Should we legislate to stop a government offering indemnities to vaccine manufacturers?

This was a matter which came before the Senate last week in a private members bill.

Some of the reasons given for the Bill were:

  • “Companies work for shareholders first and it is profits that motivate their decision and actions. People should always be put before profits”;
  • “Indemnification has created an incentive for risk-taking in the pharmaceutical industry which is not aligned with the fundamental principles of medicine. Where indemnity exists, it is human nature to take larger risks, whether it be a conscious decision or subconscious, the outcomes are poor”; and
  • “The pharmaceutical industry has a taste for your money.”

Vivid language for the impressionable mind!

The most amicable and well-meaning of senators championed the cause with a rousing speech. A personal friend of mine adroitly negotiated it behind the scenes. It was a case study in politicking, and even attracted the support of one Libertarian state division.

Then with the support of all but Labor, it went to committee for investigation and so will become news again soon. Yes, the centre-right crossbench attracted the Greens and even Senator Thorpe for a moment.

What is not to love?

Against such a juggernaut of consensus, this simple libertarian fig farmer has his misgivings. Have sympathy for me. It’s in my DNA to search for a principle.

We libertarians are fond of paraphrasing John Stuart Mill’s 1859 Harm Principle with phrases like “live and let live, as long as you don’t harm others.”

We are not so persistent in reminding our parliamentary friends that the Harm Principle requires that we ‘weigh such harms.’

The great horror of the last 3 years was that our leaders did not do this. Ignore psychological damage to infant school children plastered with a mask. Ignore the cheap, unhealthy food on the dinner table of a family with dual incomes lost to mandates. Ignore the evaporated life savings of ‘non-essential’ small business owners. Ignore the suicides and mental health flair-ups caused by lockdowns. Ignore the business collapses.

It was one flu-like covid-19 harm, all other harms be damned!

One must weigh the harms.

The problem with the Bill is that it applies a blanket ban and fails to weigh harms.

Just say the next virus is more potent. Let’s say it’s Ebola or something with a 50% mortality rate!

In the end, we need politicians who apply John Stuart Mill’s On Liberty in full. Live and let live as long as you don’t harm others. When there are competing harms, weigh them and choose the least harmful option.

I want our government to have the same commercial tool as any private sector party. Indemnification, or the transfer of risk, is used by outdoor adventure operators, mining equipment hire companies, and many others. Why ban the government?

As a libertarian, I prefer my government to be able to transact like the private sector.

As a libertarian, I prefer my government to be ready to act in the case of genuine pandemic threat. As established, I want the government to potentially offer indemnity to vaccine providers in the case of emergency.

And as a libertarian, I want politicians who’ll use skilled negotiators so offering indemnity won’t be necessary.

Further …

As a libertarian, I’m unimpressed by populist attacks on free enterprise, especially pharmaceutical companies which keep us alive. As a libertarian, I’d be more curious to know why anyone believes a vaccine company should absorb near sovereign-level risk for a government intent on releasing vaccines before they pass the government’s own safety standards. As a libertarian, my focus is on that government maladministration, not the vaccine company.

As a libertarian, I’d prefer my government weren’t both umpire, with its TGA vaccine approval processes, and player, being the acquirer and dispenser of vaccines. I’d prefer to eliminate this conflict of interest.

As a libertarian, I’d like to rollback government from healthcare delivery, replace tired old public hospitals with private hospitals, and to protect charities which run hospitals.

And as a libertarian, I’d prefer our allies in parliament did not run adrift philosophically into the dangerous and choppy waters of the anti-capitalist. I am left in little wonder why the Greens and Senator Thorpe kept the Bill alive.

I believe the correct approach for a libertarian here is to vote against the Bill. In our current system, the Government needs to make it easy for vaccine production to occur in the event of a genuine calamity.

Our government already has one hand tied behind its back running a socialised system. Let’s not tie the other one by banning the free-enterprise bargaining chip of indemnities.

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  1. “As a libertarian, I prefer my government to be able to transact like the private sector.”
    This is a wrong take! An involuntary institution of force can NEVER be like the private sector! To make it attempt to be is folly!
    A libertarian should do everything possible to hobble it!

    • Hey, thanks for replying.

      Yes, I understand that government is an institution of force. Got it. And yes, I understand that government having the commercial bargaining chip of indemnifying risk does not change that.

      In the end, who do you ‘hobble’? Government will still go on. But I do wonder whether you’d eliminate the possibility of vaccines being a choice for people.

