Vaccine Injury Compensation: Program Challenged to Settle Claims Quickly
and Easily (Letter Report, 12/22/1999, GAO/HEHS-00-8).

Pursuant to a congressional request, GAO reviewed challenges facing the
Department of Health and Human Services' (HHS) Vaccine Injury
Compensation Program (VICP), focusing on: (1) how long it takes to
process a claim through VICP; (2) the extent to which recent changes to
the program's injury table have made it easier or more difficult for
petitioners to obtain compensation for vaccine-related injuries; and (3)
why the trust fund continues to grow, and what budgetary effect proposed
options for addressing the growing trust fund balance would have.

GAO noted: (1) overall, while the program appears to provide an easier
process for obtaining compensation than the traditional civil tort
system, the process has not been as quick or as easy as expected; (2)
processing most VICP claims takes more than 2 years; (3) in 1998 and
1989, the program received about 200 claims and processed nearly all of
them within 2 years; (4) but in 1990, when a filing deadline neared for
injury claims relating to vaccinations received before October 1988, the
number of claims filed jumped to over 3,200; (5) this influx created an
immediate and large backlog of claims, which HHS is still working to
resolve; (6) another factor significantly increasing processing times is
that as the program received additional funding for staff and experts to
defend claims, the government increasingly challenged claims in which
the cause of injury was in doubt; (7) as a result, petitioners needed
more information and time to prepare cases, which resulted in processing
times that were much longer than envisioned when the program began; (8)
HHS' recent changes to the vaccine injury table will make the process
easier for some people to obtain compensation, but will make it more
difficult for a larger number to do so; (9) this is because far more
claims have historically been associated with injuries HHS removed from
the table than for injuries HHS added to it; (10) removing these
injuries shifts the burden of proof to the petitioner, making it more
difficult to qualify for compensation under VICP; (11) HHS based its
decisions to add or remove table injuries on various factors but did not
have a clear and transparent methodology to demonstrate that these
factors were consistently applied for each injury table change; (12)
without such transparency, changes that make compensation more difficult
for petitioners may continue to be questioned by some, regardless of
their merit; (13) the VICP trust fund has grown to $1.3 billion,
primarily because the income from vaccine excise taxes has been higher
than payments for claims and associated administrative costs and
interest has been accruing on the fund balance; (14) the excess tax
revenue--$948 million as of 1998--has been loaned to the Treasury and
used for other federal programs and activities; (15) vaccine
manufacturers, federal agencies, and petitioner advocates have expressed
concerns about the rising balance and have proposed options to decrease
the vaccine excise tax or increase trust fund spending; and (16)
exercising these options, however, would have implications for the
overall federal budget.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  HEHS-00-8
     TITLE:  Vaccine Injury Compensation: Program Challenged to Settle
	     Claims Quickly and Easily
      DATE:  12/22/1999
   SUBJECT:  Litigation
	     Health services administration
	     Immunization programs
	     Trust funds
	     Excise taxes
	     Claims processing
	     Compensation claims
	     Claims settlement
IDENTIFIER:  PHS National Vaccine Injury Compensation Program
	     Vaccine Injury Compensation Trust Fund

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Cover
================================================================ COVER

Report to the Chairman, Committee on Health, Education, Labor and
Pensions, U.S.  Senate

December 1999

VACCINE INJURY COMPENSATION -
PROGRAM CHALLENGED TO SETTLE
CLAIMS QUICKLY AND EASILY

GAO/HEHS-00-8

Vaccine Injury Compensation Program

(108396)

Abbreviations
=============================================================== ABBREV

  BEA - Budget Enforcement Act
  CBO - Congressional Budget Office
  CDC - Centers for Disease Control and Prevention
  DOJ - Department of Justice
  DTP - diphtheria, tetanus, and pertussis
  FDA - Food and Drug Administration
  HHS - Department of Health and Human Services
  VICP - Vaccine Injury Compensation Program

Letter
=============================================================== LETTER

B-281968

December 22, 1999

The Honorable James M.  Jeffords
Chairman, Committee on Health,
 Education, Labor and Pensions
United States Senate

Dear Mr.  Chairman: 

Infectious diseases are responsible for nearly half of all deaths
worldwide of people under the age of 44.  In the United States,
vaccinating children against such diseases is considered to be one of
the most effective public health initiatives ever undertaken.  Since
vaccination programs began, the number of people contracting
vaccine-preventable diseases in the United States has been reduced by
more than 95 percent.  In some instances, however, a vaccine can have
severe side effects, including death or disabling conditions
requiring lifetime medical care.  In the 1980s, lawsuits stemming
from such incidents threatened to affect the availability and cost of
vaccines as well as the development of new ones. 

To address this issue, the Congress, beginning in 1986, created a
different approach for compensating people injured by certain
vaccines routinely provided in childhood.  Instead of suing vaccine
manufacturers and vaccine administrators, people--including
adults--who believe they have been injured by these vaccines must
first file a claim under the Vaccine Injury Compensation Program
(VICP).\1 VICP contains a vaccine injury table, which is designed to
minimize difficulties petitioners have in proving that their injury
resulted from a vaccine.  The injuries listed on this table are
presumed to have been caused by certain vaccines, unless the
government can prove otherwise.  By contrast, in a lawsuit filed
under the civil tort system, the injured party bears the burden of
proving that the vaccine caused injury. 

Administered by the Department of Health and Human Services (HHS),
the program pays claims from a trust fund supported by an excise tax
on each dose of vaccine that is covered by the program.\2 As of
February 1999, 5,355 claims had been filed under VICP and close to $1
billion had been awarded since October 1988, when the program became
effective.  The majority of claims filed and compensation paid have
been for neurological injuries associated with the DTP (diphtheria,
tetanus, and pertussis) vaccine. 

Although VICP was created to provide compensation quickly, easily,
with certainty and generosity,\3 there is debate surrounding how
well the program meets this purpose.  Some contend that the claims
process takes too long and that recent changes to the program's
vaccine injury table make compensation too difficult to obtain. 
Another concern is the VICP trust fund, which had a balance of $1.3
billion at the end of fiscal year 1998 and has been collecting much
more than it pays out in claims.  To help with congressional
oversight of the management and financing of the program, you asked
us to determine

  -- how long it takes to process a claim through VICP;

  -- the extent that recent changes to the program's injury table
     have made it easier or more difficult for petitioners to obtain
     compensation for vaccine-related injuries; and

  -- why the trust fund continues to grow, and what budgetary effect
     proposed options for addressing the growing trust fund balance
     would have. 

Our work included analyses of claims data from HHS' VICP database
from the inception of the program to February 1999.  We supplemented
our analyses with interviews and information from the federal
agencies responsible for the VICP claims process and financial
accounting of the VICP trust fund, petitioner advocates, members of
the scientific community, and a pediatric physician professional
organization.  (See app.  I for more on our scope and methodology.)
We conducted our work from January through November 1999 in
accordance with generally accepted government auditing standards. 

--------------------
\1 When VICP became effective in October 1988, it covered vaccines
required for immunizing children against seven infectious childhood
diseases:  diphtheria, pertussis (whooping cough), tetanus, polio,
measles, mumps, and rubella (German measles).  Vaccines against
hepatitis B, hemophilus influenzae type b (Hib), and varicella
(chicken pox) were added to the program in August 1997; and a vaccine
against rotavirus was added, effective October 1998. 

\2 Claims arising from vaccinations administered prior to October 1,
1988, are paid from general fund appropriations. 

\3 Report of the House Committee on Energy and Commerce accompanying
the legislation establishing VICP, H.R.  Rep.  No.  99-908, p.  3
(1986). 

