (see app. III for the current injury table and
                                 interpretation aids).

Table 5: Injuries Added to and
Removed From the VICP Vaccine    Vaccine                            Injury added                       Injury removed
Injury Table                     Effective Mar. 10, 1995
                                 Vaccines against pertussis                                            Shock-collapse
                                 Vaccines against pertussis                                            Residual seizure disorder
                                 and tetanus
                                 Vaccines against rubella           Chronic arthritis
                                 Effective Mar. 24, 1997
                                 Vaccines against measles,                                             Residual seizure disorder
                                 mumps, and rubella
                                 Vaccines against measles           — Thrombocytopenic
                                                                    purpura
                                                                    — Vaccine-strain measles
                                 Vaccines against polioa            Vaccine-strain polio
                                 Vaccines against hepatitis B       Anaphylaxis
                                 Vaccines against hemophilus Early-onset Hib
                                 influenzae type b (Hib)
                                 Vaccines against tetanus           Brachial neuritis                  Encephalopathy
                                 a
                                  Applies to oral polio vaccine.




                                 13
                                   Most conditions fell in the third category, as the Institute of Medicine concluded that there was
                                 insufficient medical evidence to prove or disprove a relationship between vaccines and two-thirds of
                                 the 75 medical conditions studied.
                                 14
                                   HHS publishes the proposed and final rules of injury table changes in the Federal Register. HHS must
                                 allow 180 days for public comment on a proposed rule. HHS must also provide 90 days for review of
                                 proposed rule by the Advisory Commission on Childhood Vaccines, comprised of parents of injured
                                 children, health professionals, and attorneys appointed by HHS. The National Vaccine Advisory
                                 Committee is comprised of representatives from state and local health departments, vaccine
                                 companies, academia, and consumer groups.


                                 Page 13                                  GAO/HEHS-00-8 Vaccine Injury Compensation Program
                                               B-281968




                                               Although HHS added more injuries than it removed from the original injury
                                               table, fewer petitioners now have the potential to use it. Where 74 percent
                                               of petitioners filed claims alleging injuries on the injury table prior to the
                                               1995 and 1997 changes, only 55 percent filed such claims after the table
                                               was revised.15 To some extent, this decrease is because more claims were
                                               associated with the injuries removed from the table than were associated
                                               with the injuries that were added. Significantly, as shown in table 6, about
                                               45 percent (611) of the 1,368 claims awarded compensation under VICP
                                               were for injuries subsequently removed from the table. These claims
                                               accounted for about half of the $974 million awarded thus far under the
                                               program. These numbers are significant because petitioners with injuries
                                               not listed on the injury table historically have had a lower probability of
                                               being compensated than those with injuries that were listed.


Table 6: Claims Associated With Injuries Added to and Removed From the VICP Vaccine Injury Table
                                                    Claims for injuries added to injury Claims for injuries removed from
                                                                   table                           injury table
                                                                      Number                                        Number
Vaccine                        Injury                             compensated          Total awarded            compensated              Total awarded
                                                                                                                                  a                        a
Vaccines against rubella       Chronic arthritis                                 9           $622,101
                                                                                                                                  a                        a
Vaccines against tetanus       Brachial neuritis                                 0                     0
Vaccines against measles       Thrombocytopenic
                                                                                                                                  a                        a
                               purpura                                           0                     0
                                                                                                                                  a                        a
Vaccines against measles       Vaccine-strain measles                            0                     0
                                                                                                                                  a                        a
Vaccines against polio         Vaccine-strain polio                              0                     0
                                                                                                                                  a                        a
Vaccines against hepatitis B   Anaphylaxis                                       0                     0
Vaccines against hemophilus Early-onset Hib
                                                                                                                                  a                        a
influenzae type b (Hib)                                                          0                     0
                                                                                   a                    a
Vaccines against pertussis     Shock-collapse                                                                                  61           $27,228,905
Vaccines against measles,      Residual seizure
mumps, pertussis, rubella,     disorder
                                                                                   a                    a
and tetanus                                                                                                                  547            452,141,726
                                                                                   a                    a
Vaccines against tetanus       Encephalopathy                                                                                   3                529,074
Total claims compensated/amounts awarded for injuries added/removed from the table
                                                                                 9           $622,101                        611          $479,899,705
Percent of all claims compensated/amounts awarded
                                                                               0.7                   0.0                    44.7                      49.3
                                               a
                                                Not applicable.



                                               15
                                                 The actual percentages of claims qualifying as table injuries are lower due to restrictions in the
                                               definition of an injury or time of onset listed in “Qualifications and Aids to Interpretation.” (See app.
                                               III.)



                                               Page 14                                     GAO/HEHS-00-8 Vaccine Injury Compensation Program
                                B-281968




Lack of Clear Methodology       HHS  has published its rationale for each revision to the injury table in the
for Table Changes Raises        Federal Register but has not published an overall method of applying the
Questions of Consistency        criteria it uses in conjunction with the Institute of Medicine findings.
                                Because HHS’ modifications of the table determine whether the
                                government or petitioner has the burden of proof for affected claims, table
                                changes that make compensation more difficult for petitioners have been
                                questioned by some. Defining the criteria related to the level of program
                                and financial risk that the government will bear is controversial and there
                                is disagreement about what the Congress intended in this regard. For
                                example, HHS interprets the legislative history as directing it to recognize
                                table injuries where there is definitive information linking vaccines to
                                injuries, while others cite the same legislative history as directing that,
                                until definitive information is available, the benefit of doubt should remain
                                with the petitioner.

