Understanding PREP Act Liability Protections in the Fight Against COVID-19. Answers to frequently asked questions on who is eligible for PREP Act protections, which products are covered, and what activities will be immunized. By Pillsbury Law.
PREP Act guarantees of immunity are available to those who manufacture, distribute, administer, use, and coordinate drugs and devices used to combat COVID-19.
New HHS advisory opinion declares that immunity guarantees will be applied broadly, but businesses will still need to make an individual determination on whether they qualify.
Enacted in 2005, the Public Readiness and Emergency Preparedness (PREP) Act authorizes the Secretary of Health and Human Services (HHS) to limit legal liability for those who administer “countermeasures” during a declared public health emergency. The purpose of the Act is to encourage the quick and efficient development and deployment of countermeasures—like equipment, diagnostics, treatments, and vaccines—during a public health crisis, like the current COVID-19 pandemic.
For the PREP Act to apply, the Secretary of HHS must determine that a disease or other health threat constitutes a public health emergency and issue a PREP Act Declaration, formally invoking the liability protections available under the law. In response to the COVID-19 outbreak, HHS Secretary Alex Azar declared a public health emergency on January 31, 2020. He then issued a Declaration (see 85 F.R. 15198), effective February 4, 2020, making PREP Act protections available in the fight against COVID-19.
Under the Declaration, “covered persons” are immunized from legal liability for specified COVID-19 “recommended activities” and use of “covered countermeasures.” The determination of which activities and products are covered, however, is left up to individuals and businesses.
On April 14, 2020, HHS issued an advisory opinion, providing much needed guidance on how the law and Declaration will be applied during the current emergency. Although not binding law, the opinion provides important answers on who is eligible for PREP Act protections during the COVID-19 crises; which products are covered; and what activities will be immunized. Notably, the opinion emphasizes that PREP Act immunity is broad and provides a “reasonable belief” safe harbor for persons and businesses manufacturing, distributing and providing COVID-19 products. The safe harbor protects those engaged in COVID-19 countermeasures even if they are not technically covered by the law provided that they reasonably believed they were entitled to coverage.
Although HHS has indicated that it intends for the PREP Act to apply widely, determining eligibility for immunity still involves a case-by-case analysis by individuals and business themselves. The following answers to frequently asked questions are provided to help manufacturers, health care providers, first responders, and other businesses understand the scope of liability protections during the COVID-19 pandemic. The Act’s limitations and conditions for immunity should be carefully considered.
Understanding the PREP Act during the COVID-19 Pandemic
Under Secretary Azar’s Declaration invoking the PREP Act during the COVID-19 crisis, liability protections are available for (1) “covered persons” (2) engaging in “recommended activities” (3) for “covered countermeasures.” Persons and entities who satisfy all three elements are immune from liability for all claims for loss, subject to certain limitations.
Who is a “covered person” and eligible for PREP Act protections?
Under the PREP Act, a “covered person” is the United States, or a person or entity that is one of the following:
- A manufacturer of a countermeasure;
- A distributor of a countermeasure;
- A program planner of a countermeasure;
- A qualified person who prescribed, administered, or dispensed a countermeasure; or
- An official, agent or employee of a manufacturer, distributor, program planner or qualified person.
These terms are defined within the PREP Act. The COVID-19 Declaration further provides specific definition for those using the ACT during the ongoing crisis.
What are “recommended activities” eligible for PREP Act protections?
Covered activities—known as “recommended activities” include the manufacture, testing, development, distribution, administration, and use of “covered countermeasures.” The April 14 opinion clarifies that to qualify for immunity, recommended activities must be related to:
- Any arrangement with the federal government, or
- Any activity that is part of an authorized emergency response at the federal, regional, state, or local level.
An activity can be “authorized” by guidance, requests for assistance, agreements or other arrangements. Because the HHS Secretary’s COVID-19 Public Health Emergency declaration constitutes an authorizes emergency response, PREP Act immunity applies regardless of whether a state or local authority has declared a state of emergency.
What is a “covered countermeasure”?