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Overall, while the program appears to provide an easier process for
obtaining compensation than the traditional civil tort system, the
process has not been as quick or as easy as expected.  Processing
most VICP claims takes more than 2 years.  The Congress expected the
program to process claims in 1 year or less, but only about 14
percent of claims met this expectation.  In 1988 and 1989, the
program received about 200 claims and processed nearly all of them
within 2 years.  But in 1990, when a filing deadline neared for
injury claims relating to vaccinations received before October 1988,
the number of claims filed jumped to over 3,200.  This influx created
an immediate and large backlog of claims, which HHS is still working
to resolve.  Another factor significantly increasing processing times
is that as the program received additional funding for staff and
experts to defend claims, the government increasingly challenged
claims in which the cause of injury was in doubt.  As a result,
petitioners needed more information and time to prepare cases, which
resulted in processing times that were much longer than envisioned
when the program began. 

HHS' recent changes to the vaccine injury table will make the process
easier for some people to obtain compensation, but will make it more
difficult for a larger number to do so.  This is because far more
claims have historically been associated with injuries HHS removed
from the table than with injuries HHS added to it.  For example,
about half of the awards made since the program's inception have been
for neurological injuries that HHS later removed from the table in
1995 and 1997.  Removing these injuries shifts the burden of proof to
the petitioner, making it more difficult to qualify for compensation
under VICP.  HHS based its decisions to add or remove table injuries
on various factors but did not have a clear and transparent
methodology to demonstrate that these factors were consistently
applied for each injury table change.  Without such transparency,
changes that make compensation more difficult for petitioners may
continue to be questioned by some, regardless of their merit.  We are
making a recommendation to HHS to develop and apply a consistent
methodology for its decisionmaking process for making changes to the
vaccine injury table. 

The VICP trust fund has grown to $1.3 billion, primarily because the
income from vaccine excise taxes has been higher than payments for
claims and associated administrative costs and interest has been
accruing on the fund balance.  The excess tax revenue$948 million,
as of 1998has been loaned to the Treasury and used for other federal
programs and activities.  Vaccine manufacturers, federal agencies,
and petitioner advocates have expressed concerns about the rising
balance and have proposed options to decrease the vaccine excise tax
or increase trust fund spending.  Exercising these options, however,
would have implications for the overall federal budget, possibly
requiring new or higher taxes elsewhere or a decrease in spending for
other programs and activities. 

   BACKGROUND
------------------------------------------------------------ Letter :2

All 50 states require that virtually all children be vaccinated
against common childhood diseases before they enter school,\4 and HHS
reports that over 12 million vaccinations are given to children each
year.  These laws have dramatically reduced many infectious diseases
in the United States.  For example, the number of reported cases of
measles, which can lead to brain damage and death, has dropped from
about half a million in 1960 to about 100 in 1998.  For most
children, freedom from the effects of measles, diphtheria, polio,
tetanus, pertussis, and other diseases is a decided benefit.  But
immunization programs also carry a human cost.  A small number of
children who receive immunizations have serious and unexpected
reactions to them.  These reactions can be devastating--
paralysis, permanent disability, and even death.  Affected families
without adequate insurance coverage may face significant expenses,
because the costs for residential or home care, therapy, medical
equipment, and drugs needed to care for an injured child over a
lifetime can exceed several million dollars.  Prior to VICP, families
could seek compensation for damages only through the civil tort
system or through a settlement agreement with the vaccine
manufacturer or health care provider. 

Filing a lawsuit in the civil tort system was considered to be
unsatisfactory for those claiming to have suffered an adverse
reaction to a vaccine.  Petitioners had difficulty proving
vaccine-related injuries because studies and medical evidence needed
to definitively link vaccines with various medical conditions were
often insufficient to establish the level of proof required for
compensation in the legal system.\5 Establishing this link can be
difficult because most injuries that can be caused by vaccines can be
caused by other things as well.  For example, symptoms of
neurological disorders often show up in the first year of life, which
is the same time that most vaccines are administered. 

Petitioners are not the only ones who found the legal system
difficult.  As the number of lawsuits increased, particularly for the
DTP vaccine, vaccine manufacturers became concerned not only with
problems of time and expense but also with the availability and
affordability of product liability insurance.  The federal
government, in turn, became concerned that if manufacturers withdrew
from the market, vaccine shortages would result and infectious
diseases would reemerge as serious health threats. 

--------------------
\4 States generally require vaccination against each of the original
seven childhood diseases covered by the program, but there is some
variation.  Six states, for example, do not require the pertussis
vaccine and six others do not require the mumps vaccine. 

\5 For example, the Institute of Medicine studied 75 specific
relationships between vaccines and adverse events and concluded that
medical evidence was insufficient to prove or disprove a relationship
in two-thirds of the cases.  See a discussion of Institute of
Medicine studies in Research Strategies for Assessing Adverse Events
Associated With Vaccines:  A Workshop Summary (National Academy
Press, 1994). 

      VICP REPRESENTED A NEW
      APPROACH TO INJURY
      COMPENSATION
---------------------------------------------------------- Letter :2.1

VICP established a new system for vaccine injury compensation that
was expected to be fair, simple, and easy to administer.  Rather than
filing a lawsuit against the vaccine manufacturer or vaccine
administrator in the civil tort system, an individual claiming injury
from vaccines covered by the program must first file a petition for
no-fault compensation with the U.S.  Court of Federal Claims.\6
Special masters of the court--attorneys appointed by the judges of
the court--conduct informal hearings as necessary to determine
whether the petitioner is entitled to compensation from VICP, and if
so, how much.  HHS, as overall administrator of VICP, is represented
by Department of Justice (DOJ) attorneys, while the petitioner may be
represented by a private attorney.\7 (See app.  II for a description
of the claims process.)

To ensure access to the program, VICP pays attorney fees and costs
for the petitioner, regardless of whether the petitioner is awarded
compensation.\8 VICP features designed to expedite the process
include a relaxation of the rules of evidence, discovery, and other
legal procedures that can prolong cases in the legal system. 
Features designed to control costs include a legislated $250,000
payment for compensable deaths.  For compensable injuries, the
program purchases annuities covering the lifetime costs of care not
covered by insurance and compensates for pain and suffering and lost
wages.  VICP does not pay punitive damages.  Compensation is
available for reasonable attorney fees and costs, which generally
reflect the actual time and expense devoted to the case. 

--------------------
\6 Lawsuits may be filed against manufacturers or health care
providers if a petition is dismissed or judged noncompensable under
VICP and the judgment is rejected by the petitioner, if the award
granted by VICP is rejected by the petitioner, or if the vaccine is
not covered under VICP. 

\7 The vaccine manufacturer and whoever administered the vaccine are
not involved as parties to the proceedings. 

\8 Attorney fees and costs are paid if the court determines there is
a reasonable basis for the petition and the petition was filed in
good faith. 

      PROGRAM'S INJURY TABLE IS
      ITS MOST IMPORTANT FEATURE
---------------------------------------------------------- Letter :2.2

There are two ways a petitioner can qualify for compensation under
VICP.  Similar to the civil tort system, petitioners must be able to
prove that a vaccine caused an injury or, unique to VICP, the
petitioner must have an injury listed on the program's injury table. 
The number of vaccines and injuries listed on the table have changed
over time.  Legislation establishing the original injury table
included five different medical conditions related to vaccines
against seven diseases (see table 1). 

                          Table 1
          
               Original Vaccine Injury Table

Vaccine and injury\a                         Time period\b
------------------------------------------  --------------
Vaccines against diphtheria,\c tetanus, and pertussis
----------------------------------------------------------
Anaphylaxis                                       24 hours
Residual seizure disorder                           3 days
Shock-collapse\d                                    3 days
Encephalopathy                                      3 days

Vaccines against measles, mumps, and rubella
----------------------------------------------------------
Anaphylaxis                                       24 hours
Residual seizure disorder                          15 days
Encephalopathy                                     15 days

Vaccines against polio
----------------------------------------------------------
Paralytic polio\e                                30 days/6
                                                  months\f
Anaphylaxis\g                                     24 hours
----------------------------------------------------------
Note:  For current vaccine injury table, see app.  III. 

