INSIGHT: Maximizing Immunity Under the PREP Act for Covered Countermeasures

As the race to combat Covid-19 continues, many companies providing countermeasures are more closely examining the scope of immunity under the Public Readiness and Emergency Preparedness Act (PREP Act). The secretary of Health and Human Services (HHS) first issued a declaration in February pursuant to the PREP Act to provide liability immunity for certain products intended for use in treating, preventing, diagnosing, or mitigating Covid-19. Then, on May 19, 2020, the HHS released a modified advisory opinion to address questions and concerns regarding the scope of the PREP Act as it applies to Covid-19.

With additional guidance now available, and with FDA recalls, voluntary withdrawals, and removals of various Covid-related products now also underway, it is time to review any hastily implemented steps taken in the spring and ensure best practices are in place as the public health emergency (PHE) continues.

Companies that are examining PREP Act immunity should review its scope as applied to specific products, individuals, and activities, and continue to obtain and maintain appropriate records to support PREP Act immunity in the event of a future challenge. Companies should also note that, although PREP Act immunity is intentionally broad, it will not shield a company from FDA enforcement action and other critical events related to noncompliance.

What Is the Scope of Immunity?

Although broad, PREP Act immunity is not absolute. The immunity does not apply to federal enforcement actions, claims under federal law for equitable relief, or if willful misconduct proximately caused death or serious physical injury.

PREP Act immunity applies to covered persons for claims of loss caused by, arising out of, relating to, or resulting from the manufacture, distribution, administration, or use of covered countermeasures. Covered countermeasures are medical products used in connection with Covid-19, the use of which the FDA has permitted through traditional approval or clearance mechanisms, in response to the Covid-19 PHE, or which are part of an FDA-condoned clinical trial or study. In addition, non-FDA cleared respiratory protective devices (i.e., masks) are covered countermeasures so long as they are NIOSH-approved and determined by the HHS secretary to be a priority for use during a PHE.

Covered persons include, among others, manufacturers or distributors of a covered countermeasure, and “qualified persons” who prescribe, administer, or dispense a covered countermeasure. Qualified persons may be licensed health professionals or other individuals who are authorized to prescribe, administer, or dispense such countermeasures under state law, as well as any persons temporarily authorized in connection with the PHE to prescribe, administer, deliver, distribute, or dispense the covered countermeasures.

Congress did not intend to impose a strict liability standard for covered persons in determining whether a product is a covered countermeasure, so long as that person or entity could have reasonably believed that the product was a covered countermeasure and complies with all other requirements of the PREP Act and conditions of the declaration. Similarly, a person who complies with all other requirements of the PREP Act and the conditions of the declaration will not lose PREP Act immunity if the person was not a covered person so long as the entity (or individual) reasonably could have believed it was a covered person.

The HHS’s view is that covered persons should take, and document, reasonable precautions under the current emergent circumstances to facilitate the safe use or administration of covered countermeasures and should make those documents publicly and easily available.

How Can Covered Persons Maximize PREP Act Immunity?

• Maintain records and documentation to support the determination that the product is a covered countermeasure. For example, maintain a copy of the emergency use authorization (EUA), approval, or clearance from the FDA for any product used to diagnose, mitigate, prevent, treat, cure, or limit the harm of Covid-19. The HHS secretary has released lists of products currently authorized under EUAs, available here and here. Covered persons should consult these lists regularly.
• Document the process and information used to identify covered countermeasures.
• Document the determination regarding “covered person” status and implement reasonable safeguards to ensure that the company maintains such status.
• Obtain appropriate contractual protections and certifications, including but not limited to representations, warranties, and guaranties regarding federal Food, Drug and Cosmetic Act compliance, as well as supporting indemnification and insurance. Consider escrow of funds.
• Document reasonable precautions taken to safely use the countermeasures.
• Have your own legal counsel or regulatory consultant review product labeling for material compliance with applicable legal requirements. (However, remember that the manufacturer of the product should remain in control of labeling and should indemnify the company for any nonconformities or failure to provide appropriate warnings.)
• In the event of an alleged death or serious bodily harm due to the administration of a covered countermeasure, ensure all applicable reporting requirements are satisfied, including reports to the FDA and in addition, review the guidance from the HHS to determine whether additional reporting is advisable.

Ultimately, while the concept of PREP Act immunity is unique to the PHE, the underlying steps that most companies should take to ensure that they can avail themselves of full immunity are quite similar to traditional best practices for ensuring supply chain and product integrity. Covered persons should be sure that in the rush to combat Covid-19, traditional audits, due diligence, insurance verification, and comprehensive contracts are not ignored, as such steps are a key part of assuring full protection of the law.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Michelle Jacobs is a partner at Haynes and Boone in their Dallas office. Her practice focuses on complex commercial, products liability, and intellectual property litigation in state and federal courts.

Suzie Trigg is a partner at Haynes and Boone in their Dallas office. She focuses her practice on guiding companies through FDA regulatory matters, high-stakes supply chain transactions, and strategic growth.

Jennifer Kreick is an associate at Haynes and Boone in their Dallas office. She focuses her practice on delivering practical legal and business advice to healthcare clients in a variety of regulatory and business transactional matters.

Kayla Cristales is an associate at Haynes and Boone in the Dallas office. She focuses her work within the Healthcare and Life Sciences practice group, primarily on transactional and regulatory healthcare and FDA matters.