HHS Expands and Clarifies Scope of Immunity under the PREP Act

28 December 2020 Blog
Author(s): Erik K. Swanholt John J. Atallah Jessica N. Walker
Published To: Coronavirus Resource Center:Back to Business Health Care Law Today Manufacturing Industry Advisor Consumer Class Defense Counsel

Back in March, we wrote about how the Department of Health and Human Services (HHS) had extended the Public Readiness and Emergency Preparedness (PREP) Act to grant immunity to “Covered Persons” providing “Covered Countermeasures” against COVID-19.  The Office of the General Counsel for HHS issued an omnibus advisory opinion on April 14 that addressed common questions and concerns about the scope of PREP Act immunity, as discussed in our April update.  Last month, we described how courts across the country have interpreted the PREP Act in the context of the ongoing pandemic.

On December 3, 2020, HHS issued its Fourth Amendment to the Declaration Under the Public Readiness and Emergency Preparedness Act for Medical Countermeasures Against COVID-19 and Republication of the Declaration (the “Amendment”).  These amendments to the law are made retroactively effective as of February 4, 2020, with some exceptions, and they appear to come as a response to federal cases (several of which are reviewed in our November 17 article) holding that the PREP Act’s liability protections do not apply where Covered Countermeasures are not administered.

Below, we summarize points of interest in the Amendment, including: (1) the effect of the HHS Omnibus Advisory Opinion; (2) the expansion of the COVID-19 Declaration’s scope to include telehealth and pharmacy professionals; (3) clarifications regarding the scope of Covered Countermeasures; (4) the addition of a third distribution channel to the list of Covered Persons; (5) the clarification that “there can be situations where not administering a covered countermeasure to a particular individual can fall within the PREP Act and this Declaration’s liability protections”; (6) clarifications regarding the geographic scope of federal liability protections; and (7) the extension of the effective period for liability protections.  

1.  The Amendment Clarifies the Effect of the Omnibus Advisory Opinion

The Amendment clarifies that HHS’s March 17, 2020, COVID-19 Declaration must be construed in accordance with the April 14, 2020, omnibus advisory opinion from the Office of the General Counsel, and expressly incorporates the omnibus advisory opinion into the COVID-19 Declaration, thereby changing it from guidance to law.

2.  The Amendment Extends the Definition of “Covered Persons” to Include Telehealth Providers and Provides Examples of “Qualified Persons” Such as Pharmacists

The Amendment extends the definition of “Covered Persons” in Section V of the COVID-19 Declaration to include a new category: 

[H]ealthcare personnel who are permitted to order and administer a Covered Countermeasure through telehealth in a state may do so for patients in another state so long as the healthcare personnel comply with the legal requirements of the state in which the healthcare personnel are permitted to order and administer the Covered Countermeasure by means of telehealth.

Acknowledging that both the Centers for Disease Control and Prevention (CDC) and Centers for Medicare & Medicaid Services (CMS) have recognized the important role played by telehealth during the pandemic, the Amendment adds these providers to the definition of “Covered Persons” in order “to help maximize the utility of telehealth.”  The Amendment also explicitly preempts “[a]ny state law that prohibits or effectively prohibits such a qualified person from ordering and administering Covered Countermeasures through telehealth.”

The Amendment also changes Section V of the COVID-19 Declaration “to include several examples of Covered Persons who are Qualified Persons, because they are authorized in accordance with the public health and medical emergency response of the Authority Having Jurisdiction to prescribe, administer, deliver, distribute or dispense the Covered Countermeasures.”  While not an exclusive or exhaustive list, “these examples include certain pharmacists, pharmacy interns, and pharmacy technicians who order or administer certain COVID-19 tests and certain vaccines.”

Finally, the Amendment provides clarification at Section V regarding the basic cardiopulmonary resuscitation and practical training program requirements for certain Qualified Persons, including pharmacists and pharmacy interns. 

3.  The Amendment Clarifies the Covered Countermeasures

The Amendment modifies Section VI of the COVID-19 Declaration to make explicit that it “covers all qualified pandemic and epidemic products under the PREP Act.”  The COVID-19 Declaration originally listed “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.”  With the Amendment, this section now also lists “a product manufactured, used, designed, developed, modified, licensed, or procured to diagnose, mitigate, prevent, treat, or cure a serious or life-threatening disease caused by a product” from the original category, “a product or technology intended to enhance the use or effect of a product described” in the earlier categories, and “any device used in the administration of any such product, and all components and constituent materials of any such product.”  

The Amendment therefore broadens the language of the COVID-19 Declaration to clarify that other qualified pandemic and epidemic products are covered, even when the product at issue is, for example, used to enhance a product that is directly treating or diagnosing COVID-19, or used to treat a condition caused by a product used to treat COVID-19, rather than used to treat COVID-19 itself.  

4.  The Amendment Adds a Third Distribution Channel to the List of Covered Persons

Under the original COVID-19 Declaration, liability immunity was afforded to Covered Persons, defined as falling into either of the following two categories: 

to Covered Persons only for Recommend Activities related to (a) present or future federal contracts, cooperative agreements, grants, other transactions, interagency agreements, or memoranda of understanding or other federal agreements; or (b) activities authorized in accordance with the public health and medical response of the Authority Having Jurisdiction to prescribe, administer, deliver, distribute, or dispense the Covered Countermeasures following a declaration of an emergency.

