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No it doesn't, because people don't pay anywhere near the QALY value of vaccines to the vaccine company.
Let's pretend we have a vaccine for smallpox (40-50% fatality rate in babies). People/governments pay maybe $100 per dose (https://www.cdc.gov/vaccines-for-children/php/awardees/current-cdc-vaccine-price-list.html). The value of a wrongful death is $10M, so you would break even on a $100 vaccine for smallpox at one wrongful death in 100,000, while the vaccine would save 40,000 to 50,000 lives per 100,000.
I actually have to compliment @Quantumfreakonomics here, because until 15 minutes ago I thought liability was reasonable.
Why wouldn’t pharma just increase the cost of the vaccine to cover the increased cost of liability?
In the end that's exactly what would happen. Rich people would pay a lot for vaccines, poor people wouldn't get them at all, and grifters would get rich off the back of lawsuits.
Measles would go back to killing thousands of people a year in the U.S.
Is this the world you want to live in?
These concerns just seem internally silly. The only reason prices would rise a bunch is if there are a lot of vaccine related harms. If the harms are very small, then the cost for pharma would be small meaning costs would not increase much.
So what is it? Do vaccines cause a lot of damage meaning drug costs would need to increase a lot? Or do vaccines cause little harm meaning costs would rise only a little?
Neither.
Vaccines (at least the non-MRNA variety) cause little harm but the American legal system often assigns huge legal damages that are not warranted. For reference:
https://www.cnn.com/2024/05/01/business/j-and-j-talc-cancer-lawsuits-settlement/index.html
https://www.bloomberg.com/news/articles/2023-08-29/3m-to-pay-6-billion-to-resolve-vast-military-earplug-lawsuits
Ok. Now we are talking. So the problem isn’t torts per se but absurd compensatory damages. Isn’t the solution then not unlimited liability but a more proscribed amount of damages?
Yes. Fix torts and we can unlock a lot of benefits. But let's not put the cart before the horse.
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It sounds like that's the real problem here. Maybe instead of defending a specific carve-out patch for vaccines in particular, people should be pursuing tort reform instead.
Agreed. There are problems with how we calculate compensatory damages. That could be fixed resulting in the better cost benefit regulation of not just vaccines but al products.
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They might, but that ignores the collective benefits of vaccines. Imagine that our smallpox vaccine from above kills one in ten. Surely, compared to four in ten deaths from smallpox, we collectively are vastly better off with one in ten deaths and immunity to smallpox, or zero deaths if we can beat smallpox and phase out the vaccine. But now the vaccine company has liability for post vaccine deaths, and so a single dose of the vaccine is going to cost... $1M just to cover the liability. No patient/government is going to pay $1M to save a 4/10 of a life when there are cheaper QALYs to save elsewhere, so we will never beat smallpox and we will see 40% fatality rates in perpetuity.
The fair mathematical solution might be to limit the vaccine manufacturer's liability to the collective damages or to damages external to the vaccine (i.e. negligence). So if you have a vaccine which saves lives (or QALYs) on net, you have no liability, but you'd better be sure your vaccine saves lives.
This is the liquidity problem I mentioned but the reality is that practically speaking there aren’t vaxx that kill 1/10 (they would never hit the market because few diseases are so ubiquitous and deadly that it would make sense to take the vaxx).
But if a human life is worth 10m then this is spending a million to save 4 million. That’s great ROI! Why wouldn’t you spend that if you were a government?
In any event not sure it is worth spending so much time on a non central example.
Surely the answer is that the life of an arbitrary stranger is not worth anywhere near 10m. If you tout for charities based on cost per lives saved, as EA does, you find that the majority of people are not willing to spend $1 to save a life, much less $10,000,000. That figure is a political fiction designed to reflect voter’s estimation of their own (or a loved one’s) life so as not to make the government unpopular.
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