Who Pays for VICP?

There is a lot of misinformation out there about vaccines and, well, pretty much anything related to them. People like myself that take a science-based approach to vaccines to counter myths are "pharma shills" (we're not). Manufacturers have absolutely no liability (they can be sued for some liability claims). If vaccines work, it doesn't matter whether my kid is vaccinated or not (it does matter), or the variation, why do so many outbreaks include the vaccinated (it's a numbers game; see previous link). The government is scared to do a randomized, double-blind, placebo-controlled trial of the vaccine schedule (such a study would be unethical and possible illegal). VAERS is a reliable source for drawing conclusions (it's unreliable for conclusions, but can be a springboard for research ideas).

And then there's something that came up yesterday in a CDC twitter chat about vaccines. The chat (#CDCvax) was crashed by a bunch of anti-vaccine activists spouting all kinds of nonsense, including all of the myths mentioned above. One other claim popped up that I have not written about before. It involves the funding of the Vaccine Injury Compensation Program (VICP). Basically, one anti-vaccine proponent made the oft-repeated, but never correct, claim that taxpayers fund the VICP compensation fund. Here's one example of this claim:

Here's a clue, they aren't.

The short response is: Taxpayers do not pay for vaccine court payouts. But I'll go into a bit more detail.

I can understand why some people may think this. If you go to the VICP web site, on the main page you will find this description of the trust fund from which compensation is dispensed:

The Vaccine Injury Compensation Trust Fund provides funding for the National Vaccine Injury Compensation Program to compensate vaccine-related injury or death claims for covered vaccines administered on or after October 1, 1988.

Funded by a $0.75 excise tax on vaccines recommended by the Centers for Disease Control and Prevention for routine administration to children. The excise tax is imposed on each dose (disease that is prevented) of a vaccine. Trivalent influenza vaccine for example, is taxed $0.75 because it prevents one disease;  measles-mumps-rubella vaccine, which prevents three diseases, is taxed $2.25.

It's not clear from this description who is responsible for paying the excise tax. The FAQ about the program does not clarify the question, either. Without a clear description of who this tax applies to, it's easy to think that everyday citizens, whether they get a vaccine or not, are paying for the fund with their tax dollars. In its more general form, the claim implies that your income tax or property tax or some other personal tax goes to fund the VICP. It doesn't help that people like Ginger Taylor promote this misunderstanding:

Patients pay a 75 cent excise tax for each vaccine and that adds $200 million to the compensation fund each year. The pharmaceutical companies do not have to pay for the vaccine injuries they cause. Tax payers do.

But the claim is simply wrong. The History of Vaccines web site has a good overview of VICP, including a statement about who pays the tax:

NVICP is funded by a tax of $0.75 per vaccine dose, collected from vaccine manufacturers by the U.S. Department of the Treasury.

IRS Publication 510 makes this clear, with vaccine taxes listed under Section 5: Manufacturer Taxes. The manufacturer is responsible for paying taxes on every dose of vaccine they sell, if the vaccine is on the recommended childhood immunization schedule. The manufacturer, not your average citizen, is responsible for paying to the IRS that $0.75 per vaccine dose.

[Edited to Add (Dec. 10, 2014): Apparently, publication 510 was too confusing for the folks at the Vermont Coalition for Vaccine Choice to understand:

 
Amusingly, they asked me if I had updated this post yet to say that taxpayers, not manufacturers, pay the tax. Well, thanks to them, I'm adding this update. In case IRS Publication 510 is just as confusing for any other anti-vaccine folks who might read this, another IRS resource makes the matter even clearer. At the IRS page Excise Taxes - Manufacturing Tax Tips, it states (emphasis mine):

Manufacturers are responsible for manufacturers taxes on the following items (for more information on each item listed, see Publication 510, Excise Taxes for 2009 (Including Fuel Tax Credits and Refunds)

• Sport fishing equipment - tax based on the sale price of the item
• Bows - tax based on the sale price of the item
• Arrow components - tax based on the sale price of the item
• Coal - tax based on either sale price of the item or weight of the item
• Tires - tax based on the weight of the item
• Gas guzzler automobiles - tax is based on the fuel economy rating of the automobile
• Vaccine - tax is based per dose

I hope that settles the matter. The government has imposed the vaccine excise tax which funds VICP on the manufacturer, not on taxpayers like you or me.]

We could stop there, but folks like Taylor will try to redefine things, by saying that the manufacturers charge patients for the tax, so it's really the patient who pays into the fund. That's not exactly true. Yes, the manufacturer can pass the cost of the tax along to whomever buys the vaccine. That may be a patient, if they buy it directly from the manufacturer, but that's hardly likely, especially considering you need a medical license to buy prescription products like vaccines. The ones buying the vaccines are more likely health care providers, like pediatricians in private practice, clinics, hospitals and so on. But regardless of who they may pass the cost along to, the manufacturer is still ultimately responsible for paying the tax to the government. And even if you use some convoluted logic to try to claim the patient pays the tax, the recommended vaccines are considered preventive medicine, so most insurance companies do not require (and are even prohibited by law in some states from requiring) a copay for them. Unless the patient is uninsured and paying out of their own pocket, they still would not be paying the tax at all.

Anti-vaccine activists try to claim that VICP is funded by your tax dollars, but that just is not the case. Like most of what they say, it is a distortion meant to mislead and sow anger. Vaccine manufacturers pay into the fund. So when a VICP award is paid out, that money is coming out of the wallets of the vaccine manufacturers. If you're worried about your taxes being wasted on things that should not be happening, then you might want to support vaccination as a means of preventing outbreaks, which end up costing you, via your tax dollars, tens to hundreds of thousands of dollars. With most outbreaks now driven by vaccine refusal, anti-vaccine activists are the ones wasting your tax dollars.