\a Injuries are defined in Qualifications and Aids to
Interpretation, reprinted in app.  III. 

\b For first symptom, onset, or aggravation of injury after
vaccination. 

\c Administered with tetanus and/or pertussis vaccines. 

\d For vaccines against pertussis. 

\e Injury related to oral polio vaccine. 

\f Time intervals are for immunocompetent/immunodeficient individuals
who receive oral poliovirus.  Contact cases have no limit. 

\g Injury related to inactivated polio vaccine. 

Filing a claim using the injury table relieves petitioners from some
of the uncertainty caused by gaps in medical knowledge.  Under VICP,
vaccines on the injury table are presumed to have caused the listed
injury if incurred within specific time periods.  For example, under
the original table, someone suffering neurological damage from
seizures within 3 days after receiving a vaccine against pertussis
would receive compensation if HHS could not prove that the condition
was due to factors unrelated to the administration of the vaccine. 
Thus, for the petitioner, VICP's injury table may provide a benefit
over the civil tort system. 

      FUNDING FOR COMPENSATION HAS
      COME FROM TWO SOURCES
---------------------------------------------------------- Letter :2.3

VICP finances awards and attorney payments differently, depending on
when the vaccine causing the alleged injury was administered.  For
vaccines administered prior to October 1, 1988, payments are made
from general revenues appropriated by the Congress each year.  For
vaccines administered on or after this date, payments are made from
the VICP trust fund, which is supported by a $.75 excise tax on each
dose of vaccine sold\9 and interest accumulating on the trust fund
balance.  As of February 1999, VICP had paid close to $1 billion for
awards and attorney payments--
75 percent from appropriated general funds rather than from the trust
fund (see table 2). 

                          Table 2
          
             Financing for VICP Claim Payments

                                        Number
                                            of     Awards/
                                        claims    attorney
                                      filed as  payments\a
VICP        Filing      Funding        of Feb.  as of Feb.
claims      deadline    source            1999        1999
----------  ----------  ------------  --------  ----------
Vaccines    Jan. 31,    Annual           4,245  $742,244,6
administer  1991        appropriatio                    79
ed prior                ns
to Oct. 1,
1988

Vaccines    Within 24   Vaccine        1,110\b  250,296,56
administer  months      excise tax                       8
ed on or    from date
after Oct.  of death
1, 1988     or 36
            months
            from date
            of injury
----------------------------------------------------------
\a The maximum award paid was close to $8 million while the median
paid was $318,943. 

\b Includes five cases where the data field for date of vaccination
was blank. 

--------------------
\9 This uniform rate of taxation became effective Aug.  6, 1997 (P.L. 
105-34).  Prior to this date, the excise tax rate varied by vaccine
in accordance with the expected compensation payments associated with
each covered vaccine. 

   PROCESSING VICP CLAIMS TAKES
   LONGER THAN EXPECTED
------------------------------------------------------------ Letter :3

Processing VICP claims continues to take longer than expected.  When
the Congress established VICP, the expectation was that the court
would take 1 year or less\10 to judge whether a claim was entitled to
compensation and, if so, how much that compensation would be.  The
program became effective on October 1, 1988, and as of February 1999,
5,355 claims had been filed.  Of this number, about 14 percent
received judgment within 1 year (see fig.  1).  Most did not receive
judgment within 2 years.  Of the total claims filed during this
period, 10 percent had not received a judgment as of February 1999
and remained open. 

   Figure 1:  Status of VICP
   Claims

   (See figure in printed
   edition.)

Note:  Data are for cases filed as of February 1999. 

\a The length of time pending cases had been in process ranged from
less than 1 month to more than 8 years. 

Two interrelated reasons are central to explaining these longer than
expected processing times.  The first was a large influx of claims
filed a few years after the program began.  The second was that as
more funding became available to defend claims, HHS increasingly
challenged the ones it regarded as not clearly meeting the statutory
criteria. 

--------------------
\10 The original legislation required a judgment on claims no later
than 365 days after the claim was filed.  This was subsequently
amended to require a judgment by the special master within 240 days
exclusive of suspended time.  Either party may appeal the decision to
a judge of the court, which would add time to the process.  (See app. 
II.) If the special master fails to make a decision within 240 days
or if appealed and a judgment is not rendered within 420 days,
petitioners are allowed to withdraw from VICP and sue the
manufacturer or health care provider directly. 

      DELAYS DUE TO VOLUME
---------------------------------------------------------- Letter :3.1

When VICP took effect on October 1, 1988, it gave claimants 2 years
and 4 months (until January 31, 1991) to file claims on injuries for
vaccines administered prior to October 1988.  As people began
responding to the deadline, the number of claims filed under VICP
jumped from 125 claims in 1989 to 3,263 claims in 1990.  Nearly 800
more claims were filed in the month before the deadline.  As table 3
shows, this large influx of claims created an immediate backlog.  The
number of pending claims rose to as high as 3,548 at the end of 1991
and remained above 1,000 until the end of 1995. 

                          Table 3
          
            VICP Claims Filed, Adjudicated, and
                 Pending, by Calendar Year

                                        Claims      Claims
Year              Claims filed     adjudicated     pending
--------------  --------------  --------------  ----------
1988                        79               0          79
1989                       125              61         143
1990                     3,263             153       3,253
1991                       968             673       3,548
1992                       174             735       2,987
1993                       119             637       2,469
1994                       121             612       1,978
1995                       164             707       1,435
1996                        92             573         954
1997                       107             332         729
1998                       131             309         551
1999\a                      12              25         538
Total                    5,355           4,817
----------------------------------------------------------
\a Data as of February 1999. 

As might be expected, processing times began to increase as HHS
worked to respond to the influx of claims.  Before 1990, nearly all
claims were processed within 2 years.  Starting in 1990, however,
only about 30 to 40 percent of claims filed each year have been
processed this quickly (see fig.  2). 

   Figure 2:  Percentage of Claims
   Filed in Calendar Years 1988 to
   1997 With Judgment Received
   Within 2 Years

   (See figure in printed
   edition.)

Note:  Second-year data for 1997 are incomplete.  In addition, only
data for 1988 through 1991 include claims for vaccinations given
prior to October 1988 because the filing deadline for such claims was
January 31, 1991.  Data for 1992 through 1997 include claims for
vaccinations on or after October 1988. 

      DELAYS DUE TO CHANGE IN
      PROGRAM IMPLEMENTATION
---------------------------------------------------------- Letter :3.2

As figure 2 shows, the percentage of claims processed within 1 or 2
years changed somewhat from year to year but has not increased much
since 1992.  Although table 3 shows that the number of claims filed
since the 1991 deadline dramatically decreased, the number of claims
adjudicated generally declined in following years.  A key reason is
because in 1990, HHS and DOJ began to increasingly scrutinize claims
of vaccine injury as funding to fully implement their legislated
authority under the program became available.  DOJ established a
cadre of attorneys specializing in vaccine injury to represent HHS in
hearings, and HHS established an expert witness program to help
assess whether alleged vaccine injuries such as seizure disorders may
have been present from birth or were due to other causes. 

Full implementation of HHS' statutory authority to defend claims had
implications for claims processing times, making it more difficult
for claims to be processed within the 1-year period originally
envisioned or even a 2-year period.  For example, HHS data show that
more than half of all petitioners were requested to provide
supplementary medical records or other information, and most took at
least a year to do so.  Both sides often made use of expert witnesses
to review the evidence and report on their findings.  After all the
information was received, in most cases, it took the court over
another year to reach its decision. 

