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the room and get them all to vote on that, but we did in our usual way deal with the principal staff members and reach agreements on what would or would not be done.

Mr. WAXMAN. So your understandings with the subcommittee are based on a written document exclusively or were there conversations?

Mr. AHART. There were conversations which in my recollection, and I could verify this, were reduced to a written document which we sent to the subcommittees so there would be no misunderstanding of the agreements reached.

Mr. WAXMAN. There were no copies ever sent to other Members of Congress who had made requests to GAO on their own behalf as Members of Congress.

Mr. AHART. I will be happy to check our records in your personal case, Mr. Waxman, to see what we did or did not tell you and what we did or did not send you and be glad to furnish to you copies of the correspondence with the subcommittee which lay out the charter, the scope we agreed upon with them.

Mr. WAXMAN. I can assure you when you send it to me, that will be the first time I will see them, and I also want to say for the record, what gives me additional reasons for concern was, that the staff person you were negotiating with, happened to be a very strong proponent of the swine flu program and the swine flu liability section of that program.

I feel a sense of frustration as a Member of Congress and a member of the subcommittee and as one of four interested enough to be here at a hearing on swine flu to have been treated the way I have been by the GAO.

I am also a member of the Government Operations which looks into the GAO for operation of Government and perhaps an inquiry into the GAO and swine flu ought to be required. I don't know where it ends, if I as a Member of Congress don't find out this information how are my constituents ever going to know? How are the American people going to know if we blunder with a program like this and can't explain what we did and why we did it and how we did it? Is there a cover up? I think that becomes a legitimate question.

Mr. AHART. Well, I can only assure you, Congressman Waxman, we tried to be as responsive to your interests and to the subcommittee's interests as we possibly could be. If we have failed to meet all of your interests, then I really can't-

The following letter with attachments was received for the record:)

98-930 0 - 12 -- 3

Mr. AHART. Well, there are two possibilities there. We do have two firms other than these four which are licensed to manufacture vaccines that are not currently in production. Perhaps that would offer some capability.

There is always the option of going to Government operated production facilities, should that be considered necessary by the Congress or others.

Mr. ROGERS. But that is an alternative you feel should be considered?

Mr. AHART. We think it ought to be thought about if there are going to be any further programs of this nature where you are trying to immunize everyone in the country within a short period of time.

Mr. ROGERS. I noticed you also recommended that the Congress consider the effect which inadequate liability protection might have on State participation in future immunization programs.

You suggest that the Federal Government could, (1) assume total liability for the program, (2) assume liability for the participants or, (3) assume limited liability similar to that provided under the swine flu program.

As I recall, this problem came up because of a court suit, the Reyes case, where an eight-month-old child had been vaccinated and the court held that the child had not been given a proper Warning by the nurse who had administered the vaccine. As a result the lawsuit held the manufacturer liable for not giving the warning

Do you recall that as being approximately correct?
Mr. AHART. I am not personally familiar with that case.
Mr. OswALD. That is correct.
Mr. ROGERS. I think that is correct.

Now, that was why the manufacturers said: "We will not do it without insurance.” That is why insurance companies, as I understand it, said: "We won't insure on a mass scale unless the Government assumes the responsibility of warning."

I have seen statements which say that the money paid to the insurance companies will never be called upon to be paid out. What is the potential liability of the companies for the $8.65 million?

Mr. AHART. Well, as the legislation was worked out in the Congress, there was the decision made that the companies would at a minimum-and this is where it came out-be held liable for their own negligence in the matter. So this was a residual that is the only thing for which they could be held liable.

They felt they needed protection from insurance on that and got it.

Now, with the Government having undertaken the responsibility for informed consent and with the Government also having tested and approved each lot of vaccine that the manufacturers produced, before it was released to the public, it struck us at least that there is not too much potential to reach the manufacturers on a negligence charge under those kinds of circumstances.

Mr. ROGERS. You realize that it is not only a negligence charge which would be the basis for liability of the manufacturers? Are you under the impression it is only negligence?

Mr. AHART. Let me ask Mr. Burnett to comment. I thought that that is what the manufacturers residual liability was, the way the legislation was worked out; is that correct?

Mr. BURNETT. Yes, I believe so.
Mr. ROGERS. Only negligence, you feel?
Mr. BURNETT. Are you speaking of breach of warranty?
Mr. ROGERS. Sure.
Mr. BURNETT. Yes, as the second part.
I believe that comes down to negligence also.

Mr. ROGERS. Any obligation or responsibility in connection with the program includes all actions in connection with the manufacture and distribution of the vaccine other than the actions involving a duty specifically assumed by the United States under the program.

What are the duties specifically assumed by the United States; to warn?

Mr. AHART. To warn; yes.
Mr. ROGERS. What else?
Mr. AHART. Distribute the vaccine. -

Mr. ROGERS. Well, the manufacturers also distributed the vaccine.

Mr. AHART. To whom? The manufacturers distributed the vaccine to HEW.

Mr. ROGERS. I understand. Also if a specific lot just happened to be bad.

Mr. BURNETT. Yes.

Mr. ROGERS. If there is anything wrong with a specific lot of vaccine that is the responsibility of the manufacturer?

Mr. BURNETT. Mitigated perhaps, and we don't have any feel for that, it will just be up to the courts to decide, but mitigated perhaps by the fact that the Bureau of Biologics tested every batch of the vaccine before it was released.

