We’ve covered several topics already this week on the U.S. Government’s varied responses to the COVID-19 outbreak and how these responses will affect contractors that do business with the government, including BARDA’s EZ-BAA for COVID-19 diagnostics, mission-essential services during the outbreak, and how excusable delay provisions may help federal contractors affected by the outbreak.  But one area that has yet to receive in-depth discussion is the federal government’s mechanisms for addressing liability concerns raised by the use and distribution of countermeasures to the virus.  After all, while contractors are no doubt responding with appropriate speed and diligence in developing and deploying various COVID-19 countermeasures, no contractor wants to be the subject of a product liability, warranty, or negligence lawsuit later down the road.

Thankfully, Congress anticipated this concern and addressed it in 2005 by passing the Public Readiness and Emergency Preparedness Act (“PREP Act”), codified at 42 U.S.C. § 247d-6d.  Since enactment, the PREP Act has been used to issue declarations covering various countermeasures, including therapeutics, diagnostics, devices, vaccines, and constituent materials for pandemic influenza, acute radiation syndrome, smallpox, Botulism, anthrax, Zika, nerve agents, certain insecticides, and Ebola.  And earlier this week, the Secretary of the U.S. Department of Health and Human Services (the “Secretary”) issued a declaration pursuant to the PREP Act specifically for COVID-19 countermeasures.

This post will cover the PREP Act generally before discussing the implications of the COVID-19 declaration.

The PREP Act

The PREP Act authorizes the Secretary to issue a declaration providing covered individuals and entities with protection from suit and liability under federal and state law for losses related to the administration or use of specifically identified countermeasures.  Such a declaration then permits assertion of immunity from suit — which can be far more advantageous than litigating entitlement to reimbursement as may be required under other forms of liability protection (such as insurance or indemnification for unusually hazardous risks under Public Law 85-804).

To provide this immunity, the Secretary must issue a declaration after determining that a disease, condition, or other threat constitutes a present (or credible risk of a future) public health emergency.  This declaration is distinct from other forms of public health emergency declarations such as under Section 319 of the Public Health Services Act.  The Secretary must define the scope of protections afforded by each PREP Act declaration, including the covered countermeasures, geographic areas, subject populations, time periods, and means of distribution covered by the declaration.

However, the PREP Act does have its limits:  For example, it does not provide immunity for losses caused by willful misconduct or for cases brought in non-U.S. tribunals or under non-U.S. law.  In addition, PREP Act declarations generally limit the potential scope of protection by covering the administration or use of covered countermeasures only when they are distributed in connection with or have a relationship to a federal contract, grant, or other agreement — or, in some cases, as authorized in a declared public health emergency.

As a compliment to the immunity protections, the PREP Act provides for a no-fault compensation program for eligible individuals for serious physical injuries or death directly caused by the administration or use of countermeasures identified in the declarations.  Funds must be appropriated by Congress for this purpose.

The COVID-19 Declaration

Earlier this week, the Secretary issued a PREP Act declaration for certain medical countermeasures against COVID-19.  This declaration is effective as of February 4, 2020 and covers through October 1, 2025 (taking into account an additional one-year period intended for disposition of covered countermeasures).

The scope of the protection provided by the declaration is as follows:

  • Countermeasures — any antiviral, any other drug, any biologic, any diagnostic, any other device, or any vaccine used to treat, diagnose, cure, prevent, or mitigate COVID-19, or the transmission of SARS-CoV-2 or a virus mutating therefrom, or any device used in the administration of any such product, and all components and constituent materials.
  • Activities — manufacture, testing, development, distribution, administration, and use of the covered countermeasures.
  • Persons — manufacturers, distributors, program planners, qualified persons, and their officials, agents, and employees, as well as certain additional persons connected to the administration of the covered countermeasures.
  • Population and Geographic Area — no limits.

Covered countermeasures must also be qualified pandemic or epidemic products, security countermeasures, or drugs, biological products, or devices authorized for emergency or (in some cases) investigational use.

Importantly, the declaration limits immunity to recommended activities involving covered countermeasures that are related to present or future federal contracts or other federal transactions or agreements, or activities authorized by authorities with jurisdiction to prescribe, administer, deliver, distribute or dispense covered countermeasures following an emergency declaration.  For planners of governmental programs, immunity is limited to the extent they obtain covered countermeasures through voluntary means — a distribution limit intended to discourage seizure of privately held countermeasures.

Several aspects of the COVID-19 declaration are noteworthy in comparison to past PREP Act declarations.  For example, as noted above, the declaration has a retroactive effect — extending back to February 4, 2020.  The declaration also covers not only the COVID-19 virus but also viruses mutating from SARS-CoV-2, recognizing research on the virus’ potential to mutate.  Additionally, the COVID-19 declaration only covers “present or future” U.S. Government agreements and does not cover past agreements — meaning contractors who have previously developed a product with government funding may want to enter into new U.S. Government agreements to obtain protections if their product is repurposed for use of addressing the COVID-19 outbreak.

Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She…

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations (FAR) and obligations imposed by the Bayh-Dole Act, including march-in and substantial domestic manufacturing. Jen also has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, Grants, and Small Business Innovation Research agreements.

For over 20 years, Jen’s practice has focused on advising clients in the pharmaceutical, biologics and medical device industry on all aspects of both commercial and non-commercial agreements with various government agencies including:

  • the Department of Veterans Affairs (VA);
  • the Department of Health and Human Services (HHS), including the Biomedical Advanced Research and Development Authority (BARDA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC);
  • the Department of Defense (DoD), including the Defense Threat Reduction Agency (DTRA), the Defense Advanced Research Projects Agency (DARPA), and the Joint Program Executive Office for Chemical Biological Defense (JPEO-CBRN); and
    the U.S. Agency for International Development (USAID).

She regularly advises on the development, production, and supply to the government of vaccines and other medical countermeasures addressing threats such as COVID-19, Ebola, Zika, MERS-CoV, Smallpox, seasonal and pandemic influenza, tropical diseases, botulinum toxin, nerve agents, and radiation events. In addition, for commercial drugs, biologics, and medical devices, Jen advises on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as on the obligations imposed by participation in the 340B Drug Pricing program.

Jen also has significant experience in domestic sourcing compliance under the Buy American Act (BAA) and the Trade Agreements Act (TAA), including regulatory analysis and comments, certifications, investigations, and disclosures (including under the Acetris decision and Biden Administration Executive Orders). She also advises on prevailing wage requirements, including those imposed through the Davis-Bacon Act and the Service Contract Labor Standards.