Comprehensive Analysis of Liability Protection for the Vaccine Industry

MK3|MK3Blog|Oct. 21, 2025

Long story short:

The U.S. Supreme Court has upheld liability protections for vaccine makers, ruling that they can’t be sued in state court for design-defect damages. The 1986 federal law created a no-fault compensation program to shield vaccine manufacturers from excessive tort litigation.

Between 1978 and the mid- 1980s, product liability lawsuits against vaccine makers went from a few single cases to hundreds of actions.  The massive litigation led to two of the largest domestic manufacturers going out of business. Congress responded with the National Childhood Vaccine Injury Act.  The law allows plaintiffs to file a petition for compensation in the US Court of Federal Claims.  Successful claimants can receive awards for medical,  medical, rehabilitation, counseling and other expenses. Vaccine-related death awards have a $250,000 cap. Is that what a child is worth?

Because vaccine makers have this protection there is little incentive for them to design vaccines that result in fewer side effects and longer lasting immunity.

Executive Summary

The history of vaccine liability protection is a story of the gradual, deliberate transfer of risk from powerful pharmaceutical manufacturers onto the public and the government. It began with common law principles that held manufacturers accountable for their products, evolved through a series of crises that threatened the industry’s viability, and culminated in a near-total legal shield enacted by the U.S. Congress. This framework, designed to ensure a steady vaccine supply, has fundamentally altered the legal relationship between citizens, their government, and corporations, creating a system where financial and physical risk is socialized while profit remains privatized.

Part I: The Foundation (1900 – 1970s) – Common Law and the Cutter Incident

1. The Common Law Era: "Liability Without Fault" Prior to the 1980s, vaccine injury claims were litigated under standard principles of tort law. Plaintiffs could sue manufacturers under several legal theories:

  • Negligence: Failing to exercise reasonable care in the manufacture, testing, or labeling of the product.
  • Strict Liability: Holding a manufacturer responsible for any defective product that was unreasonably dangerous, regardless of fault or intent. This was a powerful tool for consumers.
  • Breach of Warranty: Failure to live up to express or implied promises about the product.

This legal environment meant that vaccine manufacturers, like all other product manufacturers, were exposed to civil lawsuits. Jury awards could be significant.

2. The Paradigm-Shifting Event: The Cutter Laboratories Incident (1955) The first major event to trigger a government response was the 1955 “Cutter Incident” involving the new Salk polio vaccine.

  • What Happened: Cutter Laboratories produced batches of inactivated polio vaccine that contained live, virulent poliovirus due to a failure in the inactivation process. This manufacturing defect caused 40,000 cases of polio, leaving 200 children with varying degrees of paralysis and killing 10.
  • The Legal Aftermath: Victims sued Cutter Laboratories. In the landmark case Gottsdanker v. Cutter Laboratories (1960), the California Supreme Court ruled that while Cutter was not negligent (they had followed the government’s protocol), they were still liable for breaching an implied warranty of merchantability. This established that a company could be held liable for a defective product even without proven negligence.
  • The Industry Impact: The financial repercussions from the lawsuits were severe and sent a shockwave through the entire vaccine industry. It demonstrated the existential financial risks of manufacturing vaccines, a product mandated for public health but inherently unpredictable and administered to healthy people. The fear of massive liability began to stifle investment and innovation.

3. The Initial Government Response: The Vaccination Assistance Act (1962) In response to the Cutter crisis and to bolster public confidence, the federal government took its first step into liability protection. The Vaccination Assistance Act of 1962 allowed the U.S. Surgeon General to contract with vaccine manufacturers and provide them with indemnification clauses. This meant the federal government, not the company, would assume financial responsibility for any claims arising from vaccines produced under these contracts. This was a quiet but crucial precedent: the state began acting as a financial backstop for corporate liability.

Part II: The Crisis and The Creation of a New System (1970s – 1986)

1. The DTP Vaccine and the Rise of Organized Skepticism In the 1970s and 1980s, concerns grew over the whole-cell pertussis component of the Diphtheria-Tetanus-Pertussis (DTP) vaccine. A small but significant number of children suffered severe neurological adverse events, including encephalopathy and permanent brain damage.

  • Media Attention: Documentaries like “DPT: Vaccine Roulette” (1982) by Lea Thompson on WRC-TV (Washington D.C.) brought these heartbreaking stories into living rooms across America, galvanizing a parent-led movement.
  • Scientific and Legal Response: While the medical establishment maintained that the benefits of the vaccine vastly outweighed the risks, plaintiffs’ attorneys found success in court. Juries, faced with profoundly injured children, were increasingly willing to award substantial damages against manufacturers like Wyeth and Lederle Laboratories.

2. The “Liability Crisis” and the Threat of Market Collapse By the mid-1980s, the situation reached a boiling point:

  • Skyrocketing Litigation: The number of lawsuits filed against DTP manufacturers exploded, with over 200 lawsuits filed in 1985 alone.
  • Spiraling Insurance Costs: Liability insurance premiums for vaccine manufacturers became prohibitively expensive, if available at all.
  • Market Withdrawal: The financial risk became too great. In 1984, one of the only two remaining manufacturers of the DTP vaccine in the U.S. announced it was withdrawing from the market. The other threatened to follow. The United States was on the verge of having no supplier for a cornerstone of its childhood vaccination program—a genuine national security and public health crisis.