                                Particularly because of these differences, establishing a clearly defined,
                                transparent decisionmaking process is important to help advance the
                                appearance of fairness. HHS has not produced such a methodology, and its
                                actions do not always convey a sense of consistency, as illustrated in the
                                following examples:

                            •   The Institute of Medicine found that existing scientific evidence favored
                                acceptance of a causal relationship between tetanus vaccines and brachial
                                neuritis, and HHS added that condition to the injury table. On the other
                                hand, the Institute also found evidence of a causal relationship between
                                the tetanus and oral polio vaccines and Guillain-Barre syndrome, but HHS
                                did not add this condition to the injury table.
                            •   The Institute of Medicine found the evidence inadequate to accept or
                                reject a causal relation between vaccines and residual seizure disorder,
                                and HHS removed this condition from the injury table. The Institute also
                                found evidence inadequate to accept or reject a causal relation between
                                the measles and mumps vaccines and encephalopathy, yet HHS left this
                                condition on the injury table.16

                                HHS stated in the Federal Register that decisions not to add injuries, such
                                as Guillain-Barre syndrome, or to remove injuries, such as residual seizure
                                disorder, were based to some extent on the level of risk in compensating
                                an inordinate number of non-vaccine-related cases for the extremely rare
                                vaccine-related case. In applying this criterion, however, HHS’ assumptions
                                about the number of potential claims and thresholds for deciding the

                                16
                                 HHS narrowed the definition of encephalopathy in the “Qualifications and Aids to Interpretation,”
                                which would preclude use of the table for some petitioners.



                                Page 15                                  GAO/HEHS-00-8 Vaccine Injury Compensation Program
                            B-281968




                            reasonable level of financial risk for compensating non-vaccine-related
                            injuries were not defined.


                            The VICP trust fund has grown to $1.3 billion primarily because the income
Trust Fund Income           from vaccine excise taxes is higher than claims payments and because the
Exceeds Need for            government pays interest on the trust fund balance. Program participants
Claims Payments             have expressed concerns about the rising balance and have proposed
                            options to address them. Exercising these options, however, would have
                            implications for the overall federal budget, possibly requiring new or
                            higher taxes elsewhere or a decrease in spending for other federal
                            programs and activities.


VICP Trust Fund Continues   The VICP trust fund has historically received more in vaccine excise taxes
to Grow                     than it has paid out for claims and related administrative costs. Since the
                            program began, the Treasury reported it has collected over $1.6 billion in
                            vaccine excise taxes: $.4 billion of this amount went directly to the general
                            fund to offset income and payroll taxes lost to the general fund as a result
                            of the excise tax.17 The remaining $1.2 billion went to the VICP trust fund
                            for claims payments and related administrative costs. Because the trust
                            fund has spent only about $290 million of the $1.2 billion received, the
                            remaining $948 million was loaned to the Treasury and used for other
                            federal programs and activities. In exchange, the trust fund received
                            Treasury securities to be redeemed if needed to pay future claims.18
                            Interest on these Treasuries held by the trust fund totaled about
                            $374 million by the end of fiscal year 1998. This $374 million in interest and
                            the $948 million loaned to the Treasury comprise the $1.3 billion trust fund
                            balance existing as of the end of fiscal year 1998.




                            17
                              The 25-percent factor is the standard offset used when excise tax provisions are scored for budget
                            purposes during the legislative process. Budget estimating conventions are that gross domestic
                            product and the price level are fixed. Therefore, any increase in excise taxes must reduce payments to
                            labor and capital (such as wages and rents) and, therefore, reduce income and payroll taxes deposited
                            to the general fund.
                            18
                             As provided in section 9602(b) of the Internal Revenue Code for management of trust funds in
                            general.



                            Page 16                                   GAO/HEHS-00-8 Vaccine Injury Compensation Program
                                        B-281968




Figure 3: Money Flows Attributable to
Vaccine Excise Taxes Collected From
Fiscal Year 1989 Through Fiscal Year
1998
                                           Excise Tax on Each
                                            Dose of Vaccine




                                                   $1.2 Billion                                  $.4 Billion




                                                                   Unused Surplus
                                                                   $.9 Billion



                                             Vaccine Injury
                                                                                                  General Fund
                                             Compensation
                                          Program Trust Fund

                                                                   Special Treasuries
                                                                   $.9 Billion
                                                                   Interest Paid on Special
                                                                   Treasuries
                                                                   $.4 Billion




                                                     $.3 Billion




                                           Injury Claims and
                                          Administrative Costs




                                        At current rates, the Congressional Budget Office (CBO) estimates that the
                                        VICP trust fund balance will reach $2.6 billion within the next decade and




                                        Page 17                        GAO/HEHS-00-8 Vaccine Injury Compensation Program
                               B-281968




                               the program will generate almost three times more revenue than will be
                               used to pay annual claims and administrative costs. However, the vaccine
                               excise tax rate is not based on an empirical risk assessment set to fund
                               future benefits, and HHS officials do not believe that there is an outstanding
                               liability requiring a large trust fund balance to meet future claims
                               payments.19 If this expectation holds true, the trust fund balance reflects
                               the amount of vaccine excise taxes and interest on Treasury securities that
                               is not expected to be needed for VICP purposes.


