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Immunity Protections for Product Manufacturers and Distributors Under the PREP Act

Mar.23.2020

With the rapid spread of COVID-19, federal, state and local governments have been scrambling to ensure that the country is equipped with adequate resources to help mitigate the spread of the virus and treat those who have fallen ill. The Public Readiness and Emergency Preparedness Act (PREP Act) was enacted in 2005 and serves as a means of incentivizing contributions of much-needed resources in such times of crisis. The PREP Act authorizes the Secretary of the Department of Health and Human Services to issue a Declaration immunizing individuals and entities from liability associated with the use of medical countermeasures. Specifically, “Covered Persons” cannot be held liable for any claim of loss “caused by, arising out of, relating to, or resulting from” the development, testing, manufacture, distribution, administration, or use of designated “Covered Countermeasures” within the Secretary’s specified period of emergency.

The Secretary issued such a Declaration with respect to medical countermeasures against COVID-19. This Declaration was published in the Federal Register on March 17, 2020, with retroactive application effective February 4, 2020.

Covered Persons under the Declaration include the United States; the manufacturers, distributors, and program planners of Covered Countermeasures; “qualified persons” who prescribe, administer, or dispense Covered Countermeasures; and the officials, agents, and employees of each of the aforementioned categories. Covered Countermeasures must be qualified pandemic or epidemic products, security countermeasures, or drugs, biological products, or devices authorized for emergency use. These categories are further defined within the PREP Act at 42 U.S.C. § 247d-6d.

The PREP Act provides that the Secretary’s Declaration immunizes Covered Persons in all U.S. jurisdictions. In a state tort action, for example, there would be no question of federal law preemption. The Declaration’s supplementary information also notes that the immunity for Covered Persons would encompass a wide variety of scenarios, ranging from allegations of negligence against manufacturers of vaccines, to claims against health care workers for prescribing incorrect dosages of medication, to injury claims against distribution centers for lax crowd control if directly related to the administration of a countermeasure.

Plaintiffs are not left entirely without recourse—those who sustain serious injury or death as a direct result of the administration or use of a Covered Countermeasure may be eligible for benefits under the Countermeasures Injury Compensation Program (CICP). The CICP is authorized by the Public Health Service Act. To qualify, claimants must reliably prove direct causation between a Covered Countermeasure and a serious physical injury.

Immunity under the PREP Act is not absolute. For example, immunity does not extend to acts of “willful misconduct.” Furthermore, immunity is only granted for use of a countermeasure that is in some way authorized by a Governmental entity—use of a countermeasure must be in connection with a federal agreement, such as a federal contract or cooperative agreement, or for certain activities authorized in accordance with local, regional, state, or federal declarations of emergency. The Secretary’s Declaration also specifies that immunity generally only extends through October 1, 2024, though an additional 12 months has been granted to allow manufacturers to arrange for the disposition of Covered Countermeasures.

Most products supplied under the PREP Act will likely have been used by the time the immunity expires, but in the unlikely event that they remain in storage after the immunity expires, there is some risk of liability should someone be harmed in the future. Having adequate warnings on products and good date and lot code traceability can mitigate risks.

As manufacturers race to produce and deploy means of battling the harm caused by COVID-19, protections under the PREP Act should provide some measure of relief to entities that are concerned they will later be sued for any defects or other issues arising from use of their products.

For more information, please contact the professional(s) listed below, or your regular Crowell & Moring contact.

Cheryl A. Falvey
Partner – Washington, D.C.
Phone: +1 202.624.2675
Email: cfalvey@crowell.com
Clifford J. Zatz
Partner – Washington, D.C.
Phone: +1 202.624.2810
Email: czatz@crowell.com
James G. Flood
Partner – Washington, D.C.
Phone: +1 202.624.2716
Email: jflood@crowell.com
Terry Rea
Partner – Washington, D.C.
Phone: +1 202.624.2620
Email: trea@crowell.com
John Fuson
Partner – Washington, D.C.
Phone: +1 202.624.2910
Email: jfuson@crowell.com
Mariam Sarwar
Associate – Los Angeles
Phone: +1 213.443.5570
Email: msarwar@crowell.com