On January 31, 2020, the Secretary of the United States Department of Health and Human Services declared a public health emergency under the Public Health Service Act to aid the health care community’s response to the spread of the COVID-19 virus. As global efforts to treat, prevent, and slow the spread of COVID-19 continue, those producing and distributing pharmaceutical treatments, medical devices, personal protective equipment, and vaccines may have concerns regarding liability as they work to meet demand as soon as possible. On March 17, 2020, the United States Department of Health and Human Services (HHS) issued a declaration pursuant to the Public Readiness and Emergency Preparedness Act (PREP Act) enacted by Congress in 2005, which may mitigate some of those concerns by establishing liability immunity for those involved in the testing, manufacture, development, distribution, administration, or use of such “medical countermeasures.”
The PREP Act authorizes HHS to make such a declaration in emergency situations, and similar declarations have been issued previously, for example in relation to efforts to combat the Ebola virus in 2018, and the Zika virus in 2016. The March 17, 2020 declaration sets forth the following key guidelines:
- Immunity extends to claims under both state and federal law. However, immunity does not extend to actions brought by federal authorities.
- As amended by the Coronavirus Aid, Relief, and Economic Security Act, the PREP Act states that a “Covered Countermeasure” must be a “qualified pandemic or epidemic product,” a “security countermeasure,” a drug, biological product, or device authorized for emergency use or a respiratory protective device approved by National Institute for Occupational Safety and Health.
- “Covered countermeasures” include “any antiviral, any other drug, any biologic, any diagnostic, any other device, or any vaccine . . . or any device used in the administration of any such product, and all components and constituent materials of any such product,” if those countermeasures are used to “treat, diagnose, cure, prevent, or mitigate” COVID-19 or its transmission. Per a March 27 amendment to the declaration, respirators that might not otherwise be considered medical devices are also included. Countermeasures must be approved for use, including investigational or emergency use, by the U.S. Food and Drug Administration or other federal, state, or tribal authorities.
- Those covered by this immunity are: “manufacturers, distributors, program planners, and qualified persons, and their officials, agents, and employees, and the United States.”
- In general, liability immunity for any respiratory protective device covers the period from March 27, 2020 and extends through October 1, 2024. Liability immunity for all other Covered Countermeasures covers the period from February 4, 2020 and extends through October 1, 2024. The immunity applies without geographic limitation, such that it would prevent a claim under U.S. law for administration or use of a countermeasure outside of the U.S.
- If COVID-19 mutates, the declaration expressly extends to “covered countermeasures” related to this new mutation, and no new declaration is necessary.
As set forth in subsection (a) of the PREP Act, liability immunity extends to “all claims for loss caused by, arising out of, relating to, or resulting from the administration to or the use by an individual of a covered countermeasure,” including claims that have “a causal relationship with the design, development, clinical testing or investigation, manufacture, labeling, distribution, formulation, packaging, marketing, promotion, sale, purchase, donation, dispensing, prescribing, administration, licensing, or use of such countermeasure.”
However, the PREP Act has made clear that immunity is subject to an exception for “willful” misconduct. The standard is stringent, however, and the PREP Act explicitly states that conduct must go beyond mere negligence or even reckless behavior. It details the following standard, requiring clear and convincing evidence that the actor’s misconduct was:
- Intentional, with a wrongful purpose,
- Knowingly without legal or factual justification, and
- In disregard of known or obvious risk that makes it highly probable harms will outweigh benefits.
On April 14, 2020, HHS issued an advisory opinion to help clarify the scope of liability immunity. While the opinion is not binding and has no force or effect of law, it expresses the view of the Office of the General Counsel that while the declaration applies to claims asserting property damage or personal injury, it does not apply to claims for equitable relief in federal court. Furthermore, in response to questions from those donating items such as personal protective equipment, the opinion states that no government contract is required for immunity to apply, though all countermeasures must be authorized. In addition, the opinion states that even those who are not actually “covered persons” as defined by the PREP Act may benefit from immunity, if they possess “reasonable belief” they are covered. The opinion further suggests that a covered person may be immune if the covered person reasonably believes that products used and/or purchased are authorized countermeasures, when in fact they turn out to be counterfeit.
It should also be noted that the declaration does not appear to extend to claims arising prior to March 27, 2020 for respirators or prior to February 4, 2020 for other Covered Countermeasures. In addition, immunity does not appear to extend to claims involving the manufacture, distribution, or use of products that are not “covered” or approved to prevent the spread of COVID-19.
Therefore, while the declaration provides broad immunity to product manufacturers and is intended to encourage innovation and a more rapid response to the public health crisis, product manufacturers should keep in mind that the immunity provided is not without limit.