The Secretary’s Declaration defines “covered countermeasures” as:
- Any product used to treat, diagnose, cure, prevent, or mitigate COVID-19, or the transmission of SARS-CoV-2 or a virus mutating therefrom, or
- Any device used in the administration of any such product, and
- All components and constituent materials of any such product.
The April 14 opinion clarifies that a covered countermeasure is a drug, device or biological product and:
- Must be used for COVID-19; and
- Must be:
- Approved, licensed or cleared by the Federal Drug Administration (FDA) (approved or cleared under chapter V or the Federal Food, Drug, and Cosmetic Act, 21 U.S.C.);
- Authorized under an Emergency Use Authorization (EUA)
- Described in an Emergency Use Instruction (EUI) issued by the Centers for Disease Control and Prevention (CDC); or
- Used under either an Investigational New Drug (IND) application or Investigational Device Exemption (IDE).
A list of products covered by an EUA is included in Appendix A and Appendix B of the April 14 opinion, and includes therapeutics, diagnostic tests, medical devices, and personal protective equipment (PPE). Further, the Coronavirus Aid, Relief, and Economic Security (CARES) Act amended the PREP Act to define respirators as covered countermeasures if they are approved by the National Institute for Occupational Safety and Health (NIOSH) and subject to an EUA.
What are the limitations on immunity under the PREP Act?
The scope of immunity is broad, but not absolute.
Liability protections are not available in situations involving willful misconduct that proximately caused death or serious injury. The “willful misconduct” exception is a high bar: lawsuits must go before a three-judge court in the U.S. District Court for the District of Columbia and a plaintiff must establish that the willful misconduct proximately caused death or serious injury.
In addition, the Opinion notes two situations where the willful misconduct exception does not apply (even if the previous two conditions are met):
- When a program planner or qualified person acted consistent with applicable directions, guidelines or recommendations by the Secretary regarding the administration or use of a covered countermeasure and met specific notice requirements.
- When an activity is regulated by the Federal Food, Drug, and Cosmetic Act and neither HHS or the Department of Justice (DOJ) has initiated an enforcement action or an enforcement action has been resolved without a covered remedy.
Immunity is further limited to personal injury and property damage liability. The PREP Act does not protect covered persons from liability from any federal enforcement actions or claims under federal law for equitable relief.
What is the “reasonable belief” safeguard?
According to the April 14 opinion, the PREP Act does not impose strict liability when a covered person determines whether a product qualifies as a covered countermeasure. Instead, “a person or entity that otherwise meets the requirements for PREP Act immunity will not lose that immunity—even if the product is not a covered countermeasure—if that person or entity reasonably could have believed that the product was a covered countermeasure.”
For example, if a covered person has taken “reasonable steps” to authenticate COVID-19 tests and PPE that are authorized under an EUA, but “some or all of the products are counterfeit,” the person “would be immune against a claim arising out of the use of a counterfeit test or respirator.”
What precautions should “covered persons” take in using “covered countermeasures”?
HHS “encourages all covered persons using or administering covered countermeasures to document the reasonable precautions they have taken to safely use the covered countermeasures.” The April 14 provides the example of a medical product distributor sourcing PPE, recommending that the distributor assesses the supplier’s facility to confirm that the supplier actually manufactures the PPE and has quality-control processes in place. The opinion also suggests that in such a situation, the distributor could provide purchasers with information about its reasonable efforts to safely use the covered countermeasures.
Pillsbury clients may obtain advice and strategic input on the PREP Act and how immunity may apply to a product being sold or donated in response to COVID-19 by contacting Brian Finch, Aimee Ghosh, Nicole Steinberg or other Pillsbury lawyers, who can also coordinate involvement of colleagues on the Pillsbury Crisis Management Team and COVID-19 Taskforce.
Pillsbury’s experienced, multidisciplinary COVID-19 Task Force is closely monitoring the global threat of COVID-19 and providing real-time advice across industry sectors, drawing on the firm’s capabilities in crisis management, employment law, insurance recovery, real estate, supply chain management, cybersecurity, corporate and contracts law and other areas to provide critical guidance to clients in an urgent and quickly evolving situation. For more thought leadership on this rapidly developing topic, please visit our COVID-19 (Coronavirus) Resource Center.