      STEPS TAKEN TO EXPEDITE
      CLAIMS PROCESSING
---------------------------------------------------------- Letter :3.3

HHS, DOJ, and the U.S.  Court of Federal Claims have taken some steps
to expedite the claims process, including the following: 

  -- Since 1990, HHS has cut its average time for completing its
     medical review and submitting its recommendation to the court
     from nearly 6 months\\11 to about 3 months. 

  -- In 1990, the court produced a guide for petitioners and their
     attorneys explaining how to process claims through VICP, and in
     1994, DOJ published steps to expedite the resolution and payment
     of compensation and attorney fees. 

  -- Starting in the fall of 1997, the court initiated a practice of
     holding conference calls between the special masters and
     attorneys within 30 to 45 days after the filing of a petition to
     discuss any deficiencies in the petition, such as absence of
     pertinent medical records, and ways to remedy them.\12

The chief special master said that while the court could process
claims more quickly, delays are granted primarily to benefit
petitioners who need more time to gather information, have medical
tests performed, or identify costs related to an injured child's
developmental needs.  If a judgment is not received within 240 days,
petitioners can withdraw their claim from VICP and file a lawsuit in
the civil tort system.  Yet HHS, DOJ, and court officials stated that
none have done so. 

--------------------
\11 Data for 1990 are for claims relating to vaccines administered
after Sept.  30, 1988.  The 1990 average for all claims is over 2
years. 

\12 For example, DOJ states that where appropriate, it will subpoena
medical records on behalf of the petitioner. 

   INJURY TABLE CHANGES MAY
   INCREASE DIFFICULTY PETITIONERS
   FACE IN OBTAINING COMPENSATION
   FOR VACCINE-RELATED INJURIES
------------------------------------------------------------ Letter :4

Of the 4,817 petitioners receiving judgment under the program as of
February 1999, close to 30 percent received compensation for a family
member's injury or death.  Most compensated claims alleged injuries
listed on the program's vaccine injury table.  Since the program
began, HHS has made two sets of changes to the table, removing some
injuries and adding other injuries and vaccines.  However, far more
claims are associated with injuries removed from the table than with
injuries that were added.  As a result, more petitioners now must
prove that a vaccine caused the injury, rather than HHS having to
prove that the injury was due to factors unrelated to the vaccine. 

      NUMBER OF PETITIONERS
      POTENTIALLY COVERED BY THE
      VACCINE INJURY TABLE HAS
      DECREASED
---------------------------------------------------------- Letter :4.1

Most of the petitioners who filed claims and received awards under
VICP alleged injuries listed on the program's vaccine injury table. 
Petitioners who did not claim injuries listed on the injury
tableabout 28 percenthad the burden of proving that a vaccine
caused the injury; of these petitioners, only 13 percent were able to
obtain compensation.  The remaining 72 percent claiming injuries on
the table had compensation rates nearly three times higher. 

                          Table 4
          
          VICP Petitions Claiming Table/Off-Table
                          Injuries

                         Percent table      Percent off-
                             claims         table claims
                        ----------------  ----------------
                        File  Compensate  File  Compensate
Vaccine                    d           d     d           d
----------------------  ----  ----------  ----  ----------
Vaccines against          83          32    17          15
 diphtheria, tetanus,
 and pertussis
Vaccines against          53          43    47          25
 measles, mumps, and
 rubella
Vaccines against polio    39          60    61           3
Vaccines against           7          \a    93          \a
 hepatitis B
Vaccines against           0          \b   100          \a
 varicella
Unspecified/               0          \b   100           0
 nonqualifying
Total                     72          35    28          13
----------------------------------------------------------
\a Judgment pending. 

\b Not applicable. 

Under the act that created VICP, HHS has rulemaking authority to
change the injury table and has done so on two occasions.  The act
established the first injury table, with HHS to make future changes
as more information became available.  The act further called for the
Institute of Medicine, of the National Academy of Sciences, to assist
HHS in this regard by reviewing existing medical studies and
literature related to a set of specific conditions that might be
related to vaccines covered by the program.  After the reviews were
completed in 1991 and 1994, the Institute of Medicine identified
certain conditions that were consistent or inconsistent with a causal
relationship, those that favored or did not favor a causal
relationship, and those where evidence was insufficient to indicate
the presence or absence of a causal relationship.\13 HHS used these
findings--in conjunction with public policy considerations provided
by the Advisory Commission on Childhood Vaccines, scientific issues
raised by its National Vaccine Advisory Committee, and input from the
public--to add seven injuries and remove three others from the table
in 1995 and 1997 (see table 5).\14 In addition, HHS refined the
supporting guidance to the table, Qualifications and Aids to
Interpretation. This document provides definitions for injuries and
the specific circumstances under which the table injuries must occur
(see app.  III for the current injury table and interpretation aids). 

                                Table 5
                
                 Injuries Added to and Removed From the
                       VICP Vaccine Injury Table

Vaccine                 Injury added            Injury removed
----------------------  ----------------------  ----------------------
Effective Mar. 10, 1995
----------------------------------------------------------------------
Vaccines against                                Shock-collapse
pertussis

Vaccines against                                Residual seizure
pertussis and tetanus                           disorder

Vaccines against        Chronic arthritis
rubella

Effective Mar. 24, 1997
----------------------------------------------------------------------
Vaccines against                                Residual seizure
measles, mumps, and                             disorder
rubella

Vaccines against        --Thrombocytopenic
measles                 purpura
                        --Vaccine-strain
                        measles

Vaccines against        Vaccine-strain polio
polio\a

Vaccines against        Anaphylaxis
hepatitis B

Vaccines against        Early-onset Hib
hemophilus influenzae
type b (Hib)

Vaccines against        Brachial neuritis       Encephalopathy
tetanus
----------------------------------------------------------------------
\a Applies to oral polio vaccine. 

Although HHS added more injuries than it removed from the original
injury table, fewer petitioners now have the potential to use it. 
Where 74 percent of petitioners filed claims alleging injuries on the
injury table prior to the 1995 and 1997 changes, only 55 percent
filed such claims after the table was revised.\15 To some extent,
this decrease is because more claims were associated with the
injuries removed from the table than were associated with the
injuries that were added.  Significantly, as shown in table 6, about
45 percent (611) of the 1,368 claims awarded compensation under VICP
were for injuries subsequently removed from the table.  These claims
accounted for about half of the $974 million awarded thus far under
the program.  These numbers are significant because petitioners with
injuries not listed on the injury table historically have had a lower
probability of being compensated than those with injuries that were
listed. 

                                         Table 6
                         
                         Claims Associated With Injuries Added to
                         and Removed From the VICP Vaccine Injury
                                          Table

                                       Claims for injuries        Claims for injuries
                                      added to injury table    removed from injury table
                                     ------------------------  --------------------------
                                           Number       Total        Number         Total
Vaccine             Injury            compensated     awarded   compensated       awarded
------------------  ---------------  ------------  ----------  ------------  ------------
Vaccines against    Chronic                     9    $622,101            \a            \a
 rubella             arthritis
Vaccines against    Brachial                    0           0            \a            \a
 tetanus             neuritis
Vaccines against    Thrombocytopeni             0           0            \a            \a
 measles             c purpura
Vaccines against    Vaccine-strain              0           0            \a            \a
 measles             measles
Vaccines against    Vaccine-strain              0           0            \a            \a
 polio               polio\
Vaccines against    Anaphylaxis                 0           0            \a            \a
 hepatitis B
Vaccines against    Early-onset Hib             0           0            \a            \a
 hemophilus
 influenzae type b
 (Hib)
Vaccines against    Shock-collapse             \a          \a            61   $27,228,905
 pertussis
Vaccines against    Residual                   \a          \a           547   452,141,726
 measles, mumps,     seizure
 pertussis,          disorder
 rubella, and
 tetanus
Vaccines against    Encephalopathy             \a          \a             3       529,074
 tetanus

Total claims compensated/amounts awarded for injuries added/removed from the table
-----------------------------------------------------------------------------------------
                                                9    $622,101           611  $479,899,705

Percent of all claims compensated/amounts awarded
-----------------------------------------------------------------------------------------
                                              0.7         0.0          44.7          49.3
-----------------------------------------------------------------------------------------
\a Not applicable. 