      To be clear, libertarians want people to have a choice to take or not take properly tested vaccines. Since Dr Edward Jenner created the first smallpox vaccine, many strides have been made. Mistakes too including a lack of transparency with results and testing. But if we say there are 8 billion people on the planet with, in the West, life expectancy of 80+ years, perhaps vaccines have something to do with that.

      Regardless, as a libertarian, I want people to have choice. Take the vaccine or not. Your call.

      Unfortunately right now, government buys the vaccines. When it does so, I prefer that it weighs the harms. Part of that weighing process is whether to indemnify the vaccine company.

      Let’s run a thought experiment:

      * Another virus emerges

      * Transmission occurs via contact with the secretions, bodily fluids and blood of infected people, as well as through any surface or material contaminated with these fluids

      * Over a short period, it becomes clear that once transmitted there is a 50% death rate. This time, there are no games being played with the statistics. 50% is a real number.

      * Miraculously, there is no media or government propaganda. No suspicious hype.

      * A majority of people are calling for a vaccine, which would be voluntary, absent all coercion.

      * The government starts negotiating purchase of a vaccine

      * It turns out there is only one vaccine manufacturer which says it cannot risk supplying Australia without an indemnity

      If I understand you correctly, your position is that a libertarian is correct to stop the government offering indemnity so the majority would have its vaccine?

      Am I representing your position correctly?

  2. This is a very contentious issue, Kenelm. I have my own strong views around vaccines in general, as well as viruses and our immune systems and healthy eating etc.
    But to stick with your point of indemnity, I disagree on the grounds that Big Pharma is a monstrously huge profit making machine, and I see no reason why our tax money should contribute one cent toward it. Especially based upon the premise of individual choice to even have a vaccine.

    • Hi Gerardine,

      Thanks for taking the time to reply. If anyone can discuss contentious issues rationally, it’s you and I.

      Let’s give it a shot, perhaps encouraging others to follow our lead.

      Regarding your first paragraph, I wouldn’t wish to disturb your strong views. Live and let live. Your choice.

      Going to your second paragraph, which as you rightly suggest is the point of my article, in relation my thought experiment above, you would like the government legally prohibited from offering indemnities to any vaccine provider?

      If ‘yes’, the result of my thought experiment which assumes zero coercion is that – in the here and now with our current system – the government purchases no vaccines even though the majority want it and there is a proven death rate of 50% from a looming virus.

      I’m just not sure individual human flourishing – the point of libertarianism – is achieved this way. We have to weigh the harms. And I would say the reduction in Australia’s population from 25 million to 12.5 million is a far greater harm than possible legal claims for ‘adverse events.’

      For greater disclosure, the virus in the thought experiment above is Ebola. We’re not talking a flu-like covid-19 now.

      I’m not saying the government would definitely offer indemnities. I’m saying the government should have the discretion to offer them if necessary.

      A couple of responses about your point ‘Big Pharma is a monstrously huge profit making machine’: first, there’s nothing wrong with profit. Profit is admirable. Profit is a measure of how well people working inside a company are servicing the necessities and offering demanded products to fellow human beings; second, profitability is irrelevant here. When considering whether a company needs an indemnity, we are looking at its balance sheet not its profit and loss report.

      As an easy-to-pick number for the purpose of this discussion, the question to ask is does the vaccine company have the ‘net shareholder equity’ (the difference between assets and liabilities) sufficient to cover contingent liabilities?

      There are many small vaccine companies. But let’s take a large one: Pfizer. It has a total shareholder equity of USD $95 billion Rough, back of a napkin calculation here. If half of Australia’s 25 million died from Ebola (an absurd proposition, as we’d intervene) and only 3% of the surviving 12.5 million joined a class action against Pfizer for the inevitable ‘adverse events’ and won, the company would have a litigation liability of USD$255,096 per plaintiff. All other things being equal, this is enough to render the company insolvent and no longer producing vaccines.

      That is the risk contemplated by my thought experiment.

      Such a liability wouldn’t bring a country like Australia to its knees.

      When you say ‘I see no reason why our tax money should contribute one cent toward it’, it may be we have no choice. Why would a vaccine company take the risk? They may assess they can. As I’ve shown with basic calculations, maybe they simply don’t have the capacity to assume the risk.

      Not all viruses are the same. Some pose trivia risks. Some pose the risk of civilisation collapse.

      The problem with government reaction to covid was that it didn’t weigh the risk and harms properly.

      A blanket ban on indemnities for vaccine companies adds to the problem. It removes a tool governments have to weigh and respond to harms which are potentially more impactful.

      I fully acknowledge there are better ways to structure and limit government, and we can talk about that as we always do. But for libertarians to be relevant, we have to also acknowledge the government structure we have today and offer insight into our responses in the here and now.


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