Mr. ROGERS. Well, I understand that.
But if it is the product liability there--

Mr. AHART. There would be product liability. Whether or not in a court case it would be found that that was attributable solely to the company's action and hold them solely accountable, we can't speculate on that.

Mr. ROGERS. As a matter of fact, then, we are not limited just to negligence in going against insurance companies for product liability. Mr. BURNETT. Yes. Mr. ROGERS. I think you ought to look at that again.

Now, what coverages are the manufacturers getting for the insurance premium? Is it $8 million, or is the total responsibility of the insurance company up to $25 million or more?

Mr. AHART. I think the total coverage for the $8.65 million is about $220 million.

Mr. ROGERS. So they have a potential liability still of $220 million?

Mr. AHART. That is correct. Mr. ROGERS. Is that still subject to liability for all of the claims filed within the time period given by the statute of limitations?

Mr. AHART. It will be subject to, first of all, all the claims that are filed against the Government and then beyond that whatever portion of those claims the Government feels it could make a case of liability on the part of the manufacturer and go against the manufacturer for reimbursement?

Mr. ROGERS. Yes.

Mr. AHART. Then, if that should absorb the total $2.5 million of each firm's self-insurance fund, then as I understand it the insurance coverage provided by the insurance companies could be reached.

Mr. ROGERS. So, perhaps it is premature to say as yet that there will be no call on that fund; in fact there may be a call up to $220 million?

Mr. AHART. That is correct. I think we put it in our statement this way, and I will repeat it, "may result in profit of nearly the entire" Mr. ROGERS. I would agree. Mr. AHART. There is that possibility. Mr. ROGERS. But also there may be a liability up to as much as $220 million.

Mr. AHART. That is the total coverage, yes sir.

Mr. ROGERS. I would hope that the General Accounting Office would continue to monitor the program, and we will make an official request that this be done. I agree with the gentleman from California, that I think you should discuss the program with all participants. Did you have discussions with insurance companies at all?

Mr. AHART. Mr. Burnett.

Mr. BURNETT. Yes, with representatives of the insurance industry. Mr. ROGERS. You have made inquiry of them? Mr. BURNETT. Yes, sir. Mr. ROGERS. Are there any participants you have not visited with?

Mr. BURNETT. Beyond the manufacturers? No, we have not talked to manufacturers.

Mr. ROGERS. The manufacturers were really the only ones you did not contact?

Mr. AHART. That is correct.

Mr. ROGERS. I would hope that you would do that in the followup audit.

Thank you so much for your presence here. We are grateful. Mr. Walgren, did you have any questions?

Mr. WALGREN. I just wondered, I don't know whether these should be addressed to GAO, how much unused vaccine is presently existent and in whose hands?

Mr. AHART. Let me see if we have that information. Mr. Flowers, do we know how much vaccine is yet unused?

Mr. FLOWERS. They produced 157 million and have administered about 45 million, so out of the total 157 million produced

Mr. BURNETT. About 110 million left, and as we understand it, there is some still with the States and HEW has possession of some.

Mr. WALGREN. So the States have some, HEW has some, and do the manufacturers still have any?

Mr. BURNETT. That, I couldn't tell you.
Mr. ROGERS. I expect HEW can probably get into this for us.

Mr. WALGREN. OK, thank you, I think they would probably know better.

Mr. ROGERS. Thank you for your presence today. You have been most helpful and we will formalize a request for continued investigations.

Thank you.

Our next witnesses will be the Department of Health, Education, and Welfare, Dr. J. Donald Millar, Director of the Bureau of State Services, Center for Disease Control, accompanied by Dr. Harry M. Meyer, Jr., Director of the Bureau of Biologics, Food, and Drug, and also by Dr. William Jordan, National Institute of Allergy and Infectious Diseases. We welcome you gentlemen to the committee.

Your statements will be made a part of the record in full. Before you begin, I might say that I wrote to the Secretary reminding him of the requirement for the liability alternative study which was due on August 12. We did get a response yesterday; a first draft of the report outlining some options with no recommended procedures or no formal cost recommendations. It is my understanding, from the letter, that costs studies are to be completed by October 15.

Dr. Millar.

STATEMENT OF J. DONALD MILLAR, M.D., DIRECTOR, BUREAU

OF STATE SERVICES, CENTER FOR DISEASE CONTROL, PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, ACCOMPANIED BY WINDELL BRAD. FORD, ADMINISTRATIVE ASSISTANT TO DR. MILLAR; HARRY M. MEYER, JR., M.D., DIRECTOR, BUREAU OF BIOLOGICS, FOOD AND DRUG ADMINISTRATION; AND WILLIAM JORDAN, M.D., NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES

Dr. MILLAR. Thank you, Mr. Chairman. I also have with me on my left, Mr. Windell Bradford of my administrative staff. Mr. ROGERS. We welcome you.

Dr. MILLAR. I am grateful for this opportunity to appear before you to review our experiences in trying for the first time in history to prevent the widespread death and disability from a flu pandemic. I hope this review can be constructively used to address the obvious problems which confront any future attempt at a major national effort in preventive medicine.

Mr. Chairman, you have very aptly designated and described these problems and I won't repeat them. I think that our challenge is to address these problems and resolve them in advance, such that national health emergencies in the future can be met head on and in time.

Much attention has been given to the controversial aspects of the swine flu program and I would like at this point to cite some of what I believe to be the undersung positive accomplishments of the program.

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