Vaccine Compensation Bill Signed : Measure Also OKs Foreign Sales of Unapproved Drugs

After an intensive lobbying effort that split ranks within the Administration, President Reagan “with mixed feelings” Friday signed the controversial omnibus health bill, which establishes a compensation system for children who suffer severe reactions to required vaccines.

The compensation provision, written by Rep. Henry A. Waxman (D-Los Angeles), was strongly opposed by both Reagan and Atty. Gen. Edwin Meese III.

“Although the goal of compensating those persons is a worthy one, the program . . . has serious deficiencies,” the President said in a statement.

Bush Supported Measure

In addition, the legislation, which contains nine health-related items, permits the export of drugs not yet approved for use in the United States. This provision, sponsored by Reagan political ally Sen. Orrin G. Hatch (R-Utah), was supported by Vice President George Bush and Health and Human Services Secretary Otis R. Bowen, both of whom had urged the President to sign the bill.

It would allow U.S. manufacturers to begin production of drugs in this country for sales abroad while waiting for Food and Drug Administration approval to market them domestically. It would not, however, allow drugs that are banned in the United States to be sold overseas.

Positive Effects Seen

“I cannot emphasize too strongly the positive effects of this provision,” Reagan said. “It will increase the competitiveness of the American pharmaceutical industry abroad, create jobs, foster biotechnology and aid other nations.”

The legislation, approved in the waning hours of the 99th Congress, was the subject of a vigorous debate largely centered on the vaccine provision.

The provision was supported by a coalition of parents’ organizations, vaccine manufacturers and pediatricians’ and other medical groups. Bowen, who opposed the vaccine provision during congressional deliberations on the bill, later recommended that the President sign the measure. However, the Justice Department never wavered in its opposition, calling the vaccine compensation a major new benefit program “for which no legitimate need has been demonstrated.”

“There was a real tug of war within the Administration--the President received conflicting recommendations,” Waxman said. “I was amazed it was such a struggle--the bill was clearly needed.”

Hatch, outgoing chairman of the Senate Labor and Human Resources Committee, and Sen. Edward M. Kennedy (D-Mass.), who will assume the chairmanship, both praised the President for signing the bill. “I applaud the President for his wisdom and compassion,” Hatch said. Kennedy called the bill “vital legislation” and said that Reagan’s decision “is the best omen so far for a productive 100th Congress.”

The vaccine provision would create a trust fund for families whose children are injured by common vaccines, such as those for whooping cough and polio. Several dozen children annually suffer severe reactions, including mental retardation, disability or even death.

Rising Liability Costs

To date, their families have often looked to the courts for relief--which, in turn, have often held manufacturers responsible. And manufacturers, faced with increasing liability costs, have either raised their prices or threatened to stop making vaccines altogether.

Under the bill, families could receive government compensation of medical and related expenses, wages lost over the child’s lifetime and up to $250,000 for death without showing that the company producing the product was negligent. They would then be prohibited from pursuing further claims in court. Presumably, because automatic compensation would be faster and less risky than a potentially lengthy court case, families would opt for this route and manufacturers would be protected against huge jury awards and increasing liability costs.

The original bill provided for the trust fund to be financed by an excise tax on each dose of vaccine. But this required action by the House Ways and Means Committee, which failed to consider it. The funding will be addressed in the next congressional session.

No Funding Mechanism

Reagan, who has traditionally opposed both new benefit programs and new taxes, said that the absence of a funding mechanism was a “major factor in my decision to approve” the bill.

Other provisions of the new law reauthorize the federal certification program for health maintenance organizations and a federal grant program that enables states to coordinate programs for the mentally ill. The bill provides also for training in geriatric medicine, protects physicians who participate in “peer review” of their colleagues and increases funding for research into Alzheimer’s disease.

“I believe the benefits of (the bill) outweigh its defects, and, therefore, with some reluctance, I am approving the bill,” Reagan said.