Options to Address             Vaccine manufacturers, parent groups, and others involved with VICP have
Concerns About the             expressed concerns about the large trust fund balance and have proposed
Growing Trust Fund             options to address them. These options generally involve cutting the
                               excise tax supporting the trust fund or spending more of the money
Balance                        received on designated vaccine-related activities. Views and options
                               include the following:

                           •   Some vaccine manufacturers view the trust fund balance as an indicator
                               that the vaccine excise tax rate is too high. They support legislative
                               proposals to reduce the tax rates.
                           •   Parent groups view the trust fund balance as an indicator of the
                               government’s unwillingness to recognize vaccine injuries and compensate
                               people fairly for these injuries. They advocate a less restrictive injury table
                               that would increase the number of petitioners compensated from the trust
                               fund.
                           •   HHS officials from the Food and Drug Administration (FDA) and the Centers
                               for Disease Control and Prevention (CDC) responsible for monitoring
                               vaccine safety view the trust fund balance as a source of potential revenue
                               if the Congress decides to expand trust fund spending to vaccine-related
                               activities. Although the Administration has not submitted formal proposals
                               to increase support of these activities or taken a position on the potential
                               use of the trust fund, FDA and CDC officials we contacted supported
                               dedicating a portion of the trust fund revenue not needed for claims
                               payment to provide funding for vaccine injury surveillance systems and for
                               research examining links between vaccines and delayed onset or chronic
                               diseases.


Budgetary Implication of       Because excise tax revenue received by the VICP trust fund and not spent
Options to Reduce the          on the program is invested in Treasury securities and these proceeds are
Trust Fund Balance             used by the general fund, implementing options to control the growth of

                               19
                                 See Budget Issues: Budgeting for Federal Insurance Programs (GAO/AIMD-97-16, Sept. 30, 1997) for
                               further information on budget issues for federal insurance programs.



                               Page 18                                 GAO/HEHS-00-8 Vaccine Injury Compensation Program
              B-281968




              the trust fund balance not only affect the trust fund but also affect revenue
              and spending for the overall federal budget. Options requiring a change in
              legislation are also affected by requirements of the Budget Enforcement
              Act (BEA).20 Under BEA, the Congress has to offset the cost of legislation
              that reduces revenue or increases spending by establishing new or higher
              taxes elsewhere or by decreasing spending for other programs.21 For
              example, if the Congress had passed a law in 1998 that either lowered the
              vaccine excise tax rate to match claims payments or allowed the trust fund
              to spend the annual excess for new activities, funding for other federal
              programs and activities would have to have been reduced by $59 million.22
              Had legislation been enacted in 1998 allowing new spending beyond the
              annual income received by the trust fund, the trust fund would have had to
              draw upon the $1.3 billion trust fund balance by redeeming its Treasury
              securities. In this case, BEA would have required a reduction in spending
              for other federal programs—or an increase in other taxes—to offset the
              new spending by the trust fund.


              While VICP was expected to provide compensation for vaccine-related
Conclusions   injuries quickly and easily, these expectations have often not been met. In
              establishing the vaccine injury table as a desirable alternative for
              petitioners over the civil tort system, the Congress was initially willing to
              accept the risk that some compensation would be provided for injuries
              where the role of vaccines is uncertain. But in administering and refining
              the injury table, HHS is in the position of determining how much of this
              uncertainty the program will continue to bear. When HHS removes or does
              not add injuries to the vaccine injury table, the petitioner bears the burden
              of proof rather than the government. Where science is insufficient to
              determine causal relationships between a vaccine and injuries, it is not
              clear that HHS’ criteria and approach to making injury table changes are
              consistent. Establishing a standard method with criteria that will be used
              consistently for all table changes may help eliminate questions regarding
              HHS’ programmatic decisions.


