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April 21, 2020 - Coronavirus (COVID-19), FDA, Emergency Use Authorization (EUA)

HHS Guidance Broadens PREP Act Immunity, Tightens Focus on Public/Private Cooperation

Using Waivers to Curb COVID-19 Legal Exposure

On April 14, the U.S. Department of Health and Human Services (HHS) issued an advisory opinion on the Public Readiness and Emergency Preparedness (PREP) Act to clarify the scope of immunity that accompanies developing and deploying countermeasures to COVID-19.

The PREP Act grants tort liability immunity to manufacturers, developers, sellers, and prescribers of certain medical countermeasures during a public health emergency. In response to the COVID-19 pandemic, the Secretary of HHS issued a PREP Act declaration last month. The Act immunizes “covered persons,” with respect to all claims for loss arising out of the use or administration of a “covered countermeasure.” But the complexity of these defined terms makes it difficult for entities to determine whether they are protected. The new guidance clarifies the countermeasures, entities, and activities that are covered by the PREP Act declaration and expands protections in a way that encourages cooperation between private parties and public health agencies.

Covered Countermeasures

Under the PREP Act, a covered countermeasure is a qualified pandemic or epidemic product, a security countermeasure, or a product authorized under a Food and Drug Administration (FDA) emergency use authorization (EUA). A recent amendment also includes respiratory protective devices approved by the National Institute of Occupational Safety and Health (NIOSH) as covered countermeasures.

Most COVID-19 products would seek to qualify as pandemic or epidemic products. The new HHS guidance states that any product used for COVID-19 that is approved, licensed, or cleared by FDA, authorized under an EUA, described in Center for Disease and Control and Prevention (CDC) Emergency Use Instructions, or being researched under investigational provisions is covered as a qualified pandemic product. Additionally, the CARES Act amended the PREP Act to add  certain NIOSH-approved respiratory protective devices to the definition of “covered countermeasures..”

Covered Person

The guidance explains many of the terms related to “covered person” in the PREP Act. A covered person is a manufacturer, distributor, or program planner of covered countermeasures, a qualified person who prescribes or administers such a countermeasure, or any agent or employee of one of these entities. A program planner is a person who supervises or administers a program to dispense certain countermeasures, including those who offer advice or guidance regarding such a program. And a qualified person is a licensed health professional who is authorized to prescribe countermeasures.

A qualified person also includes anyone authorized to prescribe or administer countermeasures in accordance with the public health and emergency response of an Authority Having Jurisdiction. That means that any such Authority—which is a public agency or its delegate with legal responsibility and authority for responding to the COVID-19 emergency—can extend PREP Act immunity to a person or entity by authorizing them to administer covered countermeasures.

Strict Compliance Not Required

In the spirit of encouraging the development and manufacture of medical products, PREP Act applicability will not be interpreted strictly. The advisory guidance acknowledges that the Act’s definitions may be difficult to parse, and that this uncertainty may chill the market participation that the Act is meant to encourage. As such, the new guidance provides that entities will not be held to a strict-liability standard regarding whether a product is a covered countermeasure or whether a person is a covered person.

In other words, persons who in good faith believed that a product was a covered countermeasure will enjoy immunity, even if it turns out the product was not. Likewise, an entity that reasonably believes it is a covered person will be treated as such and will not lose PREP Act immunity, even if it does not meet the statutory definition. As long as the entity otherwise meets the PREP Act requirements and reasonably could have believed that the product or person was covered, they will be protected. For example, if a distributor obtains COVID-19 products that claim and appear to be covered by an EUA but are actually counterfeit, the distributor will still enjoy immunity, even though the goods are not technically covered countermeasures under the statute.

Entities should still perform due diligence to ensure operation within the parameters of PREP Act protection. But they should not fear major tort exposure because of an accidental failure to strictly comply with the statute so long as they take reasonable steps to confirm that products fall within the PREP Act’s definition of covered countermeasures.

Reasonable Precautions

Aside from remaining open to enforcement actions by government agencies, a covered person will only be liable for willful misconduct that proximately caused a serious injury or death once PREP Act immunity applies. But the guidance clarifies that there is no willful misconduct if a program planner or qualified person acted consistently with the Secretary’s countermeasure use recommendations, so long as the entity notifies the Secretary or a local health authority of any serious injury caused by a product within seven days. Likewise, there is no willful misconduct if neither the Secretary nor the Attorney General initiates enforcement actions, or if an action is terminated or resolved without remedy.

The guidance nevertheless encourages covered persons to document the reasonable precautions they have taken to safely use the covered countermeasures. This transparency allows downstream users to make more informed sourcing decisions.

Industry Takeaways

This guidance continues the trend of expanding incentives for companies to bring COVID-19 products to market. The expansion of covered persons and countermeasures, with the addition of “reasonably-could-have-believed” exceptions, aligns with earlier FDA and HHS policies, making it cheaper, faster, and less risky to bring these goods to market. Likewise, the additional encouragement to document precautions and notify local health authorities of injuries caused by countermeasures is consistent with FDA’s recent policy of keeping close post-market surveillance on COVID-19 products, which are developed on an expedited timeline.

But a new development in the federal COVID-19 response is the emphasis on public/private cooperation for administering medical countermeasures. The guidance clarifies the discretion of public health agencies to confer PREP Act immunity. It also encourages parties to follow HHS guidelines and to report adverse events to HHS or even local health authorities. This reporting will likely inform those agencies’ policies and guidelines, thus representing a different kind of oversight from the traditional adverse event reporting to FDA, a body that is intended primarily to ensure the safety and efficacy of medical products. These developments add a dynamic element to PREP Act protection by rewarding cooperation between private companies and public agencies. While manufacturers are essential to produce goods, health agencies play the key role in directing how those precious resources will be spent. This guidance reflects that the two must work together during the next step in the battle against COVID-19.

We will continue to report updates from public health agencies regarding PREP Act liability immunity as they arise. Check out Morrison & Foerster’s COVID-19 Resource Center for updated multidisciplinary guidance to help your firm face these evolving issues.