As the coronavirus (COVID-19) pandemic resurges, PREP Act liability immunity continues to be critical for manufacturers and users of COVID-19 medical products.
At the start of the COVID-19 pandemic, the US Food and Drug Administration (FDA) rushed to issue multiple emergency use authorizations (EUAs) for a variety of drug and device products intended to diagnose, treat, or prevent COVID-19, including SARS-CoV-2 diagnostic tests, ventilators, face masks and other personal protective equipment, remote patient monitoring devices, and various drugs, such as remdesivir. As the pandemic wears on and case numbers rise, companies that are developing, manufacturing, distributing, and/or using such medical products will continue to face significant product liability risks from increased hospitalizations, deaths, and long-term adverse health effects. Additionally, FDA has withdrawn, modified, or limited EUAs for certain COVID-19 devices and drugs based on postmarket developments concerning their safety or effectiveness.
Given these developments, companies should continue to evaluate their potential product liability exposure and assess whether protection under the federal Public Readiness and Emergency Preparedness (PREP) Act may be available for the development and distribution of new and repurposed medical products for COVID-19 prevention and treatment, and if so, how to best position the company to document eligibility.
The PREP Act provides immunity from personal injury, business disruption, or property damage claims (except willful misconduct) to individuals or organizations broadly involved in the development, testing, manufacture, distribution, or dispensing of drugs, biologics, and devices intended for use for COVID-19 or program planning around such products.
To be covered by PREP Act immunity, the COVID-19-related activities and products must meet the criteria set forth in the US Department of Health and Human Services (HHS) declaration of immunity from liability, published March 17, 2020 and amended on April 15 (the Declaration). HHS also later issued an advisory opinion on April 17, which was updated on May 19, to provide further clarity on the breadth of the Declaration (the Advisory Opinion).
The Declaration describes several detailed criteria and definitions for liability immunity under the PREP Act; thus, it is important to assess applicability on a case-by-case basis. Key definitions from the Declaration include, for example, the following:
Covered Countermeasures. PREP Act liability immunity is tied to “covered countermeasures.”
Covered Persons. PREP Act liability immunity is available to “covered persons,” defined to include the following:
Recommended Activities. PREP Act liability immunity is available to covered persons engaged in “recommended activities,” including the following:
The Declaration also includes limitations on liability immunity. Most significantly, the Declaration states that liability immunity is only available for recommended activities involving covered countermeasures that are related to “(a) present or future federal contracts, cooperative agreements, grants, other transactions, interagency agreements, or memoranda of understanding or other federal agreements; or (b) activities authorized in accordance with the public health and medical response of the Authority Having Jurisdiction to prescribe, administer, deliver, distribute, or dispense the Covered Countermeasures following a Declaration of an emergency.”
As a result, in order to qualify for PREP Act immunity, distribution of the countermeasures must be coordinated with federal, state, or local government. According to the HHS Advisory Opinion, covered activities “can be authorized through, among other things, guidance, requests for assistance, agreements, or other arrangements.” Documenting that authorization in writing is critical.
Morgan Lewis helps companies determine the scope of their eligibility, consider documentation that may assist is securing immunity, and draft and negotiate EUAs, government contracts, and other similar documents that are critical to coverage under the PREP Act. We also provide legal and regulatory strategy and counsel on product liability risks and ongoing HHS/FDA/CLIA and related regulatory and legal compliance obligations for COVID-19-related medical products, as well as draft and negotiate collaboration and other commercial agreements between companies partnering on COVID-19-related medical products.
For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. Find resources on how to cope with the post-pandemic reality on our NOW. NORMAL. NEXT. page and our COVID-19 page to help keep you on top of developments as they unfold. If you would like to receive a digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts, and download our COVID-19 Legal Issue Compendium.
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