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Know the Law: The PREP Act’s Impact on Private Businesses and Individuals

Written by: Steven R. Mercadante

Published in the Union Leader (4/26/2020)

Q: Does my business risk facing liability by providing products and services in response to COVID-19?

A: On March 10, the secretary of Health and Human Services (HHS) issued a declaration triggering the Public Readiness and Emergency Preparedness Act (the PREP Act). The PREP Act limits a business’ potential liability associated with the provision of products and services in response to a public health emergency.

In order to be eligible for the protections of the PREP Act, you or your business must be a “covered person.” Covered persons include manufacturers, distributors, program planners, administrators and licensed health professionals. Covered Persons also include officials, agents and employees of these entities. Additionally, covered persons must engage in the design, development, testing, manufacturing, labeling, distribution, formulation, packaging, marketing, sale, purchase, donation, dispensing, licensing or administration of covered countermeasures in order to be eligible for immunity.

“Covered countermeasures” include drugs, biological products, diagnostics, personal respiratory protective devices, and any other drug or device used to treat, diagnose, cure, prevent or mitigate COVID-19 or its transmission. The FDA must approve or clear covered countermeasures, or in the alternative, make exceptions for products used for research or authorize otherwise unapproved products for emergency use. To date, the FDA issued emergency use authorizations for personal protective equipment, ventilators and in-vitro diagnostics for the detection or diagnosis of COVID-19.

Covered persons are protected from claims for losses caused by, arising out of, relating to, or resulting from, the administration or use of a covered countermeasure, including death, physical, mental or emotional injury, property damage and business interruption loss. While the protections afforded to covered persons under the PREP Act and the HHS declaration are broad, they are not absolute. Importantly, the HHS declaration limits immunity to covered countermeasures related to present or future federal contracts, grants and other federal agreements.

The PREP Act also provides that covered persons remain liable for death or serious physical injury caused by willful misconduct. However, there can be no willful misconduct found against a manufacturer or distributor if HHS refuses to take an enforcement action or terminates or settles an enforcement action without imposing a criminal, civil or administrative penalty. Program planners or licensed health professionals can also avoid willful misconduct so long as they act in accordance with applicable directions, guidelines or recommendations issued by the HHS.

Steven R. Mercadante is an attorney in McLane Middleton’s Woburn office and is admitted to practice in Massachusetts. He can be reached at [email protected]. Know the Law is a bi-weekly column sponsored by McLane Middleton, Professional Association. We invite your questions of business law. Questions and ideas for future columns should be emailed to [email protected].

Please note – Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.

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