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.

Print:
EmailTweetLikeLinkedIn
Photo of Jennifer Plitsch Jennifer Plitsch

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group. Her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions…

Jennifer Plitsch is co-chair of the firm’s Government Contracts practice group. Her practice includes a wide range of contracting issues for large and small businesses in both defense and civilian contracting. Her practice involves advising clients on contract proposal, performance, and compliance questions as well as transactional and legislative issues. Her practice also includes bid protest and contract claims and appeals litigation before GAO, agency boards and the federal courts. Ms. Plitsch has particular expertise in advising clients in the pharmaceutical and biologics industry. She advises a range of pharmaceutical and biologics manufacturers on Federal Supply Schedule contracts, including the complex pricing requirements imposed on products under the Veterans Health Care Act, as well as research and development contracts and grants with various federal agencies. She also has significant experience advising on the requirements of various programs under which vaccine products and biodefense medical countermeasures are procured by the Government.

Photo of Tyler Evans Tyler Evans

Tyler Evans is a partner in the firm’s Washington, D.C. office and a member of the government contracts group.  His practice covers multiple subject-matter areas, including research and development, non-traditional contracting, intellectual property, contract negotiations, flow-down requirements, small business issues, sourcing restrictions, costs…

Tyler Evans is a partner in the firm’s Washington, D.C. office and a member of the government contracts group.  His practice covers multiple subject-matter areas, including research and development, non-traditional contracting, intellectual property, contract negotiations, flow-down requirements, small business issues, sourcing restrictions, costs, and compliance.

Andrew Guy

Andrew Guy is an associate in the firm’s Washington, DC office. He is a member of the Government Contracts practice group.