Litigation and Vaccination Manufacturer Security Price Returns

Abstract

Objectives: To quantify the initial short-term market response of product liability litigation in appellate courts against vaccine manufacturers between 1987 and 2003. Methods: This project used a retrospective data analysis. The study analyzed appellate court decision found searching the legal research section of Lexis-Nexis® between 1987 and 2003. A single index market model was used to examine an event window of (-1, +1) and calculate a cumulative abnormal return for one of three categories; outcome in favor of the plaintiff, outcome in favor of the defense, or case dismissal. Results: Overall, this study investigated vaccine-related litigation. Thirty-three lawsuits were found involving 12 separate parent companies and ultimately lead to 82 separate incidences. A majority of the cases involved litigation concerning thimerisol (n =12, 36%). Following inclusion and exclusion criteria for the appellate court rulings, 9 cases were in favor of plaintiff, 10 cases were in favor of the defense, and 14 cases were dismissed. Appellate rulings favoring the plaintiffs were found to be negative and statistically significant, with cumulative abnormal returns equaling -1.39% during the (-1,+1) event window (p < 0.05). The mean cumulative abnormal returns for rulings favoring the defense or case dismissals were statistically insignificant at 0.49% and -0.29%, respectively Implications: Product liability litigation against vaccine manufacturers can produce significant negative short-term security price returns, which can be a disincentive for corporations to invest in vaccine development and production.