Recognizing the unprecedented nature of the pandemic, and its broad scale, HHS has amended the COVID-19 Declaration “to extend coverage to additional private-distribution channels,” as follows:

Covered Persons for Recommended Activities that are related to any Covered Countermeasure that is: 

a. licensed, approved, cleared, or authorized by the Food and Drug Administration (FDA) (or that is permitted to be used under an Investigational New Drug Application or an Investigational Device Exemption) under the Federal Food, Drug, and Cosmetic (FD&C) Act or Public Health Service (PHS) Act 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. a respiratory protective device approved by the National Institute for Occupational Safety and Health (NIOSH) under 42 CFR part 84, or any successor regulations, that the Secretary determines to be a priority for use during a public health emergency declared under section 319 of the PHS Act to prevent, mitigate, or limit the harm from, COVID-19, or the transmission of SARS-CoV-2 or a virus mutating therefrom.

To qualify for liability immunity under this third, private distribution channel, “a Covered Person must manufacture, test, develop, distribute, administer, or use the Covered Countermeasure pursuant to the FDA licensure, approval, clearance, or authorization (or pursuant to an Investigational New Drug Application or Investigational Device Exemption) or the NIOSH approval.”  This modification extends PREP Act coverage beyond federal agreements or authorizations under an Authority Having Jurisdiction: 

For example, a manufacturer, distributor, program planner, or qualified person engages in manufacturing, testing, development, distribution, administration, or use of a COVID-19 test pursuant to an FDA Emergency Use Authorization for that COVID-19 test.  If the Covered Person satisfies all other requirements of the PREP Act and Declaration, there will be PREP Act coverage even if there is no federal agreement to cover those activities and those activities are not part of the authorized activity of an Authority Having Jurisdiction.

5.  The Amendment Broadens Section IX to Include Instances Where Covered Countermeasures Are Not Administered

As we noted in our November 17, 2020, article, courts across the country have refused to apply the PREP Act to claims based on a failure to administer Covered Countermeasures.  The Amendment will likely change how similar cases will be decided going forward, as it amends Section IX “to make explicit that there can be situations where not administering a covered countermeasure to a particular individual can fall within the PREP Act and this Declaration’s liability protections.”  Courts will likely employ a case-by-case approach to determining whether PREP Act immunity applies when the allegation is that the failure to use a covered countermeasure led to an injury.

6.  The Amendment Clarifies the Geographic Coverage and the Federal Remedies for Liability Claims

The Amendment clarifies that the geographic area referenced in Section XI of the COVID-19 Declaration covers the entire United States, explaining: “there are substantial federal legal and policy issues, and substantial federal legal and policy interests within the meaning of Grable & Sons Metal Products, Inc. v. Darue Eng’g & Mf’g, 545 U.S. 308 (2005), in having a unified, whole-of-nation response to the COVID-19 pandemic among federal, state, local, and private-sector entities.”  

The Grable & Sons Metal Prods. decision, which addressed the removal of a quiet title action from state court to federal court, held “the national interest in providing a federal forum for federal tax litigation is sufficiently substantial to support the exercise of federal-question jurisdiction over the disputed issue on removal, which would not distort any division of labor between the state and federal courts, provided or assumed by Congress.”  545 U.S. at 310.  By invoking Grable & Sons Metal Prods., and highlighting the substantial federal legal and policy issues in responding to the COVID-19 pandemic, the Amendment emphasizes the appropriateness of removal to federal court of cases involving the administration (or lack of administration) of a Covered Countermeasure, even if the claims asserted in the cases are state claims.  

7.  The Amendment Extends the Effective Time Period for Liability Protections

The Amendment also provides that the liability protections begin with the Declaration of Emergency (in March 2020) and last through the final day the Declaration of Emergency is in effect, or October 1, 2024, whichever occurs first.

Liability protections for newly added Covered Countermeasures, under the third distribution channel provided for in Section VII, begin on December 3, 2020, the effective date of the Amendment.

Key Takeaways for You and Your Business

The Amendment adds telehealth providers and various pharmacy-related professionals to the “qualified persons” list, which will be important for businesses providing telehealth and/or pharmacy services.  The Amendment also clarifies, and potentially alters, how both businesses and courts should interpret the PREP Act’s application to the current pandemic, both retroactively and on a going-forward basis.  By expressly incorporating the omnibus advisory opinion, the Amendment heightens the importance of that resource to interpreting and applying the PREP Act.

The Amendment also rejects the general approach taken in the first wave of PREP Act cases, in which district courts remanded claims to state court and refused to apply the PREP Act to state law claims that arose out of an alleged failure to administer Covered Countermeasures.  HHS’s statements regarding Section IX of the COVID-19 Declaration clarify that there are instances in which the failure to administer Covered Countermeasures will fall within the PREP Act’s liability protections, and that the remand of state law claims to state court may not be appropriate where federal issues are implicated.

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