The PREP Act: Defending Product Liability and Professional Liability Litigation Involving COVID-19 Countermeasures.

AuthorLipp, Jordan
PositionPublic Readiness and Emergency Preparedness Act of 2005

THE COVID-19 pandemic has raised numerous questions about liability exposure. As companies have raced to create products to combat COVID-19 (from vaccines to ventilators), and health care providers have likewise raced to care for and treat patients with and without these products, litigation risk for companies and providers is a critical topic.

The first and often foremost defense in the United States for any such potential litigation is the Public Readiness and Emergency Preparedness Act (the "PREP Act"). (1) The PREP Act, enacted in 2005, provides broad immunity for manufacturers, distributors, and providers in lawsuits involving pandemic countermeasures after a declaration of a public health emergency. Thus, an understanding of the PREP Act is crucial in both assessing litigation risk and defending any litigation that may be filed. This article will provide an in-depth examination of the PREP Act in order to assist with both goals.

In order to understand the PREP Act, it is important to first provide the groundwork for the PREP Act by exploring its two key terms and those terms in the context of broader Food & Drug Administration ("FDA") law--which is the subject of the first part of this article. With this groundwork in place, the second part of this article will address the scope of PREP Act immunity, the sole enumerated exception to that immunity (for willful misconduct), and the compensation fund established by the PREP Act. With this foundation now in place, the third part of this article will address how the PREP Act specifically relates to the COVID-19 pandemic. This will involve a review of the COVID-19 PREP Act declaration of a public health emergency (the "Declaration"), (2) the various amendments to the Declaration, (3) and the advisory opinions on the Declaration and its amendments. (4) The final part of this article will review court decisions to date on the PREP Act.

  1. Overview of the PREP Act and its Key Terms

    To summarize the PREP Act in one sentence, the PREP Act provides a "covered person" nearly complete immunity from liability as to all claims "from the administration to or the use by an individual of a covered countermeasure," when there has been a declaration of a public health emergency. (5)

    This summary demonstrates that there are two key definitions necessary to understand the nature and scope of the PREP Act, i.e., (i) a covered countermeasure and (ii) a covered person. In order to address the first definition, of a covered countermeasure, a brief overview of drug and device law is necessary.

    1. Overview of FDA Law and Product Categories

      Among other products, the FDA regulates drugs, biologics, and devices. A drug is a substance "intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease." (6) Typically, in order for a drug to be approved by the FDA, it must first go through an extensive investigational phase and then a rigorous review by the FDA. (7)

      A biologic is very similar to a drug, except that a biologic is manufactured by a biological process, while a drug is manufactured by a chemical process. (8) Biologics include, for example, vaccines or blood derivatives that are used for "the prevention, treatment, or cure of a disease." (9) A biologic is licensed by the FDA after going through a similar process to the approval process for new drugs. (10)

      A device is "an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article...intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease." (11) Depending upon the type of device, the device is either approved or cleared by the FDA. (12)

      Thus, the FDA approves, licenses, and/or clears products to be used to cure, mitigate, prevent, or treat diseases. This FDA process is often lengthy and expensive. (13)

      However, the FDA also has Emergency Use Authorization ("EUA") authority, which provides it with the ability to authorize drugs, biologics, and devices to combat a public health emergency when the Secretary of Health and Human Services (the "Secretary") declares a public health emergency. (14) The FDA can authorize products under its EUA authority that are either completely unapproved or that are already approved for other uses, but not for the use for which it is being authorized. (15)

    2. Defining a Covered Countermeasure

      With this short background on FDA law, we may examine the first of the two key terms of the PREP Act, a "covered countermeasure." In a nutshell, a covered countermeasure is a drug, biologic, or device that has been approved, licensed, cleared, in its investigation phase, and/or authorized by the FDA intended to combat a pandemic. (16)

