Broad—Not Limitless—PREP Act Immunity for Product Manufacturers and Distributors Engaged in Covid-19 Countermeasures

For private sector companies responding to the public’s need for COVID-19 countermeasures, here are the critical points regarding the application and limits to immunity under the Public Readiness and Emergency Preparedness (“PREP”) Act.

The PREP Act authorized the Department of Health and Human Services (“HHS”) to issue a declaration providing immunity from liability to certain individuals and entities (“Covered Persons”) against any claims of loss caused, arising out of, relating to, or resulting from manufacture, distribution, administration or use of covered countermeasures. (42 U.S.C. § 247d-6d)  Under this grant of authority, the Secretary of HHS issued a declaration that provides immunity for medical countermeasures aimed at combatting the rapid spread of COVID-19 (“COVID-19 Declaration”). This immunity is effective retroactive to February 4, 2020 and extends through October 1, 2024.

Key Takeaways: Here are the significant applications, limitations, and considerations of the Declaration’s protections should your company be engaging in, or considering aiding with, COVID-19 countermeasures.

1. Covered Persons: Entities and individuals eligible for immunity include manufacturers, distributors, program planners, and qualified persons, and their officials, agents, and employees, and the United States.

• “Manufacturer” includes contractors or subcontractors of a manufacturer, suppliers or licensers, intellectual property, service, research tool or component or other article used in the design, development, clinical testing, investigation or manufacturing of a “covered countermeasure,” which is defined below.
• “Distributor” means a person or entity engaged in the distribution of drugs, biologics, or devices, including  but not limited to, manufacturers, re-packers, common carriers, contract carriers, air carriers own-label distributors, private-label distributors, jobbers, brokers, warehouses and wholesale drug warehouses, independent wholesale drug traders, and retail pharmacies.
• A “qualified person” means a licensed health professional or other individual authorized to prescribe, administer, or dispense covered countermeasures.

2. Covered Countermeasures: Products covered under the declaration include any drug, biologic, diagnostic, other device, or any vaccine used to treat, diagnose, cure, prevent, or mitigate COVID-19, including products used to administer these products. The declaration also provides immunity to products that prevent or mitigate the transmission of COVID-19, including personal respiratory protective devices (i.e., facemasks). “All components or constituent materials” of these products are also included as covered countermeasures.In order to qualify as a covered countermeasure, a product must be a “qualified pandemic or epidemic product” or “security countermeasure” cleared under the Food, Drug, and Cosmetic Act “FDCA,” licensed by the Public Health Service (“PHS”) Act, or authorized for emergency use under the FDCA. With respect to facemasks, the immunity was broadened to also include facemasks approved by NIOSH. Products recently approved for emergency use authorization (“EUA”) include modified ventilators, therapeutic drugs, face shields, facemask sterilization and decontamination systems, and imported, non-NIOSH approved, disposable facemasks.

   The products which meet the definition of a “covered countermeasures” will likely continue to evolve as private and public entities race to develop products aimed to curb the spread of this virus. For example, the FDA issued a new Enforcement Policy for Face Masks to help expand the availability of general use face masks for the general public, as well as N95 respirators for health care professionals. The policy is effective immediately and is intended to remain in effect for the duration of the COVID-19 declaration. Through this policy, the FDA is encouraging “manufacturers who have not previously manufactured masks or respirators with capabilities to increase supply of these devices” to work with FDA to obtain EUA. The FDA is encouraging manufacturers to contact the FDA at CDRH-COVID10-SurgicalMasks@fda.hhs.gov  to assess whether their device would meet EUA requirements. The FDA has issued similar guidance and requests with respect to ventilators.

3. Limitations: The immunity for covered businesses and products qualifying as countermeasures is quite broad; however, it is not absolute and there are important limitations. Immunity under the PREP Act does not cover acts of willful misconduct. Further, the declaration only applies to countermeasures authorized in some manner by a governmental entity, such as federal contracts, cooperative agreements, or grants, or for activities authorized in accordance with the public health and medical response of governmental entities following the declaration of an emergency.

4. Practical Considerations: Companies producing or distributing products and devices to combat the COVID-19 outbreak, as well as those companies considering or called upon to aid the public health response as manufacturers and distributors, should carefully evaluate their potential immunity on a case-by-case, product-by-product basis. Several companies, from major international corporations to regional and local component part manufacturers, have already began modifying processes to expand production and meet demand.  Questions about whether certain entities qualify as “covered persons” and whether certain products qualify as “covered countermeasures” are evolving with the novel pandemic and should be carefully scrutinized.While the broad immunity extends into the private sector, companies should continue to take all reasonable care in designing, manufacturing, and distributing products. This same holds true for companies seeking to repurpose devices, components, or manufacturing processes to respond to COVID-19. Companies should not presume immunity and carefully evaluate the application of the PREP Act with respect to their products.

Questions? We’re Here to Help. HAWS-KM’s attorneys continue to monitor this situation as new guidance emerges in the response to COVID-19. We are ready to assist you in assessing your legal obligations and help you make the right decisions for your business.