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March 23, 2020 - Coronavirus (COVID-19), FDA, Product Liability, Pharmaceutical & Medical Devices

PREP Act Declaration Emboldens Drug and Device Industry to Innovate in the Face of a Growing Crisis

Using Waivers to Curb COVID-19 Legal Exposure

COVID-19 is, quite literally, putting the medical supply industry to the test. Manufacturers are being pushed to develop novel products like therapies and vaccines to combat the disease as quickly as possible. The Public Readiness and Emergency Preparedness (PREP) Act encourages drug and medical device companies to increase production of existing products currently in short supply, and to develop new innovative COVID-19 therapies and treatments by limiting tort liability for the goods.

Medical companies typically spend years of development and testing in cooperation with the U.S. Food and Drug Administration (FDA) before a new product reaches consumers. While there are economic and reputational incentives for a company to quickly develop these products, there is one looming concern that risks chilling product manufacturers’ race to bring products to market: product liability litigation.

In order to limit exposure to private litigation when companies respond to public health emergencies, Congress enacted the Public Readiness and Emergency Preparedness (PREP) Act in 2005. The PREP Act allows the Department of Health and Human Services (HHS) to provide defined liability immunity for recommended activities regarding covered countermeasures for particular public health emergencies.

The current pandemic is exactly the type of emergency that the PREP Act contemplates. In response to COVID-19, the HHS Secretary issued a PREP Act declaration. The declaration was published in the Federal Register on March 17, 2020, but was backdated to February 4, 2020. It will remain in effect until October 2024. Now, firms at any stage of the product life cycle can continue development and marketing knowing these additional protections will apply when their COVID-19 therapies reach consumers.

The PREP Act confers immunity from suit and liability under state and federal law for any claims caused by, arising out of, relating to, or resulting from the administration or use of certain medical products. 42 U.S.C. § 247d-6d. While injured parties cannot maintain private lawsuits, they may be able to recover from the Countermeasures Injury Compensation Program (CICP), a fund designed to compensate individuals for injuries sustained by PREP Act-protected products. The declaration defines the following parameters:

  • Covered Persons: The United States, manufacturers, distributors, program planners, qualified persons, and their officials, agents, and employees.
  • Recommended Activities: Manufacture, testing, development, distribution, administration, or use of approved countermeasures. Willful misconduct is not protected by a PREP Act declaration.
  • Covered Countermeasures: Any antiviral, drug, biologic, diagnostic, device, or vaccine used to treat, diagnose, cure, prevent, or mitigate COVID-19 or its transmission. This includes any device used to administer such a product. Covered countermeasures must be:
    • A qualified pandemic or epidemic product, which includes specific drugs, biologics, or devices that require FDA review by definition;
    • A security countermeasure, which is either a drug or device as defined by the Food, Drug, and Cosmetics Act (FDCA), or a biological product as defined by the Public Health Service Act; or
    • A drug, biological product, or device authorized for emergency use under the Food, Drug, and Cosmetics Act.

The PREP Act has been invoked several times in the past, most notably during outbreaks of Ebola, Zika, and other diseases, and for potential biological warfare emergencies presented by anthrax and certain nerve agents. While the PREP Act is not a novel protection, the COVID-19 pandemic has ushered in other unprecedented measures to bring medical products to market. This week, FDA announced a new policy whereby states are responsible for authorizing test kits and laboratories, manufacturers can distribute test kits before obtaining emergency use authorization from FDA, and companies can distribute serological tests without FDA review. These measures follow FDA’s cooperation with manufacturers like Abbott Laboratories, Roche, and Thermo Fisher Scientific to rapidly review and issue emergency use authorizations for testing kits. FDA also issued guidance with recommendations for product developers dealing with disruptions to clinical trials.

This declaration will also encourage firms to increase production of existing preventative products that are in short supply. For example, certain products like N95 respirators were initially not covered by this PREP Act declaration because they are regulated by the National Institute for Occupational Safety and Health (NIOSH), not FDA. But Congress extended PREP Act protection to those respirators this week in the Families First Coronavirus Response Act.

Products for treating and preventing COVID-19 are in critical demand. These measures should incentivize manufacturers to spend more resources on those products. Product manufacturers should expect federal agencies and Congress to continue supporting and encouraging companies to bring products to market swiftly and to keep them stocked once they do hit store shelves. But companies and the public should not interpret these steps as a trade-off on product safety. As we have reported, FDA and the Federal Trade Commission are still taking enforcement measures against companies making unsupported or misleading claims. And companies can still face liability for willful misconduct even if the PREP Act otherwise applies to their activities.

We also advise manufacturers to remain informed and stay flexible. Continued policy changes, guidance, and incentives are sure to come as the COVID-19 pandemic progresses. We will continue to provide updates on these developments as they arise.