              20
               The Budget Enforcement Act of 1990 and subsequent amendments (the Omnibus Budget
              Reconciliation Act of 1993 and the Budget Enforcement Act of 1997) are collectively referred to as the
              Budget Enforcement Act. These acts amended the Balanced Budget and Emergency Deficit Control
              Act of 1985, sometimes called Gramm-Rudmann-Hollings.
              21
                The act requires that all legislation that increases mandatory spending or decreases receipts be fully
              offset—or paid for—so that it is deficit neutral. The Balanced Budget Act of 1997 requires that the
              impact of spending and receipts legislation be offset in the current year, the budget year, and the
              following 4 fiscal years. A point of order may be raised in the Senate if the change is not deficit neutral
              in the second 5 years. This provision is enforced through sequestration, which is done annually.
              22
               This result assumes that if vaccine excise taxes were reduced, the manufacturer would not decrease
              vaccine prices to pass on the tax savings to purchasers. If the tax savings were passed on to the
              vaccine purchaser, funding for other federal programs would need to have been reduced by
              $30 million.
              Page 19                                     GAO/HEHS-00-8 Vaccine Injury Compensation Program
                          B-281968




                          We recommend that the Secretary of HHS develop and apply a consistent
Recommendation to         methodology for evaluating and reporting on the various factors used to
the Secretary of HHS      add injuries to or remove injuries from VICP’s injury table. This
                          methodology should include specific scientific and public policy
                          considerations and their relative weight in the decisionmaking process and
                          should be applied to any future table changes.


                          Both HHS and DOJ provided written comments on our draft report. Their
Agency Comments           comments are reprinted as appendix IV and appendix V, respectively. We
and Our Evaluation        summarized their comments and provide our response below.

                          Both HHS and DOJ raised issues with our analysis of claims processing
                          times. In addition, HHS did not concur with our recommendation regarding
                          the need to establish a clear methodology for revising the vaccine injury
                          table and said that the Administration has not taken a position on potential
                          uses of the VICP trust fund surplus.


Claims Processing Times   HHS commented on what it considered an inappropriate use of the original
                          legislated criteria of 1 year to measure VICP performance. HHS pointed out
                          that subsequent legislation allows petitioners additional time, as needed,
                          to obtain medical records and bolster the sufficiency of their cases. We
                          made several modifications to the final report to reduce the perceived
                          focus on historical expectations. Nevertheless, while the legislation was
                          amended to provide petitioners with the flexibility to keep the case open
                          longer, there is no indication that the Congress changed its expectation
                          that claims would be processed quickly. In fact, the law was amended to
                          require a special master decision within 240 days, exclusive of suspended
                          time.23

                          HHS also commented that our analysis should more clearly differentiate
                          adjudication times between claims related to vaccinations administered
                          prior to October 1988 (pre-1988 claims) and claims related to vaccinations
                          on or after this date (post-1988 claims). HHS stated that pre-1988 claims are
                          not representative of current and future processing times and should be
                          reported on separately. HHS said the average processing time for post-1988
                          claims was 2 years. To clarify that our analysis did differentiate between
                          pre- and post-1988 claims, we added a note to figure 2 to indicate that the
                          years 1992 through 1997 include only post-1988 claims. We also note that

                          23
                            Either party may file an appeal of the special master decision, which would add time to the process
                          (see app. II).



                          Page 20                                   GAO/HEHS-00-8 Vaccine Injury Compensation Program
                       B-281968




                       HHS’  2-year number is the average time for only those cases that have been
                       closed. However, after 2 years, a majority of the cases filed each year are
                       still open.

                       HHS and DOJ said that the draft report implied that HHS’ increased
                       propensity to defend claims is a result of a significant change of position
                       rather than the result of the Congress providing funding for DOJ attorneys
                       to defend claims that HHS had defaulted on for the first 2 years of the
                       program. We added language to clarify that HHS’ increased level of defense
                       in implementing its statutory authority was related to the availability of
                       additional resources.

                       DOJ also commented that some statements in the draft may convey an
                       incorrect understanding of why some cases have taken longer to resolve
                       than originally anticipated. DOJ said a significant factor was that the court
                       suspended claims processing in 1991 when an overwhelming number of
                       claims were received. Legislation does allow the court to suspend
                       proceedings when the volume of claims is onerous, and our report does
                       state that the large volume of cases was a primary factor in delayed
                       processing times. However, we also point out that volume is not the only
                       factor. For example, we report that even though caseloads declined
                       between 1992 and 1997, the percentage of new claims processed within 2
                       years has remained relatively the same. We have added wording to the
                       report text to help clarify this point.

                       HHS also pointed out that our draft report did not discuss recent legislative
                       proposals to improve VICP. In our view, the legislative proposals advanced
                       by HHS in June 1999 do not directly address the findings related to our
                       report objectives; therefore, we did not include them. The proposals
                       primarily cover technical aspects of the program, such as expanding the
                       statute of limitations for filing claims and clarifying statutory terms that
                       define entitlement to compensation.


Vaccine Injury Table   HHS did not concur with our recommendation that in considering future
                       changes to the vaccine injury table, HHS formalize and apply a set of
                       standard criteria for making decisions to add or remove injuries. HHS
                       stated that it is inappropriate to reduce the scientific basis for decisions to
                       the application of weighted criteria and that a standard approach in
                       making such decisions is not possible because the scientific and public
                       policy considerations vary on a case-by-case basis. Further, HHS stated that
                       the Institute of Medicine had cautioned against using a “formula”



                       Page 21                         GAO/HEHS-00-8 Vaccine Injury Compensation Program
B-281968




approach, and HHS had gone to great lengths to explain its rationale for
each table decision when it published the proposed and final rules in the
Federal Register.

