Expedited production in Canada of goods to combat COVID‑19 and potential exposure to future claims

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Life sciences companies are contributing to the global fight against COVID-19, including by manufacturing and distributing urgently needed personal protective equipment (PPE) such as masks and gowns necessary for frontline workers, and medical devices, such as test kits and respirators. Health Canada has in turn taken steps to expedite approvals of certain products that can help combat the spread of COVID-19: for example, hand sanitizers, disinfectants and PPE, even where they may not meet current regulatory requirements.

However, unlike in the United States, Canada has not adopted measures to limit potential claims arising from the distribution and sale of products that may not meet current regulatory requirements.

In this bulletin, we consider the scope of protection available to life sciences companies providing goods and services in Canada to federal and provincial governments and to other public customers in response to the COVID-19 pandemic, and steps they can take to mitigate their exposure to potential future third-party claims.

What you need to know

  • In March, Health Canada announced that it would be facilitating expedited access to certain products that can help limit the spread of COVID-19, including “products that may not fully meet current regulatory requirements.”
  • In the United States, the recent declaration titled Medical Countermeasures Against COVID-19 provides targeted immunity for companies supplying pharmaceutical products and medical devices used to control and mitigate the spread of COVID-19. No similar provisions yet exist in Canada, and therefore there is no equivalent targeted immunity for companies in Canada.
  • Life sciences companies providing these goods and services in Canada to federal and provincial agencies and to other public customers, including hospitals and healthcare professionals, are in most cases unlikely to be protected by the liability limitation provisions of the federal Emergencies Act and its provincial equivalents, unless those goods and services are obtained by order or regulation, or in Québec by contract pursuant to the Civil Protection Act.
  • In the current circumstances, life sciences companies should carefully consider the scope of available protection from potential future third-party claims, and the availability of indemnity agreements, and/or waivers of liability.

Discussion

In March 2020, Health Canada issued an alert titled Expedited access to disinfectants, hand sanitizers and personal protective equipment to help limit the spread of COVID-19, as well as swabs for testing in which it announced that, “[i]n light of the unprecedented demand and urgent need for products that can help limit the spread of COVID-19—including hand sanitizers, disinfectants and personal protective equipment (such as masks and gowns)—as well as swabs, Health Canada is facilitating access to products that may not fully meet current regulatory requirements, as an interim measure.”1

Various manufacturers have relied on this alert and have obtained or are in the processing of obtaining regulatory approvals from Health Canada for these products. This interim measure also raises questions about manufacturers’ potential exposure to future claims.

The U.S. Medical Countermeasures Against COVID-19

On March 17, 2020, the U.S. Department of Health and Human Services (HHS) released a Declaration titled Medical Countermeasures Against COVID-19 under the Public Readiness and Emergency Preparedness Act, which allows the HSS to, among other things, grant targeted liability protections for “pandemic and epidemic products.”

The Declaration provides immunity from liability, except in cases of “willful misconduct,” to “Covered Persons”2 against claims in respect of “Covered Countermeasures”3 that relate to present or future federal contracts or similar agreements, or certain activities authorized in accordance with the public health and medical response of a public agency following a declaration of an emergency by any authorized official. The Declaration is retroactively effective to February 4, 2020 and remains effective through to October 1, 2024.

Presently, there is no Canadian federal or provincial equivalent to the U.S. Declaration.

The Canadian Emergencies Act

Canada’s closest equivalent to the U.S. Public Readiness and Emergency Preparedness Act is the federal Emergencies Act, which authorizes the taking of special, temporary measures to ensure safety and security during national emergencies, including public welfare emergencies such as those caused by “disease in human beings.” Among other things, these powers allow the federal government to procure goods and services it deems necessary under the Act. These powers are engaged when the federal government declares a “public welfare emergency,”4 which as of the date of this publication has not been declared.

Once engaged, the Emergencies Act provides certain legal safeguards, including protection from personal liability to persons acting in good faith who are “providing services pursuant to an order or regulation” made under certain sections of the Act.5 However, these protections only extend to persons required by order or regulation to “render essential services they are qualified to provide,” and to persons whose “essential goods, services and resources” the government orders be distributed or made available.6

Ontario’s Emergency Management and Civil Protection Act

Like its federal counterpart, Ontario’s Emergency Management and Civil Protection Act (EMCPA) provides sweeping and temporary powers upon the declaration of an emergency by the provincial or municipal governments, including the power to procure necessary goods and services.7 Ontario invoked its powers under the EMCPA on March 17, 2020 by declaring a state of emergency.

