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Explained | What is indemnity and why vaccine manufacturers are demanding it in supply contracts

Legal and public health experts are calling the government to be more transparent on such arrangements, and develop a mechanism for compensation for vaccine related injury and death; in case the government decides to provide indemnity. They also demand strengthening of adverse event following immunisation (AEFI) reporting and investigations.

June 04, 2021 / 09:30 PM IST
Public health activists say the government should create a compensation mechanism on the lines of countries like the UK. (Representative image: Reuters)

Public health activists say the government should create a compensation mechanism on the lines of countries like the UK. (Representative image: Reuters)

Amid reports about Pfizer and Moderna demanding indemnity as a pre-condition to enter into supply contracts with India, and local manufacturer Serum Institute of India (SII) also seeking the same, the government said it was considering the requests, and is yet to take a decision.

Legal and public health experts are calling the government to be more transparent on such arrangements, and develop a mechanism for compensation for vaccine related injury and death; in case the government decides to provide indemnity. They also demand strengthening of adverse event following immunisation (AEFI) reporting and investigations.

Here is an explainer on what indemnity is, why vaccine manufacturers are demanding it in supply contracts, and what are its implication on the public.

What is indemnity?

The indemnity will protect manufacturers from any potential civil-legal liability or immunity from being sued by people for any unforeseen complications arising from their COVID-19 vaccine. The reason why manufacturers are demanding indemnity is because the vaccines were developed at record speed and were approved for emergency use, so they took a huge risk in response to pandemic. There could possibly be potential unknown side-effects. So vaccine makers are demanding that governments should support them by providing them indemnity. For instance Pfizer enjoys such immunity in the US, UK and most other countries where it is supplying COVID-19 vaccines.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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What is the recourse of those impacted adversely by COVID-19 vaccines, in case government allows indemnity?

Experts say, indemnity doesn't stop people from suing the manufacturer, if they suffer from a grave injury, disability and death linked to the vaccine.

"Indemnity is only a contractual arrangement between the vaccine manufacturer and the government will be privy. General public has nothing to do with this contract," said Ritika Ganju, Partner, Phoenix Legal.

"It will not stop people from suing the manufacturer, their liability under the legislation will be intact. It is just that they can recover the losses contractually from the government," Ganju added.

Compensation mechanism

Public health activists say the government should create a compensation mechanism on the lines of countries like the UK. The UK has a Vaccine Damage Payments Scheme, which authorises one-time tax free payments of £120,000 for individuals who have been disabled in the rare case that a vaccine produces highly damaging side effects.

"If the government does grant immunity,..there will be a shift of liability to the government. And now how that exactly is going to operate for us is going to be important. What kind of recourse available in case of injury or death. Will they be setting up a compensation mechanism? Right now there is no compensation mechanism available for COVID-19 vaccine linked serious adverse events or for that matter any vaccine," said Malini Aisola, Co-Convenor, All India Drugs Action Network (AIDAN).

Aisola also added that the public is entitled to the terms of indemnity..

"Pfizer we know has asked other countries to indemnify against the acts of fraud or negligence or mismanagement," she said.

Do COVAX vaccines need indemnification?

The COVAX members will have to provide indemnification and no-fault compensation in the interest of faster vaccine availability, which means that governments agree that distributing entities like COVAX, along with vaccine manufacturers, will not be held liable for unexpected adverse events.

COVAX and the WHO have crafted indemnification agreements for countries considered Advanced Marketing Commitment Participants, or those who will be receiving donated vaccines. Moneycontrol learns that India got an exemption from COVAX from providing indemnification even as it procured Covishield vaccines from the global facility.
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.
first published: Jun 4, 2021 09:21 pm
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