Expanded Products Liability Immunity in the COVID-19 Crisis

The PREP Act, which became law in 2005, is a federal statute whose potent provisions normally remain dormant – during times of crisis, however, the Secretary of HHS may “activate” the PREP Act following a determination that a disease epidemic or other health threat “constitutes a public health emergency.” 42 U.S.C. § 247d-6d(b)(1). Secretary Azar recently concluded that the rampant, ongoing COVID-19 outbreak meets that definition. Accordingly, certain “covered persons” are entitled to an immunity shield for their efforts in developing, manufacturing, distributing, administering, and using “covered countermeasures” that seek to curb the crisis.

I. Who are “Covered Persons” entitled to this immunity?

Secretary Azar determined that “manufacturers,” “distributors,” and “program planners” (state and local governments and their employees, administrators and supervisors of programs responding to the crisis, etc.), are eligible for products liability immunity. The immunity also extends to other “qualified persons” – in essence, any authorized individual within the public health and medical emergency community who is responding to the crisis and who will be utilizing countermeasures. A “covered person” must be involved in the countermeasures process in at least one way defined in the Declaration for the immunity to apply. For example: through a presently-existing or impending federal contract, through some other formal agreement, interagency agreement, grant, or authoritative document, or through participation in authorized activities related to administration, delivery, distribution, or dispensation of a countermeasure. See 85 Fed. Reg. at 15202.

II. What are considered “Covered Countermeasures”?

Secretary Azar also set forth a broad definition for what products are considered “covered countermeasures” necessary to stem the COVID-19 outbreak. Specifically, the definition includes antiviral and other drugs, biological products, diagnostic products, “other device[s]”, and vaccines, for treatment, diagnosis, prevention, mitigation, or cure of the virus. 85 Fed. Reg. at 15202. Additionally, all devices used to administer any applicable product, and the components and materials within those products, are covered by the PREP Act’s protections. Id.

III. Liability Immunity

Immunity under the PREP Act extends under both state and federal law, specifically preempts state law, and 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.” 42 U.S.C. § 247d-6d(a)(1). “Loss” is defined to include all manner of scenarios, including death, various forms of injury, illness, and other disabilities (physical, mental, emotional), fear of any forms of injury just listed, and property loss. 42 U.S.C. § 247d-6d(a)(2)(A)(i)-(iv). Moreover, the immunity applies regardless of “the date of the occurrence, presentation, or discovery” of a loss. 42 U.S.C. § 247d-6d(a)(2)(A). Secretary Azar has determined that the liability immunity will remain in effect through October 1, 2024.

The “sole exception” to immunity applies if a covered person engages in “willful misconduct.” The statute includes three sub-definitions of “willful misconduct” – companies should be especially wary of acting (or failing to act) “in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit.” 42 U.S.C. § 247d-6d(c)(1)(A)(iii). A company could then be the target of a lawsuit if its misconduct was the primary cause of “death or serious physical injury”. 42 U.S.C. § 247d-6d(d)(1). Notably, though, that scenario involves the gravest of circumstances and requires a high degree of culpability.

IV. Takeaways

HHS has clearly indicated its desire for an “all hands on deck” approach to combat the COVID-19 crisis and has thus triggered the broad immunity provisions within the PREP Act. The purpose is twofold: encouraging companies to dynamically participate in the worldwide response, while simultaneously mitigating against any undue apprehension of potential liability. In considering whether liability immunity applies to their actions, companies should be particularly aware of the requirements to qualify as a “covered person” and whether the products they intend to develop, manufacture, and distribute, may be classified as “covered countermeasures.” Notably, both definitions are very comprehensive in scope. They will likely apply to thousands of entities and individuals, and a wide range of products, devices, and their components. That being said, case-by-case evaluations of whether immunity protections will extend are recommended.