We Lost the Lyme Vaccine. Under Rand Paul’s New Vaccine Liability Bill, We’ll Lose More.

Sen. Rand Paul (R–Ky.) seems to have forgotten a key lesson from vaccine policy history. His End the Vaccine Carveout Act aims to weaken, if not abolish, the National Vaccine Injury Compensation Program (VICP) and strip COVID-19 vaccines of liability protection under the Public Readiness and Emergency Preparedness (PREP) Act’s Countermeasures Injury Compensation Program. The bill would allow “individuals who suffer vaccine-related injury or death to pursue direct civil action in state or federal court without first being forced into a federal no-fault system that limits recovery and restricts legal options.”

The only problem: been there, done that, and didn’t like it much.

Why did Congress vote to adopt the National Childhood Vaccine Injury Act of 1986? In his 1985 article, “Vaccines and Product Liability: A Case of Contagious Litigation,” published in the Cato Institute’s Regulation magazine, legal scholar Edmund Kitch pointed to several badly decided state and federal product liability judgments that were driving many pharmaceutical companies out of the business of developing and manufacturing vaccines. Consequently, he explained that “the development of liability law now threatens to make both existing and promising new vaccines sporadically or entirely unavailable to a public and medical community that wants and needs them.” It was this trend toward erratic and excessive civil court tort judgments that worried Congress back then.

In response to these concerns, Congress passed the National Childhood Vaccine Injury Act, creating the VICP, a no-fault alternative to the traditional tort system that compensates people found to be injured by covered vaccines.

Along with rising Food and Drug Administration (FDA) regulatory costs and relatively poor investment returns compared to other pharmaceutical products, a 2003 analysis published by the National Academy of Sciences noted in addition that “growing concern about liability exposure” led to a “rash” exit of pharmaceutical companies from vaccine manufacturing. Between 1967 and 1980, the number of vaccine manufacturers had already dropped from 26 to 17, including eight domestic firms. By 1996, the number of companies making vaccines licensed in the U.S. had further fallen to just 8. Today, the U.S. vaccine market is dominated by five companies.

The creation of the VICP’s no-fault damage award system did not prevent consolidation of vaccine manufacturing but it could have been worse. The big red flag is the case of Lyme disease vaccine LYMErix. Approved by the FDA in 1998, the vaccine was 76 percent effective in preventing the tick-borne illness. However, since the vaccine was not recommended by the Centers for Disease Control and Prevention for routine vaccination, it was not covered by the no-fault VICP. This left its manufacturer, SmithKline Beecham, exposed to the civil courts.

Enter the trial lawyers. In 1999, the Philadelphia law firm of Sheller, Ludwig & Bailey duly filed a class action lawsuit against the LYMErix on behalf of 121 individuals who claimed to have experienced adverse reactions, chiefly arthritis, from the vaccine. In 2001, an FDA review of the safety data found no proof that the LYMErix vaccine was dangerous and that the rare cases of arthritis after vaccination were likely due to coincidence. In the face of the lawsuits, the manufacturer voluntarily withdrew the vaccine from the market in 2002. The company settled the class action lawsuit in 2003 by paying the law firm $1 million in legal fees but provided no financial compensation to the “vaccine victims.”

Since LYMErix was taken off the market, the annual number of reported Lyme disease cases has quadrupled, and, taking into account underreporting, it is estimated that nearly half a million Americans are treated for the illness each year. (Disclosure: I am one of those cases.) “Cases of Lyme continues to outpace other infectious diseases in the U.S. by significant margins,” points out the Global Lyme Alliance patient advocacy group. “In fact, there are 618% more new cases of Lyme disease in the U.S. than Hepatitis B, Hepatitis C, and West Nile Virus combined.” A January 2026 study in JAMA Network calculated that the annual cost of treating Lyme disease could reach up to $1 billion a year. Thanks, Sheller, Ludwig & Bailey!

Despite claims from vaccine critics, vaccines have never been a cash cow for the pharmaceutical industry. While strong demand for COVID-19 vaccines during the pandemic temporarily boosted profits for Moderna and Pfizer, total global vaccine revenues of around $73 billion today are only about 4.4 percent of the $1.74 trillion global pharmaceutical market.

The VICP is funded by an excise tax of $0.75 on every purchased dose of vaccines recommended by the Centers for Disease Control and Prevention. The VICP trust fund currently has a surplus of more than $4 billion. Since its inception in 1988, the VICP has paid out about $5.4 billion in compensation to people claiming vaccine injuries.

Paul is right that the VICP needs fixing. He is also right that COVID-19 vaccines should no longer be included in the Countermeasures Injury Compensation Program (CICP) under the Public Readiness and Emergency Preparedness Act. A better way forward than Paul’s proposed bill was outlined by George Washington University vaccine litigator Renée Gentry in her March 2024 testimony before the Congressional Select Committee on the Coronavirus Pandemic.

Gentry noted that for the first 30 years, the VICP judicial process was relatively speedy. As a result, very few people filing for compensation under the VICP rejected the decisions of the Vaccine Court and filed suit against a manufacturer. On the other hand, she argued that the administrative process for vaccine injury claims under the CICP is way too slow and rigid, especially with regard to COVID-19 vaccine injury cases. (Considering that more than a billion doses of COVID-19 vaccines have been administered in the U.S., it’s worth noting that only some 14,000 cases claiming serious injury or death from the vaccines have been filed.)

Instead of letting loose trial lawyers to do their worst, Gentry recommended reforming the VICP’s no-fault vaccine injury compensation process as provided by the Vaccine Injury Compensation Modernization Act. It addresses the VICP’s chief process bottleneck by increasing the number of Special Masters that adjudicate claims to more than the statutory limit of eight. More Special Masters means a reduced case backlog and speedier decisions for those claiming vaccine injuries. The act also moves all pending COVID-19 vaccine claims from the cumbersome CICP and puts them under the VICP adjudication process. In addition, the act increases the amount of compensation that can be awarded to successful claimants.

Nearly 25 years after trial lawyers hounded LYMErix off the market, a new Lyme disease vaccine—assuming FDA approval—may finally become available within the next year or so. Regulating vaccine liability through state and federal courts was a disaster. As history amply shows, exposing vaccine makers to the machinations of trial lawyers will stymie the development of innovative vaccines. Americans would consequently suffer more disease, disability, and death from illnesses that would otherwise have been prevented.