The Department of Health and Human Services published a notice on March 30, 2020 — effective March 25, 2020 — designating certain COVID-19-related personal protective equipment (“PPE”) and materials as “scarce” or “threatened” materials subject to the Defense Production Act’s (“DPA”) anti-hoarding provisions.  As a result of this notice, the DPA now prohibits the accumulation of these materials in excess of reasonable demands of business, personal, or home consumption.  The notice also results in a prohibition of the accumulation of these materials for the purpose of resale at prices in excess of the prevailing market rate.

The notice specifically applies to the following types of materials:

  • N-95 Filtering Facepiece Respirators, and other types of respirators;
  • Portable Ventilators;
  • Drug products with active ingredient chloroquine phosphate or hydroxychloroquine HCI;
  • Certain sterilization services;
  • Certain disinfecting devices;
  • Medical gowns or apparel and PPE coveralls; and
  • PPE face masks, surgical masks, face shields, and gloves.

Violating the DPA in this manner could result in a fine up to $27,000.00, or up to one year imprisonment.  See 50 U.S.C. § 4513.

The notice follows an executive order the White House issued last week on “Preventing Hoarding of Health and Medical Resources To Respond to the Spread of COVID-19.”  This order delegated to the Secretary of the Department of Health and Human Services “the authority to prescribe conditions with respect to the accumulation of” COVID-19 related materials, “to designate any material as a scare material,” or to designate “as a material the supply of which would be threatened by persons accumulating the material either in excess of reasonable demands of business, personal, or home consumption, or for the purpose of resale at prices in excess of prevailing market prices.”

If you have any questions concerning the material discussed in this client alert, please contact Jennifer Plitsch or Tyler Evans.

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Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She…

Jennifer Plitsch leads the firm’s Government Contracts Practice Group, where she works with clients on a broad range of issues arising from both defense and civilian contracts including contract proposal, performance, and compliance questions as well as litigation, transactional, and legislative issues.

She has particular expertise in advising clients on intellectual property and data rights issues under the Federal Acquisition Regulations (FAR) and obligations imposed by the Bayh-Dole Act, including march-in and substantial domestic manufacturing. Jen also has significant experience in negotiation and compliance under non-traditional government agreements including Other Transaction Authority agreements (OTAs), Cooperative Research and Development Agreements (CRADAs), Cooperative Agreements, Grants, and Small Business Innovation Research agreements.

For over 20 years, Jen’s practice has focused on advising clients in the pharmaceutical, biologics and medical device industry on all aspects of both commercial and non-commercial agreements with various government agencies including:

  • the Department of Veterans Affairs (VA);
  • the Department of Health and Human Services (HHS), including the Biomedical Advanced Research and Development Authority (BARDA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC);
  • the Department of Defense (DoD), including the Defense Threat Reduction Agency (DTRA), the Defense Advanced Research Projects Agency (DARPA), and the Joint Program Executive Office for Chemical Biological Defense (JPEO-CBRN); and
  • the U.S. Agency for International Development (USAID).

She regularly advises on the development, production, and supply to the government of vaccines and other medical countermeasures addressing threats such as COVID-19, Ebola, Zika, MERS-CoV, Smallpox, seasonal and pandemic influenza, tropical diseases, botulinum toxin, nerve agents, and radiation events. In addition, for commercial drugs, biologics, and medical devices, Jen advises on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as on the obligations imposed by participation in the 340B Drug Pricing program.

Jen also has significant experience in domestic sourcing compliance under the Buy American Act (BAA) and the Trade Agreements Act (TAA), including regulatory analysis and comments, certifications, investigations, and disclosures (including under the Acetris decision and Biden Administration Executive Orders). She also advises on prevailing wage requirements, including those imposed through the Davis-Bacon Act and the Service Contract Labor Standards.

Photo of Andrew Guy Andrew Guy

Andrew Guy advises clients across a broad range of government contracting issues — including regularly representing contractors in bid protests before the U.S. Court of Federal Claims and the U.S. Government Accountability Office (“GAO”).

Andrew also has extensive investigations and False Claims Act…

Andrew Guy advises clients across a broad range of government contracting issues — including regularly representing contractors in bid protests before the U.S. Court of Federal Claims and the U.S. Government Accountability Office (“GAO”).

Andrew also has extensive investigations and False Claims Act experience. He routinely assists clients in responding to Civil Investigative Demands and other government inquiries.

Before joining the firm, Andrew clerked for the Honorable Kenneth F. Ripple of the U.S. Court of Appeals for the Seventh Circuit.