We recognize that HHS has a difficult task of applying judgment when
scientific uncertainties exist about the causal links between vaccines and
injuries, and we did not question the table changes that were made.
However, using a variety of criteria on a case-by-case approach does not,
in our view, clearly communicate to the public that HHS is acting
consistently in applying its judgment. For example, in discussing its
rationale for each change in the Federal Register, HHS generally cites some
combination of four factors in controlling its decision. These factors
include Institute of Medicine findings (and subsequent medical studies),
biologic plausibility, recommendations from the Advisory Council on
Childhood Vaccines and the National Vaccine Advisory Committee, and
prevalence of the condition in the population attributable to vaccines.
However, in communicating its decisions to the public, HHS does not
uniformly discuss each of these factors, and the reasons why the relative
importance of each factor varies among the decisions is not apparent in all
cases. As HHS indicated in its comments, it is important to maintain public
confidence in the fairness of the program. Our recommendation is being
made with this objective in mind.

Further, we disagree that it is not practical for HHS to adopt a standard
methodology to evaluate the available evidence and that doing so would
constitute use of a formula. For example, the Institute of Medicine
developed such a methodology to perform its review and evaluation of the
available scientific evidence linking vaccines to adverse events. The
Institute considered four types of scientific evidence (biologic plausibility,
case reports, case series, and uncontrolled observational studies) and used
qualitative and quantitative approaches to weight each type of evidence.
The results were summarized in a matrix with narrative on how each
factor was applied in the decisionmaking process. HHS could develop a
similar decisionmaking methodology that includes the public policy
considerations and other relevant criteria it uses in addition to the
Institute’s findings. We have reworded our recommendation to make it
clearer that, in the future, HHS should apply a consistent methodology for
evaluating and reporting on the factors used to make vaccine injury table
changes.

HHSalso commented that the reason compensation numbers significantly
dropped for DTP after the vaccine injury table changes was not because of



Page 22                        GAO/HEHS-00-8 Vaccine Injury Compensation Program
                    B-281968




                    the table changes, as we reported, but because of a decrease in the use of
                    this vaccine. HHS also stated that our report should reflect the fact that
                    VICP’s future workload will be primarily for vaccines other than DTP. Our
                    point about the changes to the table does not relate to the use of the DTP
                    vaccine or VICP’s workload. Instead, our discussion concludes that,
                    regardless of the vaccine in question, people have historically had a higher
                    chance of being compensated for injuries that are on the table than for
                    injuries that are not on the table. Since a higher percentage of people filed
                    claims off-table after the table changes were implemented, the future
                    percentage of claims compensated under the program may be lower.


Trust Fund Growth   HHS said the Administration has not submitted formal proposals to
                    increase support of vaccine safety and research activities or taken a
                    position on the potential use of the trust fund. We have added language to
                    clarify that these options have not been formally endorsed by the
                    Administration.


                    As agreed with your office, unless you publicly announce its contents
                    earlier, we plan no further distribution of this report until 30 days from the
                    date of this letter. At that time, we will send copies of this report to the
                    Honorable Donna E. Shalala, Secretary of HHS; the Honorable Janet Reno,
                    Attorney General; the Honorable Loren A. Smith, Chief Judge, U.S. Court
                    of Federal Claims; and other interested parties. We will also make copies
                    available to interested congressional committees and others upon request.

                    This report was prepared by Frank Pasquier, Assistant Director; Lacinda
                    Baumgartner; and Linda Bade. Please call me at (202) 512-7118 if you or
                    your staff have any questions.

                    Sincerely yours,




                    Kathryn G. Allen
                    Associate Director, Health Financing
                      and Public Health Issues




                    Page 23                         GAO/HEHS-00-8 Vaccine Injury Compensation Program
Contents



Letter                                                                                                1


Appendix I                                                                                           26

Scope and
Methodology
Appendix II                                                                                          29

VICP Claims Process
Appendix III                                                                                         32

Current VICP Injury
Table and
“Qualifications and
Aids to Interpretation”
Appendix IV                                                                                          38

Comments From the
Department of Health
and Human Services
Appendix V                                                                                           43

Comments From the
Department of Justice
Tables                    Table 1: Original Vaccine Injury Table                                      6
                          Table 2: Financing for VICP Claim Payments                                  7
                          Table 3: VICP Claims Filed, Adjudicated, and Pending, by                    9
                            Calendar Year
                          Table 4: VICP Petitions Claiming Table/Off-Table Injuries                  12
                          Table 5: Injuries Added to and Removed From the VICP Vaccine               13
                            Injury Table
                          Table 6: Claims Associated With Injuries Added to and Removed              14
                            From the VICP Vaccine Injury Table
                          Table II.1: Claims Process Steps and Time Frames                           30
                          Table III.1: VICP Vaccine Injury Table                                     32




                          Page 24                      GAO/HEHS-00-8 Vaccine Injury Compensation Program
          Contents




Figures   Figure 1: Status of VICP Claims                                              8
          Figure 2: Percentage of Claims Filed in Calendar Years 1988 to              10
            1997 With Judgment Received Within 2 Years
          Figure 3: Money Flows Attributable to Vaccine Excise Taxes                  17
            Collected From Fiscal Year 1989 Through Fiscal Year 1998
          Figure II.1: Time Line of VICP Claims Processed in U.S. Court of            31
            Federal Claims Without an Appeal
          Figure III.1: “Qualifications and Aids to Interpretation”                   33




