This Client Advisory answers some frequently asked questions about the Public Readiness and Emergency Preparedness (PREP) Act and provides practical considerations for manufacturers, distributors, suppliers, healthcare professionals, research organizations, and clinical trial sites that may be impacted by the PREP Act.

What is the PREP Act?

The PREP Act, enacted in 2005, authorizes the Secretary of the Department of Health and Human Services (HHS) to issue a Declaration to provide liability immunity to certain individuals and entities (Covered Persons) against any claim of loss caused by, arising out of, relating to, or resulting from the manufacture, distribution, administration, or use of certain medical countermeasures (Covered Countermeasures), except for claims involving "willful misconduct" as defined in the PREP Act. On March 10, 2020, the Secretary issued a Declaration under the PREP Act, setting February 4, 2020, as the effective date, for certain medical countermeasures used against COVID-19.¹

If all requirements of the PREP Act and the Declaration are met, immunity covers claims of loss under tort or contract law as well as claims of loss relating to compliance with local, state, or federal laws, regulations, or other legal requirements. Immunity also applies when a Covered Person engages in activities related to an agreement or arrangement with the federal government, or when a Covered Person acts according to an Authority Having Jurisdiction to respond to a declared emergency, which includes any arrangement with the federal government, or any activity that is part of an authorized emergency response at the federal, regional, state, or local level. Such activities can be authorized through guidance, requests for assistance, agreements, or other arrangements.

In clarifying the breadth of the PREP Act immunity in the April 17, 2020 Advisory Opinion, HHS applies a reasonable belief standard whereby even if the medical product at issue is not a Covered Countermeasure or where the person at issue is not a Covered Person, such person or entity involved will not lose PREP Act immunity, provided that the individual or entity meets all other requirements of the PREP Act and the Declaration and reasonably could have believed that the product was a Covered Countermeasure or that the person at issue was a Covered Person.

HHS recommends Covered Persons to implement and document reasonable precautions taken to facilitate the safe use or administration of Covered Countermeasures and to make those documents publicly and easily available.

Suits alleging an exception to immunity afforded by the PREP Act can only be brought before a three-judge court in the United States District Court for the District of Columbia. In order to prevail, a plaintiff must establish that willful misconduct was the proximate cause of death or serious injury by clear and convincing evidence.

The PREP Act also established the Countermeasures Injury Compensation Program for compensating eligible individuals for serious physical injuries or deaths directly caused by administration or use of a countermeasure covered by the Declaration.

What is a Covered Countermeasure?

In general, for the COVID-19 pandemic, a Covered Countermeasure includes any medical product used for COVID-19 that is approved, cleared, or licensed by the U.S. Food and Drug Administration (FDA), used under an Investigational New Drug (IND) application or an Investigational Device Exemption (IDE), authorized under an EUA issued by the FDA, described in an Emergency Use Instruction (EUI) issued by the Centers for Disease Control and Prevention (CDC), or otherwise permitted to be held or used for emergency use in accordance with federal law, including the following:

• any antiviral, any other drug, any biologic, any diagnostic, any other device, any respiratory protective device, or any vaccine, used a) to treat, diagnose, cure, prevent, mitigate or limit the harm from COVID-19, or the transmission of SARS-CoV-2 or a virus mutating therefrom, or b) to limit the harm that COVID-19, or the transmission of SARS-CoV-2 or a virus mutating therefrom, might otherwise cause; or any device used in the administration of any such product, and all components and constituent materials of any such product;
• Respiratory protective devices that may not be medical devices, provided they are approved by the National Institute for Occupational Safety and Health (NIOSH) and subject to an Emergency Use Authorization (EUA) issued by the FDA; and
• Any drug, device, or biological product authorized for emergency use with respect to COVID-19 under an EUA, described in an EUI and issued by the Centers for Disease Control and Prevention (CDC), or being researched under certain investigational provisions.

The broader definition of Covered Countermeasure includes the following five categories of medical products:

1. A qualified pandemic or epidemic product;

a drug, biological product, or device that is:

• manufactured, used, designed, modified, licensed, or procured to diagnose, mitigate, prevent, treat, or cure a pandemic/epidemic, or limit the harm such pandemic/epidemic might otherwise cause; or to diagnose, mitigate, prevent, treat, or cure a serious or life-threatening disease or condition caused by such a drug, biological product, or device; or intended to enhance the use or effect of these drugs, biological product, or devices; and
• approved, licensed, or cleared by the FDA; authorized for emergency use by the FDA; permitted to be used pursuant to federal law in conditions inconsistent with its approval, clearance, or licensing; shipped and held by a government agency or someone working on that agency's behalf for emergency use only when authorized; or exempted by the FDA for use as an investigational drug or device under research for possible use to diagnose, mitigate, prevent, treat, cure, or limit harm of a pandemic or epidemic or life-threatening condition caused by such a drug or device.

