March 26, 2018

Breakingviews: Self-driving cars may find legal lesson in pharma

by Breakingviews.

Developers of self-driving cars have a legal lesson to learn from the pharmaceuticals industry. Autonomous vehicles should make road deaths like the one this week involving an Uber prototype a rarity. Paradoxically, as drugmakers found with vaccines, remaining mishaps may increase legal costs and drive companies out of the market. The pharma industry, though, found a solution.

Almost 95 percent of such deaths are caused by human error, according to the National Highway Traffic Safety Administration. Getting rid of drivers ought to make roads safer. General Motors even has “zero fatalities” as part of its slogan for developing electric and autonomous vehicles.

It’s more likely that deaths will only be reduced, albeit greatly, by mass adoption of autonomous vehicles. But people are often afraid of the unknown and poor at gauging risk: 46 percent of respondents either probably or definitely would not ride in a fully autonomous vehicle, according to a survey this month by J.D. Power and Miller Canfield. Furthermore, customer willingness to sue after an accident rose if a self-driving car were involved.

Figuring out how to apportion blame between developers, manufacturers, drivers – if involved – and other parties could be difficult. And juries may be more willing to blame, and pin large settlements on, well-off car and technology firms. Yet if legal worries slow autonomous-vehicle adoption, thousands of people will die in traffic accidents – 40,100 lost their lives last year on U.S. roads alone.

The pharma industry faced a similar dilemma. Diphtheria used to kill more than 100 in every 1 million children. Companies developed a series of shots that essentially eradicated the disease, but at the cost of leaving perhaps one in every million children who take the vaccine brain damaged.

In the 1980s juries awarded huge settlements to those children hurt by vaccines against diphtheria and other illnesses. As a result, many pharma firms stopped making them as they couldn’t get liability insurance.

So Congress banned lawsuits and forced manufacturers to pay fixed amounts into a fund to compensate victims. It’s a decent model that helps victims while keeping society’s broader goals on track.

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