--------------------
\13 Most conditions fell in the third category, as the Institute of
Medicine concluded that there was insufficient medical evidence to
prove or disprove a relationship between vaccines and two-thirds of
the 75 medical conditions studied. 

\14 HHS publishes the proposed and final rules of injury table
changes in the Federal Register.  HHS must allow 180 days for public
comment on a proposed rule.  HHS must also provide 90 days for review
of proposed rule by the Advisory Commission on Childhood Vaccines,
comprised of parents of injured children, health professionals, and
attorneys appointed by HHS.  The National Vaccine Advisory Committee
is comprised of representatives from state and local health
departments, vaccine companies, academia, and consumer groups. 

\15 The actual percentages of claims qualifying as table injuries are
lower due to restrictions in the definition of an injury or time of
onset listed in Qualifications and Aids to Interpretation. (See
app.  III.)

      LACK OF CLEAR METHODOLOGY
      FOR TABLE CHANGES RAISES
      QUESTIONS OF CONSISTENCY
---------------------------------------------------------- Letter :4.2

HHS has published its rationale for each revision to the injury table
in the Federal Register but has not published an overall method of
applying the criteria it uses in conjunction with the Institute of
Medicine findings.  Because HHS' modifications of the table determine
whether the government or petitioner has the burden of proof for
affected claims, table changes that make compensation more difficult
for petitioners have been questioned by some.  Defining the criteria
related to the level of program and financial risk that the
government will bear is controversial and there is disagreement about
what the Congress intended in this regard.  For example, HHS
interprets the legislative history as directing it to recognize table
injuries where there is definitive information linking vaccines to
injuries, while others cite the same legislative history as directing
that, until definitive information is available, the benefit of doubt
should remain with the petitioner. 

Particularly because of these differences, establishing a clearly
defined, transparent decisionmaking process is important to help
advance the appearance of fairness.  HHS has not produced such a
methodology, and its actions do not always convey a sense of
consistency, as illustrated in the following examples: 

  -- The Institute of Medicine found that existing scientific
     evidence favored acceptance of a causal relationship between
     tetanus vaccines and brachial neuritis, and HHS added that
     condition to the injury table.  On the other hand, the Institute
     also found evidence of a causal relationship between the tetanus
     and oral polio vaccines and Guillain-Barre syndrome, but HHS did
     not add this condition to the injury table. 

  -- The Institute of Medicine found the evidence inadequate to
     accept or reject a causal relation between vaccines and residual
     seizure disorder, and HHS removed this condition from the injury
     table.  The Institute also found evidence inadequate to accept
     or reject a causal relation between the measles and mumps
     vaccines and encephalopathy, yet HHS left this condition on the
     injury table.\16

HHS stated in the Federal Register that decisions not to add
injuries, such as Guillain-Barre syndrome, or to remove injuries,
such as residual seizure disorder, were based to some extent on the
level of risk in compensating an inordinate number of
non-vaccine-related cases for the extremely rare vaccine-related
case.  In applying this criterion, however, HHS' assumptions about
the number of potential claims and thresholds for deciding the
reasonable level of financial risk for compensating
non-vaccine-related injuries were not defined. 

--------------------
\16 HHS narrowed the definition of encephalopathy in the
Qualifications and Aids to Interpretation, which would preclude use
of the table for some petitioners. 

   TRUST FUND INCOME EXCEEDS NEED
   FOR CLAIMS PAYMENTS
------------------------------------------------------------ Letter :5

The VICP trust fund has grown to $1.3 billion primarily because the
income from vaccine excise taxes is higher than claims payments and
because the government pays interest on the trust fund balance. 
Program participants have expressed concerns about the rising balance
and have proposed options to address them.  Exercising these options,
however, would have implications for the overall federal budget,
possibly requiring new or higher taxes elsewhere or a decrease in
spending for other federal programs and activities. 

      VICP TRUST FUND CONTINUES TO
      GROW
---------------------------------------------------------- Letter :5.1

The VICP trust fund has historically received more in vaccine excise
taxes than it has paid out for claims and related administrative
costs.  Since the program began, the Treasury reported it has
collected over $1.6 billion in vaccine excise taxes:  $.4 billion of
this amount went directly to the general fund to offset income and
payroll taxes lost to the general fund as a result of the excise
tax.\17 The remaining $1.2 billion went to the VICP trust fund for
claims payments and related administrative costs.  Because the trust
fund has spent only about $290 million of the $1.2 billion received,
the remaining $948 million was loaned to the Treasury and used for
other federal programs and activities.  In exchange, the trust fund
received Treasury securities to be redeemed if needed to pay future
claims.\18 Interest on these Treasuries held by the trust fund
totaled about $374 million by the end of fiscal year 1998.  This $374
million in interest and the $948 million loaned to the Treasury
comprise the $1.3 billion trust fund balance existing as of the end
of fiscal year 1998. 

   Figure 3:  Money Flows
   Attributable to Vaccine Excise
   Taxes Collected From Fiscal
   Year 1989 Through Fiscal Year
   1998

   (See figure in printed
   edition.)

At current rates, the Congressional Budget Office (CBO) estimates
that the VICP trust fund balance will reach $2.6 billion within the
next decade and the program will generate almost three times more
revenue than will be used to pay annual claims and administrative
costs.  However, the vaccine excise tax rate is not based on an
empirical risk assessment set to fund future benefits, and HHS
officials do not believe that there is an outstanding liability
requiring a large trust fund balance to meet future claims
payments.\\19 If this expectation holds true, the trust fund balance
reflects the amount of vaccine excise taxes and interest on Treasury
securities that is not expected to be needed for VICP purposes. 

--------------------
\17 The 25-percent factor is the standard offset used when excise tax
provisions are scored for budget purposes during the legislative
process.  Budget estimating conventions are that gross domestic
product and the price level are fixed.  Therefore, any increase in
excise taxes must reduce payments to labor and capital (such as wages
and rents) and, therefore, reduce income and payroll taxes deposited
to the general fund. 

\18 As provided in section 9602(b) of the Internal Revenue Code for
management of trust funds in general. 

\19 See Budget Issues:  Budgeting for Federal Insurance Programs
(GAO/AIMD-97-16, Sept.  30, 1997) for further information on budget
issues for federal insurance programs. 

      OPTIONS TO ADDRESS CONCERNS
      ABOUT THE GROWING TRUST FUND
      BALANCE
---------------------------------------------------------- Letter :5.2

Vaccine manufacturers, parent groups, and others involved with VICP
have expressed concerns about the large trust fund balance and have
proposed options to address them.  These options generally involve
cutting the excise tax supporting the trust fund or spending more of
the money received on designated vaccine-related activities.  Views
and options include the following: 

  -- Some vaccine manufacturers view the trust fund balance as an
     indicator that the vaccine excise tax rate is too high.  They
     support legislative proposals to reduce the tax rates. 

  -- Parent groups view the trust fund balance as an indicator of the
     government's unwillingness to recognize vaccine injuries and
     compensate people fairly for these injuries.  They advocate a
     less restrictive injury table that would increase the number of
     petitioners compensated from the trust fund. 

  -- HHS officials from the Food and Drug Administration (FDA) and
     the Centers for Disease Control and Prevention (CDC) responsible
     for monitoring vaccine safety view the trust fund balance as a
     source of potential revenue if the Congress decides to expand
     trust fund spending to vaccine-related activities.  Although the
     Administration has not submitted formal proposals to increase
     support of these activities or taken a position on the potential
     use of the trust fund, FDA and CDC officials we contacted
     supported dedicating a portion of the trust fund revenue not
     needed for claims payment to provide funding for vaccine injury
     surveillance systems and for research examining links between
     vaccines and delayed onset or chronic diseases. 

