Is de-litigation associated with a change in product safety? The case of vaccines

I investigate whether regulation and product safety litigation are complements or substitutes.  Shavell (Rand Journal of Economics, 1984) argues that lawsuits provide an important layer of product safety, while Philipson, Sun and Goldman (Regulation Vs. Litigation: Perspectives from Economics and Law, 2011) argue that product liability lawsuits are an unnecessary expense to regulated firms.  I investigate these two competing paradigms by analyzing whether shielding vaccine manufacturers from product liability is associated with a change in the safety of vaccines.  The U.S. National Childhood Vaccine Injury Act (NCVIA), which went into effect in 1988, preempted product liability lawsuits against vaccine manufacturers.  To evaluate whether vaccine safety changed after the legislation, I compare safety ratios – defined as adverse effects to population covered – of eight vaccines licensed before the legislation with 21 vaccines licensed after the legislation.  I find vaccines licensed after the legislation are associated with twice the incidence of adverse events than vaccines licensed under a regime that permitted consumers to sue.  I then examine whether this increased risk is justified by examining whether vaccines after the legislation address more serious diseases than before the legislation.  I measure the seriousness of the disease by determining the incidence of the disease in the year prior to the licensing of the vaccine that addresses the disease.  [Analysis in progress: I expect to find that the vaccines addressed diseases of similar seriousness so that the increased risk is not justified, because there is no increased social benefit from post-legislation vaccines.]  Results suggest that vaccine safety deteriorated after de-litigation.   Litigation and regulation appear to be complements.