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7 Liability
Pages 41-48

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From page 41...
... On May 24, counsel for Merrell, one of the manufacturers, had broken off six weeks of contract negotiations, insisting on indemnification by the government for most prospective legal costs associated with the swine flu program. Reluctantly HEW counsel had drafted and the OMB, still more reluctantly, had approved an indemnification bill.
From page 42...
... To BoB and CDC, concerned for an assured vaccine supply the inference drawn from Reyes had been that if the government proposed to sponsor mass immunizations, but not to make vaccine itself it must take over the duty to warn, opening its pocket, or indemnify the private firms, or compensate victims directly. The manufacturers were eager to unload the Reyes duty.
From page 43...
... Barrett had a word with Bernard Feiner, the career head of his Business and Administrative Law Division. Meanwhile Cavanaugh, on his own motion, called Attorney General Levi who referred him to Neil Peterson, head of Tort Claims at Justice.
From page 44...
... Manufacturers accepted their responsibility for simple negligence, but these questions ranged far beyond negligence to an uncharted realm suggested by absolute liability, 200 million doses, friendly juries, and the itch to sue. Yet contract language could not assure indemnity for anything.
From page 45...
... Under prevailing contracts with drug companies, the primary insurers were obliged to defend them in court. Granting the potential for some catastrophic losses, in between awards were all the suits to be dismissed.
From page 46...
... Some firms that sold casualty insurance also sold health insurance, but the work was compartmentalized internally, and governmental contracts were facilitated through separate trade associations. The AIA, Cheek's outfit, had its headquarters in New York with many branches of which his was only one.
From page 47...
... headquarters specialists in insurance placement, then the outside brokers with whom they dealt, and finally the insurance underwriters heading up to their own managements. And it was not one chain but five, in parallel, from four drug companies to five primary insurers (one of the drug companies was shifting its insurance)
From page 48...
... The manufacturers drew a wider lesson; what might the courts pin on them next? The insurers drew a lesson wider still: verdicts aside, count up the claims, still more the suits!


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