The Declaration limits liability for manufacturers developing products to diagnose, treat, mitigate, or prevent the novel coronavirus. In this extended analysis, learn how HHS’s declaration will affect manufacturers.
Executive IQ Brief
How Things Work Now: The FDA can issue Emergency Use Authorizations (EUA) in the case of a designated Public Health Emergency, which allows market clearance for un-approved products in the case of an outbreak or other emergency. However, EUAs do not provide immunity from tort liabilities to manufacturers who develop and/or supply products under an approved EUA.
What’s New: On March 12, Secretary of the Department of Health and Human Services (HHS) Alex Azar issued a Declaration of Emergency Use under the Public Readiness and Emergency Preparedness (PREP) Act, identifying countermeasures for the novel coronavirus (SARS-CoV10) as Covered Countermeasures. Under this Declaration, Covered Persons (i.e., those who develop, manufacture, distribute, or administer) any product with an approved EUA are immune to legal liability. Additionally, the Department will open an injury fund to reimburse any individuals who are harmed by an eligible product.
Impact: The Covered Countermeasures Declaration is separate from an EUA, but provides a liability shield for manufacturers or developers working on products to mitigate the impact or spread of the novel coronavirus—potentially incentivizing more life sciences companies to consider developing or bringing forward products targeting SARS-nCoV-2019. For a product to be a Covered Countermeasure under the Declaration, it must either have an approved EUA, be currently under research via an Investigative New Drug (IND) application or Investigational Device Exemption (IDE), or if “it may reasonably be determined to qualify for approval or licensing within 10 years.”
KEY DATES AND DOCUMENTS
- HHS Declaration under the Public Readiness and Emergency Preparedness Act for Medical Countermeasures Against COVID-19
In the case of a Public Health Emergency, the Department of Health and Human Services (HHS) and the FDA have several pathways through which to incent the development and distribution of medical products to combat an outbreak.
Under sections 564A and B of the Federal Food, Drug, and Cosmetic (FD&C) Act, added to the statute through the Public Readiness and Emergency Preparedness (PREP) Act of 2005, in certain extreme or emergent circumstances the HHS Secretary can shield certain manufacturers, developers, and distributors from legal liability associated with medical products. The law grants the HHS Secretary authority to issue a Declaration of Emergency Use, through which the Secretary can establish “liability immunity” for “Covered Persons”—in effect, limit exposure to legal ramifications for life sciences companies, providers, public health departments, or other entities that develop, supply, or administer non-FDA approved medicines or diagnostics in the case of an emergency.
The law, as amended by the Pandemic and All-Hazards Preparedness Reauthorization Act (PAHPRA) of 2013, defines these types of products eligible for a Declaration of Emergency Use as “Covered Countermeasures.”
In addition to products authorized for emergency use by the FDA (see AgencyIQ’s explainer on Emergency Use Authorizations here), certain other drug, biologic, or medical devices can also be shielded for liability under the Declaration in certain circumstances.
Certain drugs and devices can be considered qualified pandemic or epidemic products under the law if they are intended to “diagnose, mitigate, prevent, treat, or cure a pandemic or epidemic or limit the harm” of such a disease, or if the product can limit the harms of such a drug or enhance its effectiveness. Qualified pandemic or epidemic drugs and devices can be considered Covered Countermeasures if they are approved or cleared by the FDA, or if they are currently being researched under an Investigational New Drug (IND) application or an Investigational Device Exemption (IDE).
Additionally, certain drugs, devices and biologic products can be considered security countermeasures. These are products that the Secretary determines to be a priority to treat, diagnose, mitigate, or prevent harm from a “material threat,” which is required to be identified by the Secretary of Homeland Security.
To be a Covered Countermeasure, and therefore eligible for legal liability limitations, the Secretary would have to determine that the product is “reasonably” likely to qualify for approval or licensing within 10 years of the Declaration.
In December 2019, a novel coronavirus known as SARS-CoV-2 was identified in China. The disease caused by the virus, COVID-19, has since spread across the globe. On January 10, the World Health Organization (WHO) declared the outbreak a Public Health Emergency of International Concern (PHEIC), upgrading the designation to a pandemic on March 11.
In the US, HHS Secretary Alex Azar declared a Public Health Emergency on January 31, and declared that the circumstances were such that the FDA could begin issuing Emergency Use Authorizations (EUAs) on February 4th. So far, the only products that have received an EUA are two diagnostic kits respectively developed by the Centers for Disease Control and Prevention (CDC) and the New York State Department of Health.
While the FDA issued guidance on February 29 expanding access to EUAs for certain clinical laboratories, no additional EUAs have yet been granted.
On March 12, HHS issued a Declaration of Emergency Use for products intended to treat, diagnose, prevent, or mitigate COVID19.
The declaration will be retroactively effective back to February 4th, the day that EUAs were formally allowed, and extends through October 2024 or until the Declaration is withdrawn. Covered Persons will have an additional 12 months after the expiration to “take appropriate actions to limit administration or use,” or dispose of, their product.
Under the Declaration, a Covered Countermeasure will be “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,” as well as all components or constituent parts.
The Declaration will protect Covered Persons including manufacturers, distributors, program planners, and officials, agents, and employees. Additionally, qualified persons will also include individuals engaged in public health and medical emergency response professionals, as well as providers prescribing, administering, or dispensing the Covered Countermeasures who is not otherwise authorized to do so under the EUA.
The Declaration itself does not expressly authorize additional products for use to respond to the emerging outbreak. However, legal protections against lawsuits could provide a new incentive for developers working products to treat, prevent, or diagnose the coronavirus, and extending this protection to products that do not have an EUA but are currently under investigation could help streamline access.
Recently, federal policymakers have raised concerns about the lack of diagnostic tests available to screen individuals for COVID19. While industry had previously indicated that it had EUA applications ready to be submitted, and the FDA has stated that it can turn around EUAs in about 24 hours, no additional EUAs have been granted since early February. With the removal of the potential for legal action against companies, this could be another step towards more widespread testing.