3. The Legislative “Solution”: The National Childhood Vaccine Injury Act (NCVIA) of 1986 Faced with the collapse of the vaccine market, Congress acted with bipartisan support. The NCVIA (42 U.S.C. § 300aa-10 et seq.) was a grand bargain with three primary objectives:

  • 1. Create a No-Fault Compensation System: The Act established the Vaccine Injury Compensation Program (VICP), a federal “vaccine court.” This administrative program was designed to be a faster, easier, and less adversarial alternative to civil litigation. Claimants only need to prove that an injury listed on the Vaccine Injury Table occurred within a certain timeframe after vaccination. There is no need to prove manufacturer fault or negligence.
  • 2. Provide Liability Protection to Manufacturers: This was the core of the bargain for the industry. The Act granted manufacturers near-total immunity from traditional product liability lawsuits for FDA-approved vaccines. To sue a manufacturer directly in civil court, a plaintiff must first exhaust all remedies through the VICP and then prove:
    • Failure to properly prepare the vaccine (manufacturing defect), OR
    • Failure to provide adequate directions or warnings (a very high bar, as labeling is approved by the FDA). This effectively eliminated lawsuits for “design defect,” the most common and successful legal theory used prior to 1986.
  • 3. Promote Vaccine Safety: The Act also included provisions for mandatory reporting of adverse events and funded research into vaccine safety.

The VICP is funded by an excise tax of $0.75 per dose of specified vaccines, meaning the program is financially supported by the consumers themselves.

Part III: The Modern Era (1991 – Present) – Expansion and Controversy

1. Operation and Criticisms of the VICP The VICP has processed over 25,000 petitions and awarded over $5 billion in compensation since its inception.

  • Criticisms:
    • "Vaccine Court": Critics argue it is a “kangaroo court” that is inherently biased toward protecting the program and the industry. The Department of Justice attorneys defend the program, not the injured party.
    • A Difficult Process: The process is often slow, complex, and arduous for grieving families. Many claims are dismissed for technicalities or because the injury is not on the official “Table.”
    • The Omnibus Autism Proceeding: This consolidated proceeding, which ultimately rejected any link between vaccines and autism, is cited by critics as a prime example of the system’s failure to adequately address widespread public concerns.

2. Further Erosion of Liability: The PREP Act The NCVIA shield was further strengthened by the Public Readiness and Emergency Preparedness (PREP) Act (2005). Initially designed for biological and chemical threats, its scope was dramatically expanded during the COVID-19 pandemic.

  • Scope of Immunity: The PREP Act allows the Secretary of Health and Human Services (HHS) to issue a declaration for a public health emergency. This declaration grants almost total immunity from liability to “covered persons” (manufacturers, distributors, program planners, and healthcare providers) for losses related to the administration or use of “covered countermeasures” (vaccines, therapeutics, diagnostics).
  • The Sole Remedy: The only avenue for recourse for someone injured by a countermeasure under a PREP Act declaration is the Countermeasures Injury Compensation Program (CICP). This program is far more restrictive than the VICP:
    • A much stricter standard of proof.
    • No right to a hearing or to challenge a decision in court.
    • Extremely narrow window to file a claim (one year from vaccination).
    • Caps on wrongful death damages.
    • No payment for pain and suffering or attorney’s fees.
  • COVID-19 Application: The HHS Secretary’s declaration for COVID-19 vaccines and therapeutics invoked the PREP Act, granting these products the strongest liability shield in American history. This has effectively barred virtually all lawsuits against Pfizer, Moderna, and other COVID-19 vaccine manufacturers for alleged injuries, regardless of the evidence.

3. Global Context The United States is unique in its extensive legal protection for vaccine manufacturers. Most other developed nations have different models:

  • No-Fault Systems (Similar to VICP): Countries like Sweden, Finland, and Denmark have administrative compensation programs for vaccine injuries, though they often operate alongside the possibility of civil litigation.
  • Full Manufacturer Liability: Many countries, including those in the European Union, maintain traditional tort liability for pharmaceuticals. However, the high burden of proof and the cost of litigation often make successful lawsuits rare.
  • State-Funded Programs: Some nations have programs where the government itself assumes responsibility for adverse events from its recommended vaccination schedule.

Conclusion: A Protected Industry

The historical trajectory is clear: from full liability under common law to a state-managed compensation system, and finally to near-blanket immunity under emergency powers. The argument for this protection has always been the same: without it, manufacturers will not produce vaccines, and public health will suffer. The counter-argument is that it creates a moral hazard, insulating powerful corporations from accountability for their products, stifles the natural market incentive to make products safer, and leaves injured citizens with limited and often inadequate recourse against the state, not the corporation that profited from the product.

The legal architecture built since the Cutter Incident, culminating in the NCVIA and PREP Act, has successfully ensured a stable vaccine supply. However, it has done so by fundamentally altering the concept of corporate responsibility and placing the financial and human costs of product injuries onto taxpayers and the injured themselves. This system remains one of the most controversial and consequential intersections of public health, corporate power, and individual rights in the modern world.