Updated Audit of Selected Aspects of the Swine Flu Program

Gao ID: HRD-79-47 February 6, 1979

The following aspects of the swine flu program were examined during an updated audit: the amount each vaccine manufacturer received, including profit; the amount the Federal Government paid in procuring vaccine, including the status of agreements with each vaccine manufacturer; the amount the Federal Government paid for insuring the vaccine; the amount the Department of Health, Education, and Welfare (HEW) paid for program administration; and the amount the Federal Government has paid for claims and the number of claims pending. The amount appropriated for the program by Congress was over $135 million. Many of the above cost elements are still unresolved, primarily because: (1) vaccine prices have not been finally negotiated; (2) the Government has not completed processing most of the claims it has received; (3) the Government is still receiving claims for adverse vaccine reactions; and (4) HEW is still incurring costs for research studies of children vaccinated during the program.

HEW incurred overhead and other costs in addition to those charged to the $135 million appropriation. More than 3,000 swine flu-related claims totaling over $3,159.6 million had been filed against the Government by December 1978; however, the Government has paid only 11 of these claims totaling $36,600. The manufacturers of the vaccine have submitted cost claims of about $39.4 million and have been paid about $39.7 million. The Shope vaccine dispute has not been resolved. The Government may recover some liability costs from the vaccine manufacturers, who had obtained a total of $230 million in liability insurance. This insurance was considered a production cost; the Government funded the first $10 million in self-insurance by the manufacturers, as well as the $220 million of liability insurance purchased from insurance companies for an $8.7 million premium.

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