          Abbreviations

          BEA        Budget Enforcement Act
          CBO        Congressional Budget Office
          CDC        Centers for Disease Control and Prevention
          DOJ        Department of Justice
          DTP        diphtheria, tetanus, and pertussis
          FDA        Food and Drug Administration
          HHS        Department of Health and Human Services
          VICP       Vaccine Injury Compensation Program


          Page 25                       GAO/HEHS-00-8 Vaccine Injury Compensation Program
Appendix I

Scope and Methodology


                          To obtain information on VICP, we interviewed (1) officials at HHS, DOJ, and
                          the U.S. Court of Federal Claims involved in the VICP claims process; (2) a
                          representative of the Institute of Medicine responsible for analyzing
                          existing scientific evidence for HHS use in revising the VICP vaccine injury
                          table; (3) officials at CDC and FDA responsible for the national immunization
                          program and monitoring vaccine safety; (4) an attorney and a parent group
                          representing the interests of people injured by vaccines; (5) a
                          representative of a professional association representing pediatric
                          physician interests; (6) Treasury officials responsible for the financial
                          accounting and reporting for the VICP trust fund; and (7) the CBO official
                          responsible for budgeting aspects of the trust fund and presentation in the
                          federal budget.

                          We also reviewed relevant legislation, financial reports, budget
                          documents, and reports evaluating various aspects of VICP operation. We
                          obtained and analyzed data from HHS on claims filed under VICP from 1988
                          to February 1999. In addition, we obtained the Federal Register notices
                          discussing HHS changes to the VICP injury table and reviewed the Institute
                          of Medicine’s analysis of information available to link vaccines to various
                          medical conditions.

                          We conducted our work from January through September 1999 in
                          accordance with generally accepted government auditing standards.


Claims Processing         To determine how long it took to process claims through VICP, we analyzed
                          HHS’ VICP claims database. This database included data fields on when the
                          claim was filed and a history of processing steps through when the claim
                          was settled. We did not perform a reliability assessment of the data
                          system.


The Effect of Table       We used HHS’ VICP claims database to identify compensation rates for
Changes on Compensation   claims that did and did not allege injuries on the vaccine injury table. We
Rates                     identified such claims by comparing injuries on the injury table with those
                          listed in the HHS claims database for each claim. We provided a list of the
                          injuries in the database to HHS officials, and they confirmed those injuries
                          that they would consider as potentially being on or off each of the three
                          injury tables. Because three different injury tables were in effect over the
                          life of the program, we first grouped the claims according to the injury
                          table that was applicable at the time the claims were filed. We then
                          computed the number and proportion of claims in each group that did or



                          Page 26                        GAO/HEHS-00-8 Vaccine Injury Compensation Program
                      Appendix I
                      Scope and Methodology




                      did not allege injuries on the injury table. Compensation rates and
                      associated awards for alleged table and non-table claims were then
                      identified using the data fields for the U.S. Court of Federal Claims’
                      judgment and award amounts in the HHS database.


Budgetary Effect of   To determine the budgetary effect of options proposed to reduce the trust
Options to Address    fund balance, we first obtained financial statements for the VICP trust fund
Growing Trust Fund    from the Treasury. These financial statements identified the revenue that
                      flowed into the trust fund from vaccine excise taxes and interest accrued
Balance               on Treasury securities, as well as expenditures that flowed out of the trust
                      fund for claims and associated administrative expenses. We did not audit
                      the trust fund financial statements.

                      Because of the interrelationship between the trust fund and the general
                      fund in the federal budget, we used the trust fund financial information to
                      identify the amounts that flowed directly and indirectly through the
                      Treasury to the general fund as a result of the program. Direct general
                      fund revenue includes 25 percent of all vaccine excise taxes collected by
                      the Treasury. As discussed with Treasury and CBO officials, we backed into
                      the total tax collected by the Treasury by dividing the vaccine excise tax
                      provided to the VICP trust fund by 75 percent. We then subtracted the trust
                      fund share of the tax from the total tax collected to get the amount of tax
                      available to finance general fund programs and activities. Indirect general
                      fund revenue includes amounts derived from Treasury securities issued to
                      the trust fund. The Treasury securities balances were listed on the trust
                      fund financial statements.

                      To demonstrate how proposed legislative changes to reduce the excise tax
                      rate or increase trust fund spending would affect the overall budget, we
                      used a rolling average of trust fund revenue and expenses in 1997 and 1998
                      (hereafter referred to as 1998). We used a rolling average to minimize
                      timing differences in accounting for revenue and expenses. We assumed
                      that if new legislation had resulted in a match between trust fund revenues
                      and expenditures in 1998, the amount of offset required by the Budget
                      Enforcement Act for 1998 would have been the difference between the
                      total excise tax actually received and expended by the trust fund in that
                      year.24 Our computation reflects the assumption that vaccine
                      manufacturers would not decrease vaccine prices to pass on the tax
                      savings to vaccine purchasers because HHS officials said that they did not

                      24
                        This excludes loss of the 25 percent in vaccine excise taxes provided directly to the general fund
                      because budget scoring convention assumes these taxes will be recouped through commensurate
                      increases in income and payroll tax revenue.



