The COVID-19 Vaccine Race: With Risks Come Rewards

Pharmaceutical and biotech companies are working diligently to develop COVID-19 therapies. Currently, however, the Food and Drug Administration (FDA) has not approved any to treat the virus. In the meantime, countries around the globe are looking to lock up vaccines even before they are ready. In late July, the White House announced a nearly $2 billion contract with Pfizer and BioNTech for 100 million doses by December. Before that, AstraZeneca announced a $1.2 billion deal with the U.S. government. AstraZeneca also recently announced a deal to supply up to 400 million doses to Europe’s Inclusive Vaccine Alliance, spearheaded by Germany, France, Italy, and the Netherlands. Sweden later joined the group by inking its own $229 million deal.

The U.S. government’s agreements with these and other companies are part of Operation Warp Speed (OWS). OWS aims to deliver 300 million doses of vaccine for COVID-19 by January 2021 and is part of a broader strategy to accelerate development, manufacturing, and distribution of pandemic countermeasures with funding of $10 billion approved by Congress. To incentivize rapid development efforts and a key feature of many of the supply agreements, companies are being granted protection from future product liability claims.

Immunity from Tort Liability

In support of OWS’s mission and to encourage the life science sector to undertake accelerated product development, the Department of Health and Human Services (HHS) bestowed extensive immunity on vaccine and therapy makers for development-related activities. Pursuant to the Public Readiness and Emergency Preparedness Act (PREP Act), the HHS issued a notice of declaration conferring immunity from tort litigation for those developing vaccines or medicines against COVID-19. Though risk always exists in developing any new therapy, particularly on an expedited basis, the benefits of creating a countermeasure likely outweigh the risk of adverse events associated with such therapy.

The PREP Act authorizes the HHS secretary to issue a declaration to provide liability immunity to certain individuals and entities against any claim of loss caused by, arising out of, relating to, or resulting from the manufacture, distribution, administration, or use of medical countermeasures (Covered Countermeasures), except for claims involving “death or serious physical injury proximately caused by willful misconduct” as defined in the PREP Act.

Under the PREP Act, willful misconduct is an act or omission (1) “intentionally to achieve a wrongful purpose,” (2) “knowingly without legal or factual justification,” and (3) “in disregard of a known or obvious risk that is so great as to make it highly probable that the harm will outweigh the benefit.” A claimant must prove all three conditions by clear and convincing evidence. Moreover, willful misconduct cannot be found against a manufacturer for actions regulated by the HHS under the Public Health Service Act or the Federal Civil Defense Administration if the HHS does not take enforcement action against the manufacturer, or if the HHS terminates or settles an enforcement action without imposing a criminal, civil, or administrative penalty.

Recovery Still Available

Even though an injured party might not be able to file suit, that party may be able to recover under the Countermeasures Injury Compensation Program (CICP). According to the declaration, individuals or their survivors who are seriously injured or die “as a direct result of the administration or use of a Covered Countermeasure” may be able to obtain benefits from the program. Under the CICP, individuals may recover medical expenses, lost employment, and certain death benefits that are reasonable and necessary to diagnose or treat a covered injury. The CICP will not impose any monetary limit on the amount of reasonable medical benefits. The CICP also will provide a lost employment income benefit in the amount of two-thirds of unreimbursed gross income, including up to 75 percent if the individual had dependents at the time of injury and up to a maximum of $50,000 for workers under age 65. Finally, the CICP will provide death benefits to survivors of eligible persons, typically based on the Public Safety Officers’ Benefit Program.

Upholding Immunity under the Act

Case law on the PREP Act is sparse, but the few cases that address it show that courts enforce the act. Of the publicly available decisions on the PREP Act, each pertained to the vaccine for the H1N1 influenza virus, and none were critical of the PREP Act’s immunity provisions.

In Parker v. St. Lawrence City Public Health Department, a parent of a kindergartner inoculated for the H1N1 influenza without her parent’s consent filed suit in New York state court. The Appellate Division of the Supreme Court of New York held that the lawsuit was preempted by the PREP Act and dismissed the case. In Kehler v. Hood, a federal court in Missouri held that the PREP Act barred claims against the vaccine manufacturer. In Casabianca v. Mount Sinai Medical Center, Inc., however, a New York state district court found the underlying activity in the case was not a Covered Countermeasure under the PREP Act because the vaccine was never given. For that reason, the court concluded that the PREP Act’s immunity provisions did not apply.

The Greater Good

“The PREP Act, which is intended to encourage companies to explore developing and manufacturing vaccines, is good for manufacturers,” stated Jim Walters, of Aon PLC’s life sciences and chemicals industry group in a recent Business Insurance article. “The act provides broad liability immunity on a federal level ‘and it supersedes state laws and even other federal laws’ to provide incentives for companies to work on vaccines and other treatments ‘without the fear of litigation,’” he added.

The declaration invoking the PREP Act for COVID-19, however, sunsets in October 2024, or when the HHS declares the pandemic to be over, whichever comes first. Whether vaccine manufacturers will continue to have immunity is an open question, as vaccines “aren’t always 100 percent foolproof effective,” noted Larry Reback of EPIC Insurance Brokers & Consultants in the same article. “They can be challenged based on specific factors, and even if they are ultimately upheld, they may cost a lot of money defending,” Reback explained.

“The typical product liability exposure is always present,” agreed Christina M. Harris, of IronHealth, a Liberty Mutual Insurance Group unit, in Business Insurance. The PREP Act’s intent “is to wash away that liability to manufacturers, distributors, and developers because they want to entice them to develop vaccines themselves and understand in doing so, they are open to public scrutiny and litigation,” she explained. To be successful in litigation efforts, plaintiffs “would have to do it very creatively and approach with caution, especially if they’ve got the federal government” seeking to “honor its word, so to speak,” by enacting the PREP Act to begin with, according to Harris.

Litigation against those who develop a COVID-19 vaccine is not “going to be looked upon very favorably by the courts and even juries,” opined James Beck of Reed Smith in the same article. Beck is likewise unconcerned about the declaration’s expiration date: “Society’s going to be so grateful to whomever provides a successful vaccine in this circumstance that immunity for the vaccine itself will be extended, if necessary.”