Health policy experts on Capitol Hill think they have found a way to protect producers of vaccines from enormous liability suits while at the same time ensuring the right of people to collect damages if a vaccine harms them.

Drug companies say the threat of liability judgments has been driving up the cost of vaccines and has forced several pharmaceutical firms to get out of the business altogether, threatening the availability of vaccines that prevent lethal diseases.

This week, Rep. Henry A. Waxman (D-Calif.), chairman of the Energy and Commerce health and environment subcommittee, will introduce legislation to set up a federal compensation program to pay children injured by vaccines. This no-fault system is an attempt to limit the number of lawsuits against vaccine manufacturers. Hearings are to begin next week.

Introducing the legislation during a news conference last week, Waxman was flanked by representatives of the American Academy of Pediatrics, the American Nurses' Association Inc. and the American Public Health Association, all of whom voiced support for the bill.

"Today we're trying to protect one of the most significant public health programs we have -- that's the childhood immunization program -- from its own demise," Waxman said.

"Because of insurance, liability and manufacturers' pricing structures, vaccines are becoming the fastest rising cost in the health care economy," he said. "If we don't move forward this year . . . we may have a real threat to the supply of vaccine in this country." Several bills have been introduced on this subject in both the House and the Senate in the past few years, though none has gotten out of committee.

The new bill is a compromise measure, said subcommittee assistant counsel Timothy Westmoreland, incorporating the desires of parents to receive compensation, industry groups seeking a lessening of their liability and public health and medical groups interested in keeping up the supply of vaccine.

But the president of Dissatisfied Parents Together, a national organization started by parents whose children became severely ill or died after a DPT shot, said his group will oppose the bill because it does not offer enough financial compensation to victims or provide incentives for manufacturers to develop safer vaccines.

A spokesman for Lederle Laboratories, one of two remaining manufacturers of the DPT vaccine, said officials of his company are withholding judgment until they can see the bill in its final form.

In the Senate, Sen. Paula Hawkins (R-Fla.) introduced a bill last year to establish a compensation program for injured children. There has been no action on the bill, and a revised version may be introduced by September.

A House bill introduced last year by Rep. Edward Madigan (R-Ill.) that would set up a system of arbitrators to award compensation to injured children is currently stalled in Waxman's subcommittee, according to a Madigan spokeswoman.

Waxman cited as a particular problem the whooping cough, or pertussis, component of the DPT vaccine. According to the American Academy of Pediatrics, the pertussis vaccine can cause side effects ranging from minor discomfort to, in rare cases, brain damage or death. A series of DPT shots, which also protects against diphtheria and tetanus, is mandatory for nearly all public school students.

Lederle Laboratories announced in May that to combat rising liability insurance costs, it would nearly triple the price of its DPT vaccine to private physicians from $4.29 to $11.40 per dose.

Westmoreland said companies that make the measles, mumps, rubella and oral polio vaccines are also raising prices, "not quite so dramatically as DPT, but they are going up steadily and steeply."

Since 1981, the price of vaccines has increased 381 percent, Westmoreland said.

Waxman said his bill has two main purposes: to make sure the small number of injured children are compensated, and to ensure that there is always a safe and affordable supply of vaccines.

"I believe that most parents who sue manufacturers are doing so because they have a sick or injured child that needs care," he said. "Those parents now have only the court system to turn to for help . . . an inefficient alternative to direct compensation. Those parents, I believe, will choose the compensation system of this bill and reduce the liability costs for the manufacturers."

Waxman said, however, that the bill would continue to allow civil suits in cases of negligence, and that would serve as an incentive "to regulators and manufacturers alike to keep the vaccine supply as safe as it can be."

The legislation would establish a "Federal Vaccine Injury Trust Fund" to pay for medical bills, rehabilitation expenses, special education and other costs, such as lost wages and pain and suffering, Waxman said.

Initial funding would come from a loan from the federal government, in an amount yet to be determined. Additional funds would come from an excise tax on the purchase of each vaccine. Waxman said he doesn't know precisely how much the tax would be, but that it would not force prices any higher than they are now. Over time, he said, "I expect vaccine costs to decrease."

The bill was still in draft form last week, but according to Waxman, Westmoreland and a summary released at the press conference, this is how the compensation program would work: Parents who believe their children have sustained a vaccine-related injury could file a petition with the U.S. District Court in the jurisdiction where they live. Petitioners would be precluded from filing a civil claim until a final judgment has been reached under the compensation program. Petitions would be heard by special masters appointed by the courts. If parents can establish that their children have received a vaccine and sustained an injury listed in a vaccine injury table to be outlined in the legislation, compensation would be automatic. Compensation would also be available when there is proof that other injuries not listed in the table are related to a vaccine. Parents would be guaranteed a decision within a year after they file a petition. If a petition is accepted, a family could be compensated for unreimbursed expenses for medical care, rehabilitation, special education and residential and custodial care. Damages for pain and suffering would be limited to $250,000. Recovery for lost earnings for children would be limited to the maximum amount that would be paid under the federal Supplemental Security Income (SSI) program. In cases of death, the fixed award would be $250,000. No punitive damages would be awarded. Petitioners would have 90 days after the final judgment to decide whether to accept the award or to proceed with a civil court claim. Those who decide to take their claims to court would forfeit the award under the compensation system. Civil suits could be filed only on the basis of negligence or wrongful conduct. Individuals who had civil suits pending before the bill went into effect could choose to withdraw their suits and opt for federal compensation instead.

The bill would also establish a vaccine development program.

Last week the vaccine injury table was still being written by subcommittee staff members, but Westmoreland said examples of DPT injuries that would be automatically recognized are anaphylactic shock within 24 hours and convulsions within seven days.

For the oral polio vaccine, the bill would cover, for example, the onset of paralytic polio within 30 days. A special section of the bill would provide compensation to adults who contract polio by coming in contact with children who have received the vaccine. For measles, mumps and rubella vaccine, convulsions and anaphylactic shock would be included in the table.

Westmoreland said there is no way to determine how many children would develop those diseases without the vaccines. "To find out, you would have to withhold vaccines from a study group," he said.

Jeffrey H. Schwartz, president of Dissatisfied Parents Together, said his group objects to Waxman's proposal because it undercuts the incentives provided by the legal system to develop safer vaccines and because its limits on compensation for injured children are "grossly inadequate."

He also said the bill may not significantly lower vaccine prices because it contains no requirement that manufacturers pass on to consumers any savings they realize.

Margretta M. Styles, president of the American Nurses' Association, said nurses have seen "the enormous impact that immunization has made on the health of children in this country, virtually eliminating many diseases that have plagued us."

And Dr. William H. Foege, president of the American Public Health Association, said Waxman's plan is "a good bill," a means of protecting "the world's best immunization program."

Rebecca Young is a writer who lives in Alexandria.