                      Page 27                                   GAO/HEHS-00-8 Vaccine Injury Compensation Program
Appendix I
Scope and Methodology




reduce prices when VICP took on the burden of liability. However, we also
computed the somewhat lesser effect on the general fund if the
manufacturer had passed on the savings. The effect is less because CDC
information on federal vaccine purchases shows that nearly half of all
vaccine purchases are made by the federal government. Therefore, lower
vaccine prices to federal agencies purchasing vaccines would offset the
decrease in excise tax. We computed the government’s loss as the
percentage of excess in the trust fund that was related to state and private
vaccine purchases.




Page 28                        GAO/HEHS-00-8 Vaccine Injury Compensation Program
Appendix II

VICP Claims Process


              Three federal agencies are involved in the VICP claims process: HHS, DOJ,
              and the U.S. Court of Federal Claims. The process consists of several
              steps. (See table II.1.)




              Page 29                        GAO/HEHS-00-8 Vaccine Injury Compensation Program
                                               Appendix II
                                               VICP Claims Process




Table II.1: Claims Process Steps and Time Frames
Step                                                                   Time frame
Petition filed
An individual or representative claiming injury or death from a        — In the case of an injury, the claim must be filed within 36
vaccine files a petition for compensation with the court.              months after the first symptoms appeared, and the effects must
                                                                       have continued at least 6 months after vaccination.
                                                                       — In the case of a death, the claim must be filed within 24
                                                                       months of the death and within 48 months after the onset of the
                                                                       vaccine-related injury causing the death.
Physician review
A physician at the Division of Vaccine Injury Compensation, HHS,       — Court rules require the report to be sent to the court within 90
reviews each petition to determine whether it meets the medical        days from the date the claim was filed. This deadline is subject to
criteria for compensation. This recommendation is provided to the      change depending on a petitioner’s ability to obtain all relevant
court through a report filed by DOJ, although it is not binding.       medical records and file a complete petition.
Special master decision
A “special master” of the court is required to make the initial        The special master is required to issue a judgment within 240
decision for compensation under the program. A special master is       days (exclusive of suspended time) from the date a claim is filed,
an attorney appointed by the judges of the court. At hearings before   or petitioners are allowed to withdraw their claim from VICP and
the special master, HHS is represented by a DOJ attorney and the       file a lawsuit against the vaccine manufacturer or vaccine
petitioner is represented by a private attorney.                       administrator in the civil tort system.
Acceptance or rejection of special master decision
The petitioner and HHS accept or reject the special master’s           — Either party has 30 days to file a motion for review by the
decision.                                                              court. If a motion is filed, an additional 30 days is provided to the
                                                                       other party to respond.
                                                                       — Instead of filing a motion for review, if a petitioner files an
                                                                       election to reject a special master’s judgment within 90 days after
                                                                       entry of judgment, the petitioner may proceed to file a lawsuit in
                                                                       the civil tort system.
Court judgment
The court issues a judgment on the special master’s decision.          — The court is required to enter a judgment within 420 days from
                                                                       the date the claim was filed (exclusive of the time spent on
                                                                       remand to the special master).
                                                                       — Within 60 days, either party may file a petition for review of the
                                                                       judgment with the U.S. Court of Appeals for the Federal Circuit.
                                                                       Final appeal from the Federal Circuit is to the U.S. Supreme Court
                                                                       through a petition seeking a writ of certiorari. Within 90 days of
                                                                       the conclusion of the appeals process, if a petitioner files with the
                                                                       court an election to reject the judgment, the petitioner may
                                                                       proceed to file a lawsuit in the civil tort system. If the petitioner
                                                                       takes no action within 90 days, the judgment is deemed
                                                                       “accepted” by law.
Payment of award
Petitioners accepting the judgment and awarded compensation are        Agency criteria requires HHS to pay petitioners within 60 days
paid from the VICP trust fund if the vaccine was administered on or    after payment is authorized by the court and DOJ.
after October 1, 1988, or from annual appropriations if administered
before this date.




                                               Page 30                              GAO/HEHS-00-8 Vaccine Injury Compensation Program
                                        Appendix II
                                        VICP Claims Process




Figure II.1: Time Line of VICP Claims
Processed in U.S. Court of Federal
Claims Without an Appeal
                                                                                  Deadline for                      Deadline
                                                         Deadline                 special                           for           Deadline to
                                                         for HHS to               master of          U.S.           petitioner    authorize
                                                         complete                 U.S. court to      court          to accept     payment if
                                        Petitioner       medical                  reach a            finalizes      or appeal     judgment
                                        files claim      review                   decision a         judgment b     judgment c    accepted




                                            0              90                             240     270                   360         420
                                                                                  Elapsed time (days)




                                        a
                                         Parties can request suspensions adding up to 180 days to the time before the special master
                                        reaches a decision. In addition, for claims related to vaccines administered before Oct. 1, 1988,
                                        the special master can suspend proceedings an additional 900 days.
                                        b
                                         Parties may expedite this step by waiving their right to file a motion for review. If parties file a
                                        motion for review of the special master’s decision, the deadline for the court to render judgment is
                                        extended by 150 days.
                                        c
                                        The petitioner may expedite this step by immediately electing judgment.