2. A security countermeasure:

a drug, biological product, or device that HHS determines to be a priority:

• to treat, identify, or prevent harm from any biological, chemical, radiological, or nuclear agent identified as a material threat by the Secretary of Homeland Security, or to treat, identify, or prevent harm from a condition that may result in adverse health consequences or death and may be caused by administering a drug, biological product, or device against such an agent;
• is determined by HHS to be a necessary countermeasure to protect public health; and
• is approved, cleared, or licensed by the FDA; may reasonably be determined to qualify for approval or licensing within eight years after HHS decides to purchase the countermeasure; or authorized for emergency use by the FDA.

3. An unapproved drug, biological product, or device used under an EUA issued by the FDA;

4. An approved drug, biological product, or device used pursuant to federal law in conditions that are in consistent with its approval; and

5. An unapproved drug, biological product, or device, or an approved drug, biological product, or device intended for an unapproved use, that is intended for emergency use and shipped and held by a government agency or someone working on that agency's behalf for use only when that use is authorized.

As noted above, PREP Act immunity also protects an entity or individual even if the medical product at issue is not a Covered Countermeasure if that entity or individual reasonably could have believed that the product was a Covered Countermeasure and complies with all other requirements of the PREP Act and the Declaration.

Who is a Covered Person?

Covered Persons, when used with respect to the administration or use of a Covered Countermeasure, include the United States and any person or entity that is:

1. a manufacturer of a Covered Countermeasure;
   • Includes a contractor or subcontractor of a manufacturer; a supplier or licenser of any product, intellectual property, service, research tool or component or other article used in the design, development, clinical testing, investigation or manufacturing of a covered countermeasure; and any or all of the parent companies, subsidiaries, affiliates, successors, and assigns of a manufacturer.
2. a distributor of a Covered Countermeasure;
   • Includes a person or entity engaged in the distribution of drugs, biologics, or devices, including but not limited to: manufacturers; repackagers; common carriers; contract carriers; air carriers; own-label distributors; private-label distributors; jobbers; brokers; warehouses and wholesale drug warehouses; independent wholesale drug traders; and retail pharmacies.
3. a program planner of a Covered Countermeasure;
   • Includes a state or local government, including an Indian Tribe; a person employed by the state or local government; or other person (such as a private sector employer or community group) who supervises or administers a program with respect to the administration, dispensing, distribution, provision, or use of a Covered Countermeasure; includes persons who establish requirements or provide policy guidance, or who supply technical or scientific advice or assistance or who provide a facility to administer or use a Covered Countermeasure in accordance with the applicable Declaration.
4. a qualified person who prescribed, administered, or dispensed a Covered Countermeasure; or
   • Includes a licensed health professional or other individual who is authorized to prescribe, administer, or dispense covered countermeasures under the law of the state in which the countermeasure was prescribed, administered, or dispensed; or a person within a category identified as "qualified" in the applicable Declaration, such as volunteers.
5. an official, agent, or employee of a person or entity described above.

As noted above, PREP Act immunity also applies even if the person at issue is not a Covered Person if the entity or individual reasonably could have believed that the person was a Covered Person and complies with all other requirements of the PREP Act and the Declaration.

When does immunity under the PREP Act become available?

PREP Act immunity for federally distributed Covered Countermeasures is effective from February 4, 2020, through October 1, 2024. Outside of federal contracts or distribution channels, immunity is effective from February 4, 2020, through October 1, 2024, or the end of the COVID-19 public health emergency as declared by the relevant agency, whichever is earlier. Immunity for respiratory protective devices is effective from March 27, 2020.

Covered Persons should also note that EUAs issued by the FDA will no longer be effective when the government declares that the COVID-19 public health emergency is over.

Manufacturers will receive an additional 12 months of immunity for the disposition of Covered Countermeasures, including return of Covered Countermeasures to the manufacturer and measures taken to limit the administration or use of Covered Countermeasures.

How does the PREP Act work in practice?