      BUDGETARY IMPLICATION OF
      OPTIONS TO REDUCE THE TRUST
      FUND BALANCE
---------------------------------------------------------- Letter :5.3

Because excise tax revenue received by the VICP trust fund and not
spent on the program is invested in Treasury securities and these
proceeds are used by the general fund, implementing options to
control the growth of the trust fund balance not only affect the
trust fund but also affect revenue and spending for the overall
federal budget.  Options requiring a change in legislation are also
affected by requirements of the Budget Enforcement Act (BEA).\20
Under BEA, the Congress has to offset the cost of legislation that
reduces revenue or increases spending by establishing new or higher
taxes elsewhere or by decreasing spending for other programs.\21 For
example, if the Congress had passed a law in 1998 that either lowered
the vaccine excise tax rate to match claims payments or allowed the
trust fund to spend the annual excess for new activities, funding for
other federal programs and activities would have to have been reduced
by $59 million.\22 Had legislation been enacted in 1998 allowing new
spending beyond the annual income received by the trust fund, the
trust fund would have had to draw upon the $1.3 billion trust fund
balance by redeeming its Treasury securities.  In this case, BEA
would have required a reduction in spending for other federal
programs--or an increase in other taxes--to offset the new spending
by the trust fund. 

--------------------
\20 The Budget Enforcement Act of 1990 and subsequent amendments (the
Omnibus Budget Reconciliation Act of 1993 and the Budget Enforcement
Act of 1997) are collectively referred to as the Budget Enforcement
Act.  These acts amended the Balanced Budget and Emergency Deficit
Control Act of 1985, sometimes called Gramm-Rudmann-Hollings. 

\21 The act requires that all legislation that increases mandatory
spending or decreases receipts be fully offsetor paid forso that it
is deficit neutral.  The Balanced Budget Act of 1997 requires that
the impact of spending and receipts legislation be offset in the
current year, the budget year, and the following 4 fiscal years.  A
point of order may be raised in the Senate if the change is not
deficit neutral in the second 5 years.  This provision is enforced
through sequestration, which is done annually. 

\22 This result assumes that if vaccine excise taxes were reduced,
the manufacturer would not decrease vaccine prices to pass on the tax
savings to purchasers.  If the tax savings were passed on to the
vaccine purchaser, funding for other federal programs would need to
have been reduced by $30 million. 

   CONCLUSIONS
------------------------------------------------------------ Letter :6

While VICP was expected to provide compensation for vaccine-related
injuries quickly and easily, these expectations have often not been
met.  In establishing the vaccine injury table as a desirable
alternative for petitioners over the civil tort system, the Congress
was initially willing to accept the risk that some compensation would
be provided for injuries where the role of vaccines is uncertain. 
But in administering and refining the injury table, HHS is in the
position of determining how much of this uncertainty the program will
continue to bear.  When HHS removes or does not add injuries to the
vaccine injury table, the petitioner bears the burden of proof rather
than the government.  Where science is insufficient to determine
causal relationships between a vaccine and injuries, it is not clear
that HHS' criteria and approach to making injury table changes are
consistent.  Establishing a standard method with criteria that will
be used consistently for all table changes may help eliminate
questions regarding HHS' programmatic decisions. 

   RECOMMENDATION TO THE SECRETARY
   OF HHS
------------------------------------------------------------ Letter :7

We recommend that the Secretary of HHS develop and apply a consistent
methodology for evaluating and reporting on the various factors used
to add injuries to or remove injuries from VICP's injury table.  This
methodology should include specific scientific and public policy
considerations and their relative weight in the decisionmaking
process and should be applied to any future table changes. 

   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :8

Both HHS and DOJ provided written comments on our draft report. 
Their comments are reprinted as appendix IV and appendix V,
respectively.  We summarized their comments and provide our response
below. 

Both HHS and DOJ raised issues with our analysis of claims processing
times.  In addition, HHS did not concur with our recommendation
regarding the need to establish a clear methodology for revising the
vaccine injury table and said that the Administration has not taken a
position on potential uses of the VICP trust fund surplus. 

      CLAIMS PROCESSING TIMES
---------------------------------------------------------- Letter :8.1

HHS commented on what it considered an inappropriate use of the
original legislated criteria of 1 year to measure VICP performance. 
HHS pointed out that subsequent legislation allows petitioners
additional time, as needed, to obtain medical records and bolster the
sufficiency of their cases.  We made several modifications to the
final report to reduce the perceived focus on historical
expectations.  Nevertheless, while the legislation was amended to
provide petitioners with the flexibility to keep the case open
longer, there is no indication that the Congress changed its
expectation that claims would be processed quickly.  In fact, the law
was amended to require a special master decision within 240 days,
exclusive of suspended time.\23

HHS also commented that our analysis should more clearly
differentiate adjudication times between claims related to
vaccinations administered prior to October 1988 (pre-1988 claims) and
claims related to vaccinations on or after this date (post-1988
claims).  HHS stated that pre-1988 claims are not representative of
current and future processing times and should be reported on
separately.  HHS said the average processing time for post-1988
claims was 2 years.  To clarify that our analysis did differentiate
between pre- and post-1988 claims, we added a note to figure 2 to
indicate that the years 1992 through 1997 include only post-1988
claims.  We also note that HHS' 2-year number is the average time for
only those cases that have been closed.  However, after 2 years, a
majority of the cases filed each year are still open. 

HHS and DOJ said that the draft report implied that HHS' increased
propensity to defend claims is a result of a significant change of
position rather than the result of the Congress providing funding for
DOJ attorneys to defend claims that HHS had defaulted on for the
first 2 years of the program.  We added language to clarify that HHS'
increased level of defense in implementing its statutory authority
was related to the availability of additional resources. 

DOJ also commented that some statements in the draft may convey an
incorrect understanding of why some cases have taken longer to
resolve than originally anticipated.  DOJ said a significant factor
was that the court suspended claims processing in 1991 when an
overwhelming number of claims were received.  Legislation does allow
the court to suspend proceedings when the volume of claims is
onerous, and our report does state that the large volume of cases was
a primary factor in delayed processing times.  However, we also point
out that volume is not the only factor.  For example, we report that
even though caseloads declined between 1992 and 1997, the percentage
of new claims processed within 2 years has remained relatively the
same.  We have added wording to the report text to help clarify this
point. 

HHS also pointed out that our draft report did not discuss recent
legislative proposals to improve VICP.  In our view, the legislative
proposals advanced by HHS in June 1999 do not directly address the
findings related to our report objectives; therefore, we did not
include them.  The proposals primarily cover technical aspects of the
program, such as expanding the statute of limitations for filing
claims and clarifying statutory terms that define entitlement to
compensation. 

--------------------
\23 Either party may file an appeal of the special master decision,
which would add time to the process (see app.  II). 

      VACCINE INJURY TABLE
---------------------------------------------------------- Letter :8.2

HHS did not concur with our recommendation that in considering future
changes to the vaccine injury table, HHS formalize and apply a set of
standard criteria for making decisions to add or remove injuries. 
HHS stated that it is inappropriate to reduce the scientific basis
for decisions to the application of weighted criteria and that a
standard approach in making such decisions is not possible because
the scientific and public policy considerations vary on a
case-by-case basis.  Further, HHS stated that the Institute of
Medicine had cautioned against using a "formula" approach, and HHS
had gone to great lengths to explain its rationale for each table
decision when it published the proposed and final rules in the
Federal Register. 

