Businesses and individuals have rushed to respond to the many needs arising from the current crisis. The critical lack of protective masks, ventilators, disinfectants and other supplies has spurred efforts to find immediate solutions. Responders often ask if their efforts may expose them to liability in the future. The Public Readiness and Emergency Preparedness Act (PREP Act) grants immunity from liability for certain of these activities. Specifically, it adds new legal authority to the Public Health Service Act (PHS) to provide liability immunity related to the manufacture, testing, development, distribution, administration and use of medical countermeasures against the pandemic. It also adds authority to establish a program to compensate eligible individuals who suffer injuries from administration or use of products covered by these same immunity provisions.
Background: Declaration of HHA
The PREP Act authorizes the Secretary of Health and Human Services (HHA) to issue a Declaration to provide liability immunity to certain individuals and entities against any claim of loss from the manufacture, distribution, administration or use of medical countermeasures (i.e., “Covered Countermeasures”), except for claims involving “willful misconduct.” The HHA Secretary has issued the Declaration with a retroactive effective date of Feb. 4, 2020 and is extending its liability immunity provisions through Oct. 1, 2024.
What Products/Measures Are Covered?
Products covered under the Declaration are called “Covered Countermeasures.” A Covered Countermeasure is a “qualified pandemic or epidemic product” or a “security countermeasure” authorized for emergency use under the Federal Food, Drug, and Cosmetic (FD&C) Act.
Qualified Pandemic or Epidemic Products. A qualified pandemic or epidemic product is any drug, device or biological product that is manufactured, used, designed, developed, modified, licensed or procured to diagnose, mitigate, prevent, treat or cure:
- the pandemic or limit the harm the pandemic might otherwise cause;
- a serious or life-threatening disease or condition; or
- intended to enhance the use or effect of such a drug, device or biological product.
In other words, masks, ventilators, gloves or other similar products are Covered Countermeasures whose manufacture, use or license are afforded the limited liability provided under the Act.
Security Countermeasures. A security countermeasure is a drug or device that the Secretary of HHA determines is:
- a priority to diagnose, mitigate, prevent or treat harm from any biological, chemical, radiological or nuclear agent or any adverse health consequences or death caused by administering such drug or device; and
- a necessary countermeasure to protect public health.
So, for example, a device or process to disinfect products would qualify as a Covered Countermeasure.
To be a Covered Countermeasure, qualified pandemic or epidemic products or security countermeasures must be approved or cleared under the FD&C Act; licensed under the PHS Act; or authorized for emergency use under Sections 564, 564A or 564B of the FD&C Act.
A qualified pandemic or epidemic product also may be a Covered Countermeasure when it is subject to an exemption (that is, it is permitted to be used under an Investigational Drug Application or an Investigational Device Exemption) under the FD&C Act and is the object of research for possible use for diagnosis, mitigation, prevention, treatment or cure, or to limit harm of a pandemic or epidemic or serious or life-threatening condition caused by such a drug or device.
Who Is Granted Immunity?
Covered Persons. Covered Persons are broadly defined to include, among others, those that manufacture, distribute, administer, prescribe or use Covered Countermeasures and their agents and employees. Specifically:
- A manufacturer includes a contractor or subcontractor of a manufacturer; a supplier or licenser of any product, intellectual property, service, research tool or component or other article used in the design, development, clinical testing, investigation or manufacturing of a Covered Countermeasure; and any or all the parents, subsidiaries, affiliates, successors and assigns of a manufacturer.
- A 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.
This first bullet point is of particular interest in that it covers the “licenser” of any product. Although not explicitly stated as such, it presumably grants immunity from claims of infringement that might arise provided, of course, that such acts of infringement were not willful.
What is the Immunity?
In general, the liability immunity applies to entities and individuals involved in the development, manufacture, testing, distribution, administration and use of medical countermeasures described in the Declaration. The only statutory exception to this immunity is for actions or failures to act that constitute willful misconduct. The PREP Act also authorizes a fund in the United States Treasury to provide compensation to eligible individuals for serious physical injuries or deaths directly caused by administration or use of a countermeasure covered by the Declaration.
Immunity means that courts must dismiss claims brought against any entity or individual covered by the PREP Act. Claims that courts must dismiss include claims for any loss that is related to any stage of design, development, testing, manufacture, labeling, distribution, formulation, labeling, packaging, marketing, promotion, sale, purchase, donation, dispensing, prescribing, administration, licensing or use of a countermeasure recommended in a Declaration. This includes, but is not limited to, claims for:
- physical, mental or emotional injury, illness, disability or condition or fear of any such injury, illness, disability or condition;
- any need for medical monitoring; or
- property damage or loss, including business interruption loss.
While the Declaration is in effect, the Act precludes, for example, liability claims alleging negligence by a manufacturer in creating a vaccine, or negligence by a health care provider in prescribing the wrong dose, absent willful misconduct. Likewise, the Act precludes a liability claim relating to the management and operation of a countermeasure distribution program or site, such as a slip-and-fall injury or vehicle collision by a recipient receiving a countermeasure at a retail store serving as an administration or dispensing location that alleges, for example, lax security or chaotic crowd control.
Are There Limitations on Immunity From Liability?
As noted above, immunity from liability under the PREP Act is not available for death or serious physical injury caused by willful misconduct. A “serious physical injury” is one that is life-threatening, or results in or requires medical or surgical intervention to preclude permanent impairment of a body function or results in permanent damage to a body structure. Willful misconduct is misconduct that is greater than any form of recklessness or negligence. It is defined in the PREP Act as an act or failure to act that is taken: 1) intentionally to achieve a wrongful purpose; 2) knowingly without legal or factual justification; and 3) in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit. All three of these conditions must be proven with clear and convincing evidence.
Both the Declaration and the PREP Act have provided a limited safe harbor from liability for many of the necessary countermeasures being taken to address the urgent needs facing the nation as a result of COVID-19. Not all measures, and not all persons, are insulated. Before undertaking any action or producing any product, be sure to consult with counsel.
For more information or to discuss further, please reach out to David Posteraro at email@example.com or 216.736.7218.