Imagine a company whose product is vaunted as a miracle cure by the corporate press, purchased en mase by the state, and is a must-have for attendance in certain elite institutions. Then imagine the company, regardless of how effective or ineffective its product is, remains entirely immune from the lawsuits arising from the use of its product. Such a fantasy is the nightmare of the anti-capitalists and forms one of their main criticisms of the free market: that a company will arise which can establish a monopoly that holds sway over the state to such a degree it in effect becomes the governing structure.
However, despite the fear of anti-capitalists, such monopolies are not a function of the free market. As Austrian economist, Murray Rothbard stated in his seminal Man, Economy, and State, “Monopoly is a grant of special privilege by the State, reserving a certain area of production to one particular individual or group. Entry into the field is prohibited to others and is enforced by the gendarmes of the state.”1 Recently, under both the Biden and Trump administrations, Rothbard’s definition of monopoly came to fruition not by the process of the free market as is feared by the anti-capitalists, but through the granting of a near monopoly privilege to pharmaceutical giant Pfizer via the PREP Act.
In order for the PREP Act to be invoked, the HHS Secretary must first declare a public health emergency under 42 USC § 247d (2022). Such a declaration can be made, “If the Secretary determines, after consultation with such public health officials as may be necessary, that (1) a disease or disorder presents a public health emergency; or (2) a public health emergency, including significant outbreaks of infectious diseases or bioterrorist attacks, otherwise exists.”2 Former Secretary, Alex M Azar II, declared an emergency on January 31, 2020, which has been repeatedly renewed under current HHS Secretary Xavier Becerra.3
Once a public health emergency is declared, the Public Readiness and Emergency Preparedness act provides, “liability immunity to certain individuals and entities against any claim of loss caused by, arising out of, relating to, or resulting from the manufacture, distribution, administration, or use of medical countermeasures, except for claims involving ‘‘willful misconduct’’ as defined in the PREP Act.”4 “Willful misconduct” is defined as, “denot[ing] an act or omission that is taken (i) intentionally to achieve a wrongful purpose; (ii) knowingly without legal or factual justification; and (iii) in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit.”5 Further, “If an act or omission by a manufacturer or distributor with respect to a covered countermeasure…is subject to regulation by this Act…such act or omission shall not constitute “willful misconduct” for purposes of subsection (d) if—(i) neither the Secretary nor the Attorney General has initiated an enforcement action with respect to such act or omission.”6 Such vast immunity was explicitly granted to Pfizer’s Comirnaty vaccine on December 3, 2020 when the former HHS Secretary amended the PREP Act’s immunity to include “all qualified pandemic and epidemic products. (Pfizer’s Comirnaty vaccine being the main product).”7
Put simply, as long as the FDA approves a pharmaceutical product and subsequently the product is declared protected under the PREP Act by the HHS Secretary, the pharmaceutical company cannot act with willful misconduct so long as the Secretary has not already said the company is engaged in willful misconduct. Under this circular logic, barring any action by the HHS Secretary, it is impossible to sue a pharmaceutical company for a product protected by the PREP Act.
What, in effect the PREP Act declaration did, is create a monopoly for Pfizer on the Covid treatment market. The results of this monopoly are bound to be negative for everyone except Pfizer.
The most obvious effect of the current invocation of the PREP Act is that individuals cannot receive recompense for any vaccine side effects. This obviously hurts the individual consumer who may be harmed, but the restrictions also hurt the overall market. While the Pfizer/Moderna vaccine is currently approved by the FDA, the FDA is no stranger to endorsing drugs that ended up causing serious side effects: POSICOR, Seldane, MERIDIA, etc.8 One of the main reasons these drugs were subsequently pulled from the market was the massive outroar and lawsuits by consumers.9 If there is even a small chance the FDA made a mistake by approving the Comirnaty vaccine, consumers will have a more difficult time getting out the word to both the medical community and the general public. The lack of critical public information will reinforce Pfizer’s market dominance.
Second, the PREP Act is bad for producers because Pfizer was given a massive, state-sanctioned market advantage in terms of capital allocation. The ability to supply different treatments is ultimately curtailed as other companies have to invest more into R&D to make absolutely sure they are not sued or into legal defense if those companies are sued. This creates an investment barrier that may be so high other companies forgo creating a treatment in the first place, thus solidifying Pfizer as the sole provider of Covid treatments.
Last, Pfizer, has little incentive to actually continue producing an effective treatment after receiving PREP immunity. Instead, Pfizer can use their capital to lobby the FDA and HHS to extend the immunity for their previously produced vaccine which may actually be a subpar treatment for current Covid variants. Arguably this is seen in Pfizer’s push for “boosters” despite questionable evidence as to their effectiveness.10
Ultimately, the PREP Act is a tool for the government to limit the market mechanisms which prevent a monopoly from developing in the first place. By invoking the PREP Act, Pfizer gained massive market advantages which create a state-approved monopoly on Covid treatments. Surely, even in times of emergency, such a monopoly is exactly the opposite of what the public needs in terms of healthcare: choice.
1. Murray Rothbard, Man, Economy, and State with Power and Market 669, (Scholar’s ed. 2003).
2. 42 USC § 247d (2022).
3. U.S. Department of Health and Human Services, Public Health Emergency Declarations (2022), https://www.phe.gov/emergency/news/healthactions/phe/Pages/default.aspx
4. 42 USC § 247d (2022).
7. Mackenzie Sigalos, You can’t sue Pfizer or Moderna if you have severe Covid vaccine side effects. The government likely won’t compensate you for damages either (2020), https://www.cnbc.com/2020/12/16/covid-vaccine-side-effects-compensation-lawsuit.html.
8. Rhona Finkel, 8 FDA Approved Drugs That Were Pulled From The Market (2012), https://www.drugsdb.com/blog/fda-approved-drugs-pulled-from-market.html.
10. Joseph Fraiman, Juan Erviti, Mark Jones, Sander Greenland, Patrick Whelan, Robert M. Kaplan, Peter Doshi, Serious adverse events of special interest following mRNA vaccination in randomized trials (2022).