As noted above, the PREP Act functions to provide liability immunity to a person or entity who meets the requirements and conditions of the PREP Act and the Declaration when a plaintiff brings a claim of loss related to the manufacture, distribution, administration, or use of a Covered Countermeasure against the Covered Person, which compels the court to dismiss the plaintiff's claim, provided there is no willful misconduct.

For example, in Parker v. St. Lawrence County Public Health Department, 102 A.D.3d 140 (2012), the Appellate Division of the New York Supreme Court upheld the PREP Act and dismissed the claims brought by a child's parent who alleged negligence and battery under state law when a county nurse inadvertently vaccinated the child without parental informed consent as part of a school-based vaccination program conducted by the county in response to the H1N1 outbreak. The court concluded that the PREP Act preempted the state law claims and thus precluded the plaintiff's claims of negligence and battery.

What are the limitations on liability immunity?

Immunity under the PREP Act is not absolute and is not available in the following circumstances:

• Immunity does not apply if death or serious physical injury was proximately caused by willful misconduct.
• Immunity does not apply if claims are based on activities that fall outside the scope of the applicable Declaration, such as foreign claims outside of the U.S. jurisdiction and claims not related the administration, use or other specified activities with respect to a Covered Countermeasure described in the applicable Declaration.
• The PREP Act does not provide immunity against federal enforcement actions brought by the federal government, whether civil, criminal, or administrative.
• Immunity does not apply against claims under federal law for equitable relief.

Would a company face liability in U.S. courts for COVID-19 medical products sold outside of the U.S.?

Subject to the limitations and the requirements discussed above, the PREP Act provides immunity for claims of loss brought under U.S. law and in a U.S. court. The PREP Act does not grant immunity in non-U.S. courts or in foreign jurisdictions. As such, a company may be subject to liability suits brought in other countries where it chooses to sell such medical products.

What is the Countermeasures Injury Compensation Program (CICP)?

The CICP provides compensation for those who suffer serious injuries, or certain survivors or the estate of a deceased who suffered serious injuries, that occurred as the result of the administration or use of a Covered Countermeasure. The CICP is a payer of last resort and covers expenses or provides benefits not covered by other third-party payers, such as health insurance, the Department of Veterans Affairs, and Workers' Compensation programs. Those seeking compensation under the CICP generally have one year to submit a request with the Health Resources and Services Administration (HRSA).

Practical Considerations:

• The PREP Act provides limited immunity from liability, but it does not eliminate the need for insurance coverage and proper risk management. Entities that engage in activities involving a Covered Countermeasure should obtain robust product liability insurance that also covers attorney's fees.
• As noted above, HHS recommends Covered Persons to implement and document reasonable precautions taken to facilitate the safe use or administration of Covered Countermeasures and to make those documents publicly and easily available.
• Individuals or entities engaged in activities involving Covered Countermeasures should include robust disclaimers in contracts with customers as well as in website communications about products intended to be used during the pandemic.
• While not legally required to receive immunity under the PREP Act, some companies are beginning to include language in various contracts involving a Covered Countermeasure that acknowledges the application of the PREP Act and its liability immunity to applicable parties involved in the contract.
• Companies may also consider including terms and conditions in customer contracts regarding the disposition of Covered Countermeasures after the COVID-19 public health emergency has ended or when the FDA's EUA is no longer effective, such as the requirement to return or to destroy all remaining Covered Countermeasures.
• For clinical trials involving Covered Countermeasures, trial sponsors should disclose the potential impact of the PREP Act and the Countermeasures Injury Compensation Program on participants' legal rights with respect to serious physical injuries or death, as 45 CFR § 46.116 (general requirements for informed consent) requires the inclusion of "[a]n explanation of whom to contact for answers to pertinent questions about the research and research subjects' rights, and whom to contact in the event of a research-related injury to the subject".

[1] See 85 Fed. Reg. 15198 (published on March 17, 2020); see also 85 Fed. Reg. 21012 (April 15, 2020); 85 Fed. Reg. 35100 (June 8, 2020); HHS, “Advisory Opinion on the Public Readiness And Emergency Preparedness Act and the March 10, 2020 Declaration Under the Act April 17, 2020, as Modified on May 19, 2020”; and HHS, “Advisory Opinion 20-02 on the Public Readiness and Emergency Preparedness Act and the Secretary’s Declaration Under the Act May 19, 2020”; Public Health Emergency, Public Readiness and Emergency Preparedness Act website.