                                        Page 31                                   GAO/HEHS-00-8 Vaccine Injury Compensation Program
Appendix III

Current VICP Injury Table and
“Qualifications and Aids to Interpretation”


Table III.1: VICP Vaccine Injury Table
Vaccine                                                     Injury/adverse eventa                                             Time periodb
Tetanus-containing                                          Anaphylaxis or anaphylactic shock                                 4 hours
                                                            Brachial neuritis                                                 2-28 days
Pertussis-containing                                        Anaphylaxis or anaphylactic shock                                 4 hours
                                                            Encephalopathy (or encephalitis)                                  72 hours
Measles, mumps, rubella in any combination                  Anaphylaxis or anaphylactic shock                                 4 hours
                                                            Encephalopathy (or encephalitis)                                  5-15 days
Measles-containing                                          Thrombocytopenic purpura                                          7-30 days
                                                            Vaccine-strain measles in an immunodeficient recipient            6 months
Rubella-containing                                          Chronic arthritis                                                 7-42 days
Polio live virus-containing                                 Paralytic polio
                                                            —In a nonimmunodeficient recipient                                30 days
                                                            —In an immunodeficient recipient                                  6 months
                                                            —In a vaccine-associated community case                           Not applicable
                                                            Vaccine-strain polio viral infection
                                                            —In a nonimmunodeficient recipient                                30 days
                                                            —In an immunodeficient recipient                                  6 months
                                                            —In a vaccine-associated community case                           Not applicable
Polio inactivated virus-containing                          Anaphylaxis or anaphylactic shock                                 4 hours
Hepatitis B                                                 Anaphylaxis or anaphylactic shock                                 4 hours
Hemophilus influenzae type b (Hib), unconjugated            Early-onset Hib disease                                           7 days
Hib, conjugated                                             No condition specified                                            Not applicable
Varicella                                                   No condition specified                                            Not applicable
Rotavirus                                                   No condition specified                                            Not applicable
New vaccines recommendedc                                   No condition specified                                            Not applicable
                                             a
                                              Injuries also include any acute complication or sequela (including death) of the listed events (for
                                             all but the conjugated Hib, varicella, and new vaccines).
                                             b
                                                 For first symptom, onset, or aggravation of injury after vaccination.
                                             c
                                              Any new vaccine recommended by CDC for routine administration to children, after publication
                                             by the Secretary of HHS of a notice of coverage.




                                             Page 32                                       GAO/HEHS-00-8 Vaccine Injury Compensation Program
                                            Appendix III
                                            Current VICP Injury Table and
                                            “Qualifications and Aids to Interpretation”




Figure III.1: “Qualifications and Aids to
Interpretation”




                                            Page 33                              GAO/HEHS-00-8 Vaccine Injury Compensation Program
Appendix III
Current VICP Injury Table and
“Qualifications and Aids to Interpretation”




Page 34                              GAO/HEHS-00-8 Vaccine Injury Compensation Program
Appendix III
Current VICP Injury Table and
“Qualifications and Aids to Interpretation”




Page 35                              GAO/HEHS-00-8 Vaccine Injury Compensation Program
Appendix III
Current VICP Injury Table and
“Qualifications and Aids to Interpretation”




Page 36                              GAO/HEHS-00-8 Vaccine Injury Compensation Program
Appendix III
Current VICP Injury Table and
“Qualifications and Aids to Interpretation”




Page 37                              GAO/HEHS-00-8 Vaccine Injury Compensation Program
Appendix IV

Comments From the Department of Health
and Human Services




              Page 38   GAO/HEHS-00-8 Vaccine Injury Compensation Program
               Appendix IV
               Comments From the Department of Health
               and Human Services




Now on p. 2.




               Page 39                          GAO/HEHS-00-8 Vaccine Injury Compensation Program
                Appendix IV
                Comments From the Department of Health
                and Human Services




Now on p. 11.




Now on p. 2.




                Page 40                          GAO/HEHS-00-8 Vaccine Injury Compensation Program
                Appendix IV
                Comments From the Department of Health
                and Human Services




Now on p. 15.




                Page 41                          GAO/HEHS-00-8 Vaccine Injury Compensation Program
                Appendix IV
                Comments From the Department of Health
                and Human Services




Now on p. 18.




Now on p. 15.




                Page 42                          GAO/HEHS-00-8 Vaccine Injury Compensation Program
Appendix V

Comments From the Department of Justice




              Page 43    GAO/HEHS-00-8 Vaccine Injury Compensation Program
           Appendix V
           Comments From the Department of Justice




(108396)   Page 44                           GAO/HEHS-00-8 Vaccine Injury Compensation Program
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