What You Need To Know About Liability Protection For COVID-19 Products
Executive Summary
Companies developing medical countermeasures for COVID-19 need to become familiar with divergences in the liability protection offered by different countries with regard to possible safety issues that may arise when products are fast-tracked for public health reasons. By doing so they can adopt a systematic process for prospectively evaluating and managing international risks, say Dan Kracov, Lincoln Tsang and Alexander Roussanov.
The COVID-19 pandemic has brought unprecedented challenges. The rapid cross-border spread of the virus has prompted the international regulatory community to work closely together. For this reason, a consistent international approach has rightly been adopted towards collecting robust and reliable evidence to establish the safety and efficacy of medical countermeasures for COVID-19.
About The Authors
Dan Kracov, Lincoln Tsang and Alexander Roussanov are partners in, respectively, the Washington, DC, London and Brussels offices of law firm Arnold & Porter.
While the intention of the regulators is to hold such products to the usual high standards and ensure they have a favorable benefit-risk profile, the urgent need for cures and vaccines means they need to be made available within a relatively short period of time. In an emergency pandemic situation, manufacturers of vaccines, drugs, medical devices and other COVID-19 countermeasures may not have time to accrue a dataset of an equivalent size to that which is typically required for marketing approval.
Liability issues are of course likely to arise for a product that is developed under significant time constraints and under great pressure to produce sufficient quantities to supply a large population. Understandably, this area has attracted a great deal of attention.
"The challenge for pharmaceutical companies is to integrate the remedies and protections available in various countries into an international risk management strategy" – Arnold & Porter
The challenge for pharmaceutical companies is to integrate the remedies and protections available in various countries into an international risk management strategy. There is no international legal framework for product liability, and the treatment of personal injury claims is still largely determined by national laws. There are inevitably divergences in national laws so international pharmaceutical companies face considerable uncertainty when assessing liability exposure according to the local standards.
In a pandemic outbreak, treatments are purchased and recommended for use by national governments. Where there are potential gaps in liability protections, manufacturers are turning to national governments for advance assurances that they will assume responsibility for liability if a nationally recommended COVID-19 countermeasure causes adverse reactions or offers inadequate protection. But the fact that these protections apply at a national level raises challenges for pharmaceutical companies operating internationally.
Some countries have set up special statutory liability schemes, or are seeking to rely on protections in their respective national no-fault compensation regimes if there are adverse events that can be attributed to mandatory vaccination. In the US, the relevant statutory scheme has been extended to COVID-19, and there is no reason why the established national schemes in other jurisdictions should not be extended to COVID-19 countermeasures, especially vaccines.
The various measures that have been introduced to remove uncertainty of liability for manufacturers are of course necessary to address an immediate public health need. However, from a risk mitigation perspective, there is clearly a tension between these measures and the need to achieve at least the minimum safety standard.
Nonetheless, the concept of risk management is based on certain universally accepted guiding principles that have been effectively applied in many areas of business, including pharmacovigilance and product quality.
There is no reason why a manufacturer cannot adopt a systematic process for evaluating, controlling, communicating and reviewing international risks arising from the manufacture and clinical use of potential COVID-19 countermeasures. In order to do this, transatlantic pharmaceutical companies will need to be aware of the different remedies and protections available in the US, the UK and the various EU member states.
The Situation In The US
The US 2005 Public Readiness and Emergency Preparedness Act (PREP Act) was evoked in a March 2020 Declaration, with an effective date of 4 February 2020, to provide immunity for activities related to COVID-19 countermeasures. These are known as “covered countermeasures” under the PREP Act.
In the COVID-19 Declaration (as amended), the covered countermeasures that are afforded immunity include drugs, biologics (including vaccines) and devices and diagnostics 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 that product.
In general, these must be products that are approved, cleared or licensed by the Food and Drug Administration and authorized for investigational use. Of particular interest is the emergency use authorization (EUA), a unique mechanism that permits a product to be authorized for use on a temporary basis in situations where the scientific evidence supports a positive benefit-risk finding. Gilead Sciences’ antiviral drug, Veklury (remdesivir), for example, was granted an EUA in May for the treatment of patients with suspected or laboratory-confirmed SARS-CoV-2 infection and severe COVID-19.
The protections provided by the PREP Act for those involved in developing such covered countermeasures are extensive. They include immunity for claims of loss that have 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 the covered countermeasure.
In order to be covered by the PREP Act's liability immunity you need to be a “covered person.” Covered people can include manufacturers, distributors, program planners and qualified persons, along with their officials, agents and employees. These terms are defined quite broadly. For example, a manufacturer includes a contractor or subcontractor of a manufacturer, and all the parents, subsidiaries, affiliates, successors and assigns of a manufacturer.
