In Short
The Background: Test manufacturers and labs are rushing to offer molecular and antibody tests for the novel coronavirus (COVID-19) to meet huge demand. Meanwhile, regulatory oversight during this national emergency has loosened, and the risks of unauthorized distributors falsely advertising tests have grown significantly.
The Issue: Whether test manufacturers or labs can stop unauthorized distributors or resellers from advertising their tests as approved, safe, or effective when the FDA has not so determined.
The Answer: Test manufacturers and labs that have secured Emergency Use Authorization ("EUA") for their tests can stop competitors who do not have EUA, or who do not comply with the conditions of any EUA they do have, from falsely advertising their tests as FDA-authorized, safe, or effective.
The U.S. Food and Drug Administration ("FDA") has recently granted EUAs to test manufacturers and labs offering molecular and antibody tests for COVID-19. This authorization, and the level of evidence necessary for FDA to make the decision, is distinctly different from the clearance or approval process to which a test would typically be subject and FDA's subsequent determination of substantial equivalence or safety and effectiveness. Notably, molecular and serology test EUAs are expressly conditioned on the party not advertising the test in certain ways, such as stating or suggesting the authorized tests are safe and effective or approved by FDA.
The increase in EUAs is driven, in part, by the immunity from liability afforded by the Public Readiness and Emergency Preparedness Act ("PREP Act"). To encourage the development and distribution of testing during declared public health emergencies, the PREP Act provides immunity from covered losses to those who offer covered countermeasures to address the pandemic, including test manufacturers and labs that have obtained EUAs from the FDA to offer molecular and antibody tests.
In an Office of General Counsel Advisory Opinion, the U.S. Department of Health and Human Services ("HHS") stated that it views the PREP Act as extending immunity to persons that "reasonably could have believed" they were a covered entity or were dealing with a test that had an EUA (such as a lab that, after appropriate diligence, purchased and used a test but, in reality, that test turned out to be counterfeit). HHS also clarified that the PREP Act does not provide "immunity against suit and liability for claims under federal law for equitable relief."
The huge demand for coronavirus and antibody testing unfortunately creates an incentive for unauthorized distributors to falsely advertise, as safe or effective, "FDA-approved," "-authorized," or "-notified," tests that either have not secured an EUA or do not comply with the conditions for the issuance of the EUA. This risk is especially great for antibody tests, given that FDA's enforcement policy does not require the manufacturer or laboratory to pursue an EUA, and the tremendous uncertainty about their role and use during the pandemic.
The federal Lanham Act provides a private right of action for equitable injunctive relief benefitting companies that are likely to be injured by these false and misleading advertisements. If a company falsely advertises tests as safe or effective, or as FDA-authorized without an EUA, or in contravention of any of the conditions for an EUA that a company did obtain, then a manufacturer or lab that has secured an EUA for a similar test can secure an injunction against such advertising.
State statutory and common law can also afford a basis for equitable injunctions against such deceptive trade or business practices where the authorized manufacturer can show actual loss or a likelihood of injury to its business reputation.
Three Key Takeaways
- Manufacturers or labs that have an EUA and that notice others advertising competing product without an EUA or outside their EUA conditions should send them a formal notice and demand they stop. Among other things, such notice could undercut an unauthorized competitor's effort to claim immunity under the PREP Act under the guise of "reasonably believing" their activities were covered by an EUA.
- Manufacturers and labs should take reasonable steps to ensure that their authorized distributors do not advertise in contravention of conditions for their EUA, lest they forfeit their statutory immunity.
- Manufacturers should also coordinate their brand and advertising enforcement efforts with their public relations consultants to safeguard their reputation against opportunists.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