      Specifically, often using redundant language, the PREP Act defines a covered countermeasure as either a "qualified pandemic or epidemic product," a drug, biological, or device that is authorized under the FDA's EUA authority, or a National Institute for Occupational Safety and Health ("NIOSH") approved respiratory device. (17) A "qualified pandemic or epidemic product," in turn, is a drug, biological, or device that is used to diagnose, mitigate, prevent, treat, limit the harm, or cure a pandemic or epidemic. (18) It can also be a product used to prevent or mitigate the harm from a drug, biologic, or device combating the pandemic, or to enhance the benefits of such drugs, biologics, or devices. (19) However, in order to be a "qualified pandemic or epidemic product," the product must also be either (i) an FDA approved, cleared, or licensed product, (ii) a product that is going through the FDA investigational stage, or (iii) a product "authorized for emergency use" under the FDA's EUA authority. (20)

      As the Office of General Counsel conveniently summed it up, for a product to be a qualified pandemic or epidemic product and fall under the PREP Act as to COVID-19, it:

      (1) must be used for COVID-19; and

      (2) must be

      (a) approved, licensed, or cleared by FDA;

      (b) authorized under an EUA;

      (c) described in an EUI [Emergency Use Instructions]; or

      (d) used under either an Investigational New Drug (IND) application or an Investigational Device Exemption (IDE). (21)

    3. Defining a Covered Person

      The second key term in the PREP Act is for a "covered person." The PREP Act broadly defines covered persons, which in short are the entities and people protected by the PREP Act. Covered persons largely fall into three broad categories, (i) manufacturers and distributors of covered countermeasures, (ii) providers (termed as "a qualified person") who prescribe, administer, or dispense covered countermeasures, and (iii) governmental and similar entities (termed as a "program planner") who supervise or administer a program with respect to the administration or use of covered countermeasures. (22) This article will primarily focus on the first two categories.

      The definition of a "manufacturer" includes contractors, subcontractors, suppliers, parents, subsidiaries, employees, and agents. (23) Similarly, the definition of a distributor means any person or entity engaged in distribution (as well as their employees), which includes everything from air carriers to retail pharmacies. (24)

      The PREP Act's use of the term "qualified person" refers to either (i) "a licensed health professional or other individual who is authorized to prescribe, administer, or dispense such countermeasures under the law of the State in which the countermeasure was prescribed, administered, or dispensed," or (ii) any other person identified in the declaration of a public health emergency that invokes the PREP Act. (25)

  2. The Heart of the PREP Act--The Scope of Immunity, the Willful Misconduct Exception, and the Process Fund

    The immunity conferred by the PREP Act is extraordinarily broad, but it is not without its limits. This section will first address the scope and limits of immunity under the PREP Act. Then, it will address the sole exception to immunity, willful misconduct. Finally, it will discuss the Covered Countermeasure Process Fund (the "Fund").

    1. The Scope and Limits of Immunity

      PREP Act immunity for a covered person applies "to all claims for loss caused by, arising out of, relating to, or resulting from the administration to or the use by an individual of a covered countermeasure." (26) With regards to causality, all that is required under the PREP Act is that the claim for loss "has a causal relationship with the administration to or use by an individual of a covered countermeasure." (27)

      A claim for loss, includes death, injury or illness, fear of injury or illness, and loss of or damage to property including business interruption. (28) There is "a rebutable presumption that any administration or use...of a covered countermeasure shall have been for the category or categories of diseases" covered by a declaration, such as COVID-19. (29) The PREP Act also expressly preempts state law. (30)

      By way of example of the breadth of the scope of immunity, in the Declaration, the Secretary stated

      that the PREP Act even precludes a liability claim relating to the management and operation of a countermeasure distribution program or site, such as a slip-and-fall injury or vehicle collision by a recipient receiving a countermeasure at a retail store serving as an administration or dispensing location that alleges, for example, lax security or chaotic crowd control. (31) However, immunity only applies if the countermeasure was administered or used during the effective period of the declaration. (32) Further, immunity only applies if the countermeasures "was administered or used for the category of diseases" in the declaration, (33) e.g., COVID-19. And, immunity can be limited by the means of distribution as specified in the declaration. (34)

    2. The Willful Misconduct Exception

      The "sole exception to the immunity" afforded by the PREP Act is for willful misconduct. (35)...

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