Pursuant to his powers under the Public Readiness and Emergency Preparedness Act (PREP Act), 42 U.S.C. § 247d-6d, the United States Secretary of Health and Human Services has issued a declaration that significantly limits potential legal liability arising from the design, testing, manufacture, labeling, distribution, administration, and provision of medical products intended to diagnose and treat COVID-19.

The declaration means that, subject to certain limitations, persons covered by its terms "shall be immune from suit and liability under Federal and State law with respect 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" product. 42 U.S.C. § 247d-6d(a)(1).

The scope of the immunity granted is broad. It "applies to any claim for loss that has a causal relationship with the administration to or use by an individual of a covered" product, "including a causal relationship with the design, development, clinical testing or investigation, manufacture, labeling, distribution, formulation, packaging, marketing, promotion, sale, purchase, donation, dispensing, prescribing, administration, licensing, or use of such" a product. 42 U.S.C. § 247d-6d(a)(2)(B).

Persons enjoying immunity under the declaration include manufacturers and distributors of medical products intended to diagnose or treat COVID-19 as well as licensed professionals and others duly authorized to prescribe and administer such products. By pre-empting potential state-law liability, which is often unpredictable and costly to defend even when meritless, the declaration incentivizes companies that do not normally produce medical products to manufacture ventilators, masks, and other items needed in the fight against COVID-19.

Products covered by the declaration include "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 of any such product." 85 Fed. Reg. at 15202.

Notably, the immunity afforded by the declaration is not limited to claims arising from medical products as such but, under the Secretary's interpretation, also precludes any "liability claim relating to the management and operation of a ... program or site" distributing such products, so long as the claim arises from their distribution. For example, as construed by the Secretary, the declaration provides premises owners immunity against "slip-and-fall" claims and claims based on alleged "lax security or chaotic crowd control" at testing and treatment sites. 85 Fed. Reg. at 15200.

By statute, the "the sole exception to the immunity from suit and liability of covered persons ... shall be for an exclusive Federal cause of action against a covered person for death or serious physical injury proximately caused by willful misconduct" as that term is (narrowly) defined in the PREP Act. 42 U.S.C. § 247d-6d(d)(1).

For the duration of the Secretary's declaration—which, as of now, will remain in effect through October 1, 2024 (85 Fed. Reg. at 15202)—states and their political subdivisions may not enforce any law related to the design, testing, manufacture, labeling, distribution, or administration of medical products intended to diagnose and treat COVID-19 that "is different from, or is in conflict with" the requirements imposed by the PREP Act.

The obvious effect of the declaration is to shield those who design, test, manufacture, label, and distribute medical products intended to diagnose and treat COVID-19 from product-liability claims (and to protect those authorized to administer such products from medical malpractice claims). Less clear is whether the declaration shields entities from breach-of-contract claims, if, for example, a component manufacturer fails to fulfill a pre-existing contract because it diverts resources to make ventilators needed to treat COVID-19 patients. Given the broad scope of immunity conferred by the PREP Act and its express reference to "business interruption loss[es]," it seems likely that the immunity also extends to contract claims. Certainty on the point is impossible, however, as the issue seems never to have been litigated under prior declarations.

Although the declaration grants manufacturers and distributors immunity from most tort claims, it does not protect them from FDA enforcement actions.

Individuals who would have a legal claim absent the Secretary's declaration are not entirely without recourse. They are eligible for compensation through the Countermeasures Injury Compensation Program, which was established by the PREP Act and is administered by HHS.

Issued on March 10 and retroactively effective as of February 4, the declaration is available at 85 Fed. Reg. 15198 (March 17, 2020) and https://www.phe.gov/Preparedness/legal/prepact/Pages/COVID19.aspx.

March 25, 2020

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