We recognize that HHS has a difficult task of applying judgment when
scientific uncertainties exist about the causal links between
vaccines and injuries, and we did not question the table changes that
were made.  However, using a variety of criteria on a case-by-case
approach does not, in our view, clearly communicate to the public
that HHS is acting consistently in applying its judgment.  For
example, in discussing its rationale for each change in the Federal
Register, HHS generally cites some combination of four factors in
controlling its decision.  These factors include Institute of
Medicine findings (and subsequent medical studies), biologic
plausibility, recommendations from the Advisory Council on Childhood
Vaccines and the National Vaccine Advisory Committee, and prevalence
of the condition in the population attributable to vaccines. 
However, in communicating its decisions to the public, HHS does not
uniformly discuss each of these factors, and the reasons why the
relative importance of each factor varies among the decisions is not
apparent in all cases.  As HHS indicated in its comments, it is
important to maintain public confidence in the fairness of the
program.  Our recommendation is being made with this objective in
mind. 

Further, we disagree that it is not practical for HHS to adopt a
standard methodology to evaluate the available evidence and that
doing so would constitute use of a formula.  For example, the
Institute of Medicine developed such a methodology to perform its
review and evaluation of the available scientific evidence linking
vaccines to adverse events.  The Institute considered four types of
scientific evidence (biologic plausibility, case reports, case
series, and uncontrolled observational studies) and used qualitative
and quantitative approaches to weight each type of evidence.  The
results were summarized in a matrix with narrative on how each factor
was applied in the decisionmaking process.  HHS could develop a
similar decisionmaking methodology that includes the public policy
considerations and other relevant criteria it uses in addition to the
Institute's findings.  We have reworded our recommendation to make it
clearer that, in the future, HHS should apply a consistent
methodology for evaluating and reporting on the factors used to make
vaccine injury table changes. 

HHS also commented that the reason compensation numbers significantly
dropped for DTP after the vaccine injury table changes was not
because of the table changes, as we reported, but because of a
decrease in the use of this vaccine.  HHS also stated that our report
should reflect the fact that VICP's future workload will be primarily
for vaccines other than DTP.  Our point about the changes to the
table does not relate to the use of the DTP vaccine or VICP's
workload.  Instead, our discussion concludes that, regardless of the
vaccine in question, people have historically had a higher chance of
being compensated for injuries that are on the table than for
injuries that are not on the table.  Since a higher percentage of
people filed claims off-table after the table changes were
implemented, the future percentage of claims compensated under the
program may be lower. 

      TRUST FUND GROWTH
---------------------------------------------------------- Letter :8.3

HHS said the Administration has not submitted formal proposals to
increase support of vaccine safety and research activities or taken a
position on the potential use of the trust fund.  We have added
language to clarify that these options have not been formally
endorsed by the Administration. 

---------------------------------------------------------- Letter :8.4

As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
from the date of this letter.  At that time, we will send copies of
this report to the Honorable Donna E.  Shalala, Secretary of HHS; the
Honorable Janet Reno, Attorney General; the Honorable Loren A. 
Smith, Chief Judge, U.S.  Court of Federal Claims; and other
interested parties.  We will also make copies available to interested
congressional committees and others upon request. 

This report was prepared by Frank Pasquier, Assistant Director;
Lacinda Baumgartner; and Linda Bade.  Please call me at (202)
512-7118 if you or your staff have any questions. 

Sincerely yours,

Kathryn G.  Allen
Associate Director, Health Financing
 and Public Health Issues

SCOPE AND METHODOLOGY
=========================================================== Appendix I

To obtain information on VICP, we interviewed (1) officials at HHS,
DOJ, and the U.S.  Court of Federal Claims involved in the VICP
claims process; (2) a representative of the Institute of Medicine
responsible for analyzing existing scientific evidence for HHS use in
revising the VICP vaccine injury table; (3) officials at CDC and FDA
responsible for the national immunization program and monitoring
vaccine safety; (4) an attorney and a parent group representing the
interests of people injured by vaccines; (5) a representative of a
professional association representing pediatric physician interests;
(6) Treasury officials responsible for the financial accounting and
reporting for the VICP trust fund; and (7) the CBO official
responsible for budgeting aspects of the trust fund and presentation
in the federal budget. 

We also reviewed relevant legislation, financial reports, budget
documents, and reports evaluating various aspects of VICP operation. 
We obtained and analyzed data from HHS on claims filed under VICP
from 1988 to February 1999.  In addition, we obtained the Federal
Register notices discussing HHS changes to the VICP injury table and
reviewed the Institute of Medicine's analysis of information
available to link vaccines to various medical conditions. 

We conducted our work from January through September 1999 in
accordance with generally accepted government auditing standards. 

      CLAIMS PROCESSING
------------------------------------------------------- Appendix I:0.1

To determine how long it took to process claims through VICP, we
analyzed HHS' VICP claims database.  This database included data
fields on when the claim was filed and a history of processing steps
through when the claim was settled.  We did not perform a reliability
assessment of the data system. 

      THE EFFECT OF TABLE CHANGES
      ON COMPENSATION RATES
------------------------------------------------------- Appendix I:0.2

We used HHS' VICP claims database to identify compensation rates for
claims that did and did not allege injuries on the vaccine injury
table.  We identified such claims by comparing injuries on the injury
table with those listed in the HHS claims database for each claim. 
We provided a list of the injuries in the database to HHS officials,
and they confirmed those injuries that they would consider as
potentially being on or off each of the three injury tables.  Because
three different injury tables were in effect over the life of the
program, we first grouped the claims according to the injury table
that was applicable at the time the claims were filed.  We then
computed the number and proportion of claims in each group that did
or did not allege injuries on the injury table.  Compensation rates
and associated awards for alleged table and non-table claims were
then identified using the data fields for the U.S.  Court of Federal
Claims' judgment and award amounts in the HHS database. 

      BUDGETARY EFFECT OF OPTIONS
      TO ADDRESS GROWING TRUST
      FUND BALANCE
------------------------------------------------------- Appendix I:0.3

To determine the budgetary effect of options proposed to reduce the
trust fund balance, we first obtained financial statements for the
VICP trust fund from the Treasury.  These financial statements
identified the revenue that flowed into the trust fund from vaccine
excise taxes and interest accrued on Treasury securities, as well as
expenditures that flowed out of the trust fund for claims and
associated administrative expenses.  We did not audit the trust fund
financial statements. 

Because of the interrelationship between the trust fund and the
general fund in the federal budget, we used the trust fund financial
information to identify the amounts that flowed directly and
indirectly through the Treasury to the general fund as a result of
the program.  Direct general fund revenue includes 25 percent of all
vaccine excise taxes collected by the Treasury.  As discussed with
Treasury and CBO officials, we backed into the total tax collected by
the Treasury by dividing the vaccine excise tax provided to the VICP
trust fund by 75 percent.  We then subtracted the trust fund share of
the tax from the total tax collected to get the amount of tax
available to finance general fund programs and activities.  Indirect
general fund revenue includes amounts derived from Treasury
securities issued to the trust fund.  The Treasury securities
balances were listed on the trust fund financial statements. 

To demonstrate how proposed legislative changes to reduce the excise
tax rate or increase trust fund spending would affect the overall
budget, we used a rolling average of trust fund revenue and expenses
in 1997 and 1998 (hereafter referred to as 1998).  We used a rolling
average to minimize timing differences in accounting for revenue and
expenses.  We assumed that if new legislation had resulted in a match
between trust fund revenues and expenditures in 1998, the amount of
offset required by the Budget Enforcement Act for 1998 would have
been the difference between the total excise tax actually received
and expended by the trust fund in that year.\24 Our computation
reflects the assumption that vaccine manufacturers would not decrease
vaccine prices to pass on the tax savings to vaccine purchasers
because HHS officials said that they did not reduce prices when VICP
took on the burden of liability.  However, we also computed the
somewhat lesser effect on the general fund if the manufacturer had
passed on the savings.  The effect is less because CDC information on
federal vaccine purchases shows that nearly half of all vaccine
purchases are made by the federal government.  Therefore, lower
vaccine prices to federal agencies purchasing vaccines would offset
the decrease in excise tax.  We computed the government's loss as the
percentage of excess in the trust fund that was related to state and
private vaccine purchases. 