The US Congress is currently considering some measures that would provide further liability protections. However, immunity under the PREP Act is not available for claims made in countries where the US has no jurisdiction, and when it comes to the UK and the EU member states, protections for COVID-19 countermeasures have been more limited.
The Situation In Europe
There is no EU law instrument equivalent to the PREP Act to protect manufacturers supplying COVID-19 countermeasures for use in national health systems. In the UK and the EU, liability immunity and compensation programs in the event of personal injury are mainly dealt with by national laws.
In France there is a specific vaccine compensation regime for all damages directly attributable to a mandatory national vaccination for the pediatric or adult population according to local public health law. Similarly, under a local law to prevent and control communicable diseases in men, Germany has a national scheme to compensate for personal injuries resulting from a vaccine that is required by law or recommended for use in a national vaccination program. In addition, the German Federal Ministry of Health stated that it plans to limit the liability risks for pharmaceutical companies during clinical trials for treatments for COVID-19, but has not yet published the conditions for such a limitation.
In the UK, the Vaccine Damage Payments Act 1979 provides for payments to be made out of public funds in cases where severe disablement occurs as a result of vaccination against certain diseases. The Vaccine Damage Payments Act was extended to vaccines used for swine flu between 2009-2010, but has not yet been extended to cover COVID-19 vaccines.
"Product liability exposure remains a critical consideration for manufacturers in Europe" – Arnold & Porter
Given the patchiness and paucity of protections at a national level, it is most useful for pharmaceutical companies to take an overarching view and to look to EU level legislation and regulations for protection. The EU has its own harmonized regulatory framework for medicinal products, including vaccines. Effective coordination among the national regulatory authorities and centralized bodies is critical with respect to approval of COVID-19 countermeasures.
Product liability exposure remains a critical consideration for manufacturers in Europe. EU pharmaceutical law provides a limited protection regime against civil liability arising from the emergency use of an unauthorized product as a public health countermeasure required or recommended by an EU member state in response to a pandemic. But this does not diminish the risk of a claim being brought by an injured person under the European Product Liability Directive.
This directive considers a product to be defective if it does not have the safety which persons generally are entitled to expect, taking into account all the circumstances, including the expected use of the product and information provided about its use. Article 7(e) of the directive sets out a “development risks defence” which can in certain circumstances be of use to producers facing product liability claims in the EU. Certain member states have implemented the development risks defence into their domestic law. It is likely to provide, to a degree, a barrier to successful claims against manufacturers that have been required to accelerate the R&D of COVID-19 countermeasures.
It is, however, important to bear in mind that fast-tracking the approval of a COVID-19 countermeasure does not mean that the evidential requirement for establishing its safety, quality and efficacy will be relaxed. Rather, the regulatory process that is being adopted during the current health crisis enables the evidence to be submitted incrementally, in order to allow the benefit-risk balance to be constantly monitored.
Moreover, in the context of the European Product Liability Directive, national courts have taken the view that they need to maintain a flexible approach to assessing the appropriate level of safety. This approach takes into account the particular circumstances of a case and the weight to be attached to each of them.
Risk Management Strategies
Ultimately, any analysis of how pharmaceutical companies can best mitigate their risks of being found liable for defects in COVID-19 countermeasures needs to take account of the fact that only one product, remdesivir, has been approved for treating COVID-19, and most potential vaccines are still at the clinical trial stage.
Novel multiple technology platforms are being used to expedite vaccine product development, including genome sequencing techniques. Each product will require a bespoke risk assessment that recognizes there may be uncertainty in characterizing the risks associated with the administration of COVID-19 countermeasures in the target population.
Ultimately, risk mitigation should be a shared responsibility among researchers, manufacturers, health care professionals and the community at large whose views on risk tolerance need to be factored into the analysis.
In the US, the focus of risk mitigation must be on adhering to the terms of the PREP Act Declaration, as well as on the relevant clearance, approval, or authorization that provides the specific terms for the use of the product during the pandemic.
Until about 15 years ago, efforts to improve health and safety were directed primarily at risks of relatively certain magnitude. The social harm from accidents and infectious diseases such as polio was all too easy to measure. Risks were managed by learning from mistakes, and this is still an essential part of good risk management.
But trial-and-error management is ill suited for many risks relating to the current health crisis, for example risks with long latency periods or catastrophic potential. The industry must now seek better ways to manage risks prospectively, using methods that avoid the human costs of a trial-and-error approach.