April 2006

The Cutter Incident: A Legal Tale of Unintended Consequences for Vaccine Development

Two events which took place in the mid-1950s have exerted an extraordinary influence over health care since that time. The first event was the development of an effective vaccine against polio, a scientific triumph over a fearsome communicable disease that had killed or crippled thousands of people annually, including Franklin D. Roosevelt. The second event was the litigation over an imperfectly prepared polio vaccine which caused injuries or death to hundreds of children--an event now known as the Cutter Incident. The Cutter litigation has played a pivotal role in changing the products-liability system to a liability-without-fault standard in which manufacturers must pay for damages, even in the absence of negligence.

In his book The Cutter Incident: How America's First Polio Vaccine Led to the Growing Vaccine Crisis (Yale University Press, 2005), Paul A. Offit provides a fascinating narrative of these two seminal events and concludes that this unfortunate turn in liability law has reduced today’s vaccine supply and, most importantly, has retarded the development of new vaccines. At an April 14 AEI conference, the author presented his book and discussed its implications with Randy Bovbjerg of the Urban Institute and AEI resident scholar John E. Calfee.

Paul A. Offit
Children’s Hospital of Philadelphia and the University of Pennsylvania

The Cutter Incident was a medical tragedy of the mid-1950s that spawned legal and regulatory precedents that have greatly discouraged the development of new and existing vaccines ever since. At the time, a severe polio epidemic was ravaging the United States, leaving tens of thousands of crippled and paralyzed children in its wake. Americans’ fear of this devastating disease eventually elicited a massive public-private research effort that culminated in one of the greatest scientific breakthroughs of the past century--the development of an inactivated polio vaccine that was free of infectious virus but capable of stimulating a protective immune response.

With unprecedented speed, the vaccine was approved and licensed to five manufacturers: Eli Lilly, Parke-Davis, Wyeth, Pitman-Moore, and Cutter Laboratories. Having triumphantly overcome decades of disasters in vaccine development, no one envisioned the difficulties in scaling up production to satisfy the demand of a frightened and eager public. However, while the manufacturing process was still evolving and being fine-tuned, Cutter Laboratories inadvertently released some vaccine with live, virulent poliovirus that had not been properly inactivated--the result of an unforeseeable design flaw that plagued all the polio vaccine manufacturers, not just Cutter.

The ensuing catastrophe to this day hails as one of the worst biological disasters in American history and as the only man-made epidemic. At least 200,000 people were infected with the full-blown poliovirus: 70,000 developed abortive polio, 200 were permanently paralyzed, and 10 were killed. The Cutter tragedy was followed by a revamping and restructuring of the regulatory landscape, which began an era of extensive and often fruitless industry regulations. In turn, the subsequent Cutter litigation gave rise to the emotive liability-without-fault legal culture now embedded in the pharmaceutical sector. A rational jury, shaped by the heavy hand of a magisterial judge, found Cutter liable for damages despite believing the manufacturer was not negligent in its production of polio vaccine. This decision set in motion a wave of characteristically frivolous litigation that has since penetrated vaccine, pharmaceutical, and medical product makers alike.

The National Vaccine Injury Compensation Program, established in 1986, has protected some vaccine manufacturers from the abuses of the tort system, but is far from a solution to the current vaccine crisis. Without real tort reform, society will continue to be deprived of lifesaving vaccines that could be easily developed with existing technologies.

Randall R. Bovbjerg
Urban Institute

Dr. Paul Offit has written a very entertaining book with two extremely important messages. First, the good news: vaccines have accomplished enormous good in America and the world at large, notably including the conquest of polio he describes. Polio was a huge fear for those of us in elementary school in the pre-Cutter 1950s. Moreover, the benefit-cost ratios of vaccines soar above those for most health and safety spending. Second, the bad news: the large potential for future vaccine progress may go unrealized, which would be a great social loss. Dr. Offit’s book blames manufacturers’ fear of legal liability, inflamed by the flamboyant success of Melvin Belli and his successors in winning occasional big liability awards. Other important factors are less prominent in the book, including: (a) changes in social attitudes about risk, injury causation, and compensation, (b) an incomplete liability reform through the National Vaccine Compensation Act, and (c) stingy public health budgets that pay too little for doses of vaccine while also failing to stabilize demand for vaccine production. Dr. Offit’s fine presentation, however, notes these as well.

Alas, The Cutter Incident has itself been structured, edited, and titled to promote drama rather than clarity of policy presentation. It seizes the occasion of one incident’s 50th anniversary to blame it for all the ills of today’s vaccine policy and styles the case’s single jury award (virtually directed by the judge) as the “Pandora’s Box” of pharmaceutical liability. The book emphasizes colorful anecdotes and characters. As a reader, I reveled in recalling how eagerly we youngsters all lined up for our Salk shots. But I often had trouble following the chronology and the logical flow of argument in the book.

The view from this corner is that the book’s presentation of legal history is problematic; vaccine litigation was part of much larger trends in American tort law, and if the Cutter Incident had not led to pharmaceutical liability, another event soon would have. No book can do everything, however, and this one certainly touches upon the big questions. How are Americans to reconcile the clear benefits of mandatory vaccination with traditions of individual liberty, parental control, and demands of compensation for harm? Who is to decide, and on what basis, whether ills that follow a vaccination were actually caused by it?

Dr. Offit’s book is thought-provoking, and I conclude with five thoughts that seem mainly consistent with its worldview:

• Courtrooms are ill-suited to weigh costs and benefits for such broad safety policy.
   
• Public health loses out not just to lawyers but also to budgetary competition with Medicaid and other public payments for private provision of acute care.
   
• Scientific illiteracy is a big problem not just in courtrooms, but also in the public’s understanding of safety and public health in general.
   
• Reimbursement should be better both for vaccine makers and for those injured by vaccines.
   
• Weak regulation and compensation increase demand for strong judicial liability.

John E. Calfee
AEI

Today, the liability-without-fault system, with or without the negligence standard, works reasonably well for manufacturing defects, such as the one responsible for the Cutter Incident. Manufacturing defects by their nature are relatively rare and uncontroversial, and are therefore not a major source of substantial or frivolous litigation. The real problem lies in lawsuits that go beyond production problems and into failure to warn or design defects--two extremely plastic standards that depend on the context of events and on juror attitudes toward the party being sued.

Original tort law was designed to deter wrongful behavior. The tort system went astray when the Cutter decision and subsequent litigation made compensation the focus of product liability. It is illogical to systematically compensate victims of drug side-effects under a liability-without-fault system, given that on average, many patients would have been even worse off if they had not taken the drug at all. Why should we compensate those who suffer from taking a product but not compensate those who suffer from not taking the product? The current liability system simply cannot handle risk-reducing products in a reasonable manner, at least not when awards become very large as they have in recent drug litigation.

The fuzzy standards of causality and failure to warn leave room for a great deal of subjective disagreement within the courtroom. As exemplified in the recent Vioxx lawsuits, it can be very difficult, and at times impossible, for scientists and physicians, let alone jurors, to make definitive decisions on such matters. Arbitrary and unpredictable verdicts against an already risky and costly pharmaceutical industry will only lead to higher prices and stagnant innovation.
 
AEI research assistant Elizabeth DuPré prepared this summary.