April 14, 2020

CARES Act Expands Liability Protections Under the PREP Act

The COVID-19 pandemic has called upon manufacturers and distributors of products to develop, supply and administer the protective tools necessary to combat the spread of infectious disease. For companies that wish to contribute to national efforts to supply much-needed personal and respiratory protective equipment but lack medical device manufacturing experience, such activities can be fraught with potential liabilities. To alleviate these concerns and to incentivize production and distribution of these important products, the Coronavirus Aid, Relief and Economic Security (CARES) Act expands the liability protections already in place for the manufacturers of COVID-19 vaccines and countermeasures to include protections for manufacturers of PPE and other medical devices.

The CARES Act and Extended Manufacturer Immunity

On March 27, 2020, President Trump signed the CARES Act into law. The CARES Act provides emergency assistance and health care response to those affected by the COVID-19 pandemic, in part by incentivizing businesses to produce and distribute critically needed respiratory protective equipment by granting additional liability protection to these device manufacturers.

Among the numerous provisions directed at mitigating medical supply shortages, the CARES Act amended a provision of the Public Health Service Act to extend state and federal liability protection to manufacturers of respiratory protective equipment. Specifically, section 3103 of the CARES Act adds certain respiratory protective devices, such as masks and respirators, to the definition of “covered countermeasure” under the Public Readiness and Emergency Preparedness (PREP) Act, 42 U.S.C. § 247d-6d. As explained in our prior alert, on March 10, the Secretary of Health and Human Services (HHS) issued a PREP Act Declaration immunizing certain individuals and entities from liabilities arising from the manufacture, testing, development, distribution, administration and use of “Covered Countermeasures” against threats during the COVID-19 public health emergency. The CARES Act extended the protections set forth in HHS’s March 10, 2020, PREP Act Declaration to entities and persons who manufacture, test, distribute, prescribe or administer these respiratory protective devices during the public health emergency period.

To qualify for protection, respiratory protective devices must be approved by the National Institute for Occupational Safety (NIOSH) and the Secretary of HHS must have designated the devices as a priority for use during a public health emergency. Prior to the CARES Act, immunity under the PREP Act was only available to respirator devices that were both NIOSH-certified and FDA-approved. However, many NIOSH-certified devices are not FDA regulated because they are not intended for medical applications. This meant that manufacturers of devices such as common nonsurgical N95 masks, which are NIOSH-certified but lack Food and Drug Administration (FDA) approval, were unlikely to benefit from the PREP Act’s liability protection provisions.

Now, however, Section 3013 grants manufacturers and distributors this broad liability protection to incentivize further production and distribution of these devices. Importantly, because this CARES Act provision implements this extension of liability by amending the definition of “covered countermeasure” in the Public Health Service Act (PHSA), contractors should plan to satisfy the other qualifying conditions of the PREP Act before they are entitled to immunity.

The CARES Act also has important implications for manufacturers and suppliers whose devices are added to the Strategic National Stockpile (SNS). Section 3102 of the Act adds “personal protective equipment, ancillary medical supplies, and other applicable supplies required for the administration of drugs, vaccines and other biological products, medical devices, and diagnostic tests” to the list of items required to be stockpiled. For those covered countermeasures that are subject to the COVID-19 Declaration at the time they are obtained for the SNS, the PREP Act extends the effective period of liability immunity through the time the countermeasure is used or administered. This provides essential liability protection to manufacturers and suppliers whose devices may be added to the SNS in the coming months but not used until after October 1, 2024 — the date the COVID-19 Declaration ends.

What Does This Mean for Manufacturers and Distributors?

It is clear that government contractors will continue to play critical roles in the fight against COVID-19. Manufacturers and distributors of covered countermeasures designed to combat the spread of COVID-19 provide critical defenses during this national public health crisis. The federal government’s broad liability protections encourage contractors to contribute to the national pandemic response. When the dust of the pandemic finally settles, however, it is foreseeable that an increase in PREP Act litigation may occur, arising from the administration and use of masks, ventilators, vaccines and other devices. Although medical device manufacturers should use reasonable care when developing and distributing personal protective equipment, the PREP Act and the CARES Act offer targeted immunity that may provide a vigorous defense to a lawsuit arising from the production, distribution or administration of these countermeasures.

If you have questions about whether the PREP Act or CARES Act tort liability protections apply to your company, or about how to maneuver through the rapidly shifting regulatory landscape as it relates to the current public health emergency, please reach out to any of the above-listed authors.

For more helpful resources, please see any member of the Faegre Drinker government contracts team or the Faegre Drinker Product Liability Mass Tort COVID-19 Task Force.

As the number of cases around the world grows, Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.

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