The EMCPA provides certain protections from liability for individuals who are ordered to use, procure, or make available for distribution “any necessary goods, services and resources within any part of Ontario” or who the government otherwise orders to take actions or measures deemed necessary to prevent, respond to, or alleviate the effects of the emergency. However, like the federal Emergencies Act, these protections are only available to persons acting pursuant to the Act or an order under the Act.8

Québec’s Public Health Act and Civil Protection Act

In Québec, the Public Health Act permits the government or the health minister to incur expenses and enter into contracts considered necessary to protect the health of the population upon the declaration of a public health emergency.9 The government, the minister or another person may not be prosecuted by reason of an act performed in good faith in or in relation to the exercise of their powers, including as a result of entering into such contracts.10 Québec invoked the Public Health Act by declaring a public health emergency on March 13, 2020.

In addition, Québec’s Civil Protection Act allows the provincial and local/regional governments to take steps to protect persons and property against disasters, including pandemics, by declaring a state of emergency. The Civil Protection Act also provides certain protections for persons mobilized pursuant to measures established under the Act or whose intervention is required or expressly accepted under the statute: such persons are, for the purposes of third-party liability, deemed to be agents of the authority under whose command that person is placed for the duration of the person’s intervention.11 As the date of this publication, only the municipality of Montréal has declared a state of local emergency under the Civil Protection Act in connection with the COVID-19 pandemic.

In certain situations, the Civil Code of Québec also provides protection from liability for persons, including companies, who provide materials gratuitously and for an unselfish motive, unless the injury is due to an intentional or gross fault (negligence).12

Emergency legislation in other provinces

“States of emergency” or “public health emergencies” have been declared by the Provinces of Alberta, British Columbia, Saskatchewan, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island under provincial legislation similar to Ontario’s EMCPA.

Each of these statutes contains a limitation of liability, but only for persons acting under their authority including by a governmental order or direction related to the emergency, performing a duty related to the emergency, or appointed to carry out measures relating to the emergency.13

Protection from third-party liability

Since the relevant provisions in federal and provincial emergency measures or public health emergency statutes are general and not specific to COVID-19, there remains uncertainty as to their scope of application.

In most cases, the protections from liability that these provisions extend to third-party suppliers of goods and services are only available when they are engaged by a declaration of emergency, and when goods or services are obtained by order or regulation, or in Québec, when the goods or services are obtained by way of contract or provided “gratuitously” and “unselfishly,” unless the injury is due to intentional or gross fault (negligence).

While courts would no doubt have regard to the current dire circumstances in assessing any potential liability, suppliers seeking protection from potential future claims should carefully consider the scope of available protection under the federal Emergencies Act and its provincial equivalents, and the availability of indemnity agreements, and/or waivers of liability.

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1 See: https://healthycanadians.gc.ca/recall-alert-rappel-avis/hc-sc/2020/72623a-eng.php

2 “Covered Persons” includes manufacturers, distributors, program planners, and qualified persons, and their officials, agents, and employees.

3 “Covered Countermeasures” include “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, and all components and constituent materials of any such product.”

4 Emergencies Act, s. 6(1).

5 Emergencies Act, s. 47(1)

6 Emergencies Act, s. 8(1)

7 EMCPA, s. 7.0.2(4)

8 EMCPA, s. 11

9 Public Health Act, s. 123 (7)

10 Public Health Act, 123 sub-para. 2

11 Civil Protection Act, s. 125

12 Article 1471 of the Civil Code of Québec

13 See: British Columbia’s Emergency Program Act, s. 18; Saskatchewan’s Emergency Planning Act, s. 15; Manitoba’s Emergency Measures Act, s. 18; New Brunswick’s Emergency Measures Act, s. 22; Nova Scotia’s Emergency Management Act, s. 21; Alberta’s Public Health Act, s. 66.1; Newfoundland’s Public Health Protection and Promotion Act and Emergency Services Act, s. 55; and Prince Edward Island’s Public Health Act, s. 69.

Read all our coronavirus-related updates on our COVID-19 guidance for organizations resource page.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

For permission to republish this or any other publication, contact Janelle Weed.

© 2020 by Torys LLP.
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