--------------------
\24 This excludes loss of the 25 percent in vaccine excise taxes
provided directly to the general fund because budget scoring
convention assumes these taxes will be recouped through commensurate
increases in income and payroll tax revenue. 

VICP CLAIMS PROCESS
========================================================== Appendix II

Three federal agencies are involved in the VICP claims process:  HHS,
DOJ, and the U.S.  Court of Federal Claims.  The process consists of
several steps.  (See table II.1.)

                                        Table II.1
                         
                           Claims Process Steps and Time Frames

Step                                          Time frame
--------------------------------------------  -------------------------------------------
Petition filed
-----------------------------------------------------------------------------------------
An individual or representative claiming      --In the case of an injury, the claim must
injury or death from a vaccine files a        be filed within 36 months after the first
petition for compensation with the court.     symptoms appeared, and the effects must
                                              have continued at least 6 months after
                                              vaccination.
                                              --In the case of a death, the claim must be
                                              filed within 24 months of the death and
                                              within 48 months after the onset of the
                                              vaccine-related injury causing the death.

Physician review
-----------------------------------------------------------------------------------------
A physician at the Division of Vaccine        --Court rules require the report to be sent
Injury Compensation, HHS, reviews each        to the court within 90 days from the date
petition to determine whether it meets the    the claim was filed. This deadline is
medical criteria for compensation. This       subject to change depending on a
recommendation is provided to the court       petitioner's ability to obtain all relevant
through a report filed by DOJ, although it    medical records and file a complete
is not binding.                               petition.

Special master decision
-----------------------------------------------------------------------------------------
A special master of the court is required   The special master is required to issue a
to make the initial decision for              judgment within 240 days (exclusive of
compensation under the program. A special     suspended time) from the date a claim is
master is an attorney appointed by the        filed, or petitioners are allowed to
judges of the court. At hearings before the   withdraw their claim from VICP and file a
special master, HHS is represented by a DOJ   lawsuit against the vaccine manufacturer or
attorney and the petitioner is represented    vaccine administrator in the civil tort
by a private attorney.                        system.

Acceptance or rejection of special master decision
-----------------------------------------------------------------------------------------
The petitioner and HHS accept or reject the   --Either party has 30 days to file a motion
special master's decision.                    for review by the court. If a motion is
                                              filed, an additional 30 days is provided to
                                              the other party to respond.
                                              --Instead of filing a motion for review, if
                                              a petitioner files an election to reject a
                                              special master's judgment within 90 days
                                              after entry of judgment, the petitioner may
                                              proceed to file a lawsuit in the civil tort
                                              system.

Court judgment
-----------------------------------------------------------------------------------------
The court issues a judgment on the special    --The court is required to enter a judgment
master's decision.                            within 420 days from the date the claim was
                                              filed (exclusive of the time spent on
                                              remand to the special master).
                                              --Within 60 days, either party may file a
                                              petition for review of the judgment with
                                              the U.S. Court of Appeals for the Federal
                                              Circuit. Final appeal from the Federal
                                              Circuit is to the U.S. Supreme Court
                                              through a petition seeking a writ of
                                              certiorari. Within 90 days of the
                                              conclusion of the appeals process, if a
                                              petitioner files with the court an election
                                              to reject the judgment, the petitioner may
                                              proceed to file a lawsuit in the civil tort
                                              system. If the petitioner takes no action
                                              within 90 days, the judgment is deemed
                                              accepted by law.

Payment of award
-----------------------------------------------------------------------------------------
Petitioners accepting the judgment and        Agency criteria requires HHS to pay
awarded compensation are paid from the VICP   petitioners within 60 days after payment is
trust fund if the vaccine was administered    authorized by the court and DOJ.
on or after October 1, 1988, or from annual
appropriations if administered before this
date.
-----------------------------------------------------------------------------------------
   Figure II.1:  Time Line of VICP
   Claims Processed in U.S.  Court
   of Federal Claims Without an
   Appeal

   (See figure in printed
   edition.)

\a Parties can request suspensions adding up to 180 days to the time
before the special master reaches a decision.  In addition, for
claims related to vaccines administered before Oct.  1, 1988, the
special master can suspend proceedings an additional 900 days. 

\b Parties may expedite this step by waiving their right to file a
motion for review.  If parties file a motion for review of the
special master's decision, the deadline for the court to render
judgment is extended by 150 days. 

\c The petitioner may expedite this step by immediately electing
judgment. 

CURRENT VICP INJURY TABLE AND
"QUALIFICATIONS AND AIDS TO
INTERPRETATION"
========================================================= Appendix III

                                       Table III.1
                         
                                VICP Vaccine Injury Table

                                                                             Time
Vaccine                              Injury/adverse event\a                  period\b
-----------------------------------  --------------------------------------  ------------
Tetanus-containing                   Anaphylaxis or anaphylactic shock       4 hours
                                     Brachial neuritis                       2-28 days

Pertussis-containing                 Anaphylaxis or anaphylactic shock       4 hours
                                     Encephalopathy (or encephalitis)        72 hours

Measles, mumps, rubella in any       Anaphylaxis or anaphylactic shock       4 hours
combination                          Encephalopathy (or encephalitis)        5-15 days

Measles-containing                   Thrombocytopenic purpura                7-30 days
                                     Vaccine-strain measles in an            6 months
                                     immunodeficient recipient

Rubella-containing                   Chronic arthritis                       7-42 days

Polio live virus-containing          Paralytic polio
                                     --In a nonimmunodeficient recipient     30 days
                                     --In an immunodeficient recipient       6 months
                                     --In a vaccine-associated community     Not
                                     case                                    applicable
                                     Vaccine-strain polio viral infection
                                     --In a nonimmunodeficient recipient     30 days
                                     --In an immunodeficient recipient       6 months
                                     --In a vaccine-associated community     Not
                                     case                                    applicable

Polio inactivated virus-containing   Anaphylaxis or anaphylactic shock       4 hours

Hepatitis B                          Anaphylaxis or anaphylactic shock       4 hours

Hemophilus influenzae type b (Hib),  Early-onset Hib disease                 7 days
unconjugated

Hib, conjugated                      No condition specified                  Not
                                                                             applicable

Varicella                            No condition specified                  Not
                                                                             applicable

Rotavirus                            No condition specified                  Not
                                                                             applicable

New vaccines recommended\c           No condition specified                  Not
                                                                             applicable
-----------------------------------------------------------------------------------------
\a Injuries also include any acute complication or sequela (including
death) of the listed events (for all but the conjugated Hib,
varicella, and new vaccines). 

\b For first symptom, onset, or aggravation of injury after
vaccination. 

\c Any new vaccine recommended by CDC for routine administration to
children, after publication by the Secretary of HHS of a notice of
coverage. 

   Figure III.1:  "Qualifications
   and Aids to Interpretation"

   (See figure in printed
   edition.)

   (See figure in printed
   edition.)

   (See figure in printed
   edition.)

   (See figure in printed
   edition.)

   (See figure in printed
   edition.)

(See figure in printed edition.)APPENDIX IV
COMMENTS FROM THE DEPARTMENT OF
HEALTH AND HUMAN SERVICES
========================================================= Appendix III

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)

(See figure in printed edition.)Appendix V
COMMENTS FROM THE DEPARTMENT OF
JUSTICE
========================================================= Appendix III

(See figure in printed edition.)

*** End of document. ***