On March 19, 2015, EPA sent its proposed rule, “Management Standards for Hazardous Waste Pharmaceuticals,” to the White House Office of Management and Budget (OMB) for pre-publication review.  This review may take up to 90 days (barring a one-time 30-day extension).  Unless OMB returns the rule to EPA for reconsideration, we expect the proposed rule to be released this summer.  This rule will have major implications for the pharmaceutical reverse distribution industry and the management of non-dispensable pharmaceuticals at health care facilities.

The fall 2014 Unified Agenda states that the rule is “intended to clarify regulation of a major mechanism used by health care facilities for management of unused and/or expired pharmaceuticals, known as reverse distribution.”  This “clarity” and the path forward for the pharmaceutical reverse distribution industry hinges predominantly on two facets of the rule:

  1. Definition of “Health Care Facilities”

The proposed rule will apply to the management and disposal of pharmaceuticals that are characterized as hazardous waste and come from “health care facilities.”  If EPA sticks to the definition in its 2008 proposal (a failed attempt to add hazardous waste pharmaceuticals to the Universal Waste Program), “health care facilities,” will include “pharmacies, hospitals, physicians’ offices, dentists’ offices, other health practitioners, outpatient care centers, other ambulatory health care services, residential care facilities, reverse distributors and veterinary clinics.”  While at first blush this definition seems comprehensive, drug stores and other retailers of OTC pharmaceuticals would be outside the scope of a “health care facility” regulation.  While a broad regulation will bring much-needed clarity for the health care industry, EPA must take into account the use of reverse distributors by pharmacies, drug stores and other retailers.  Inclusion, rather than exclusion, would provide needed certainty to all retailers of pharmaceuticals and for reverse distributors servicing a wide-array of customers.

  1. Point of Generation

A literal reading of the fall 2014 Unified Agenda implies that health care facilitiesgenerate hazardous waste pharmaceuticals.  In the context of reverse distribution, while this aligns with some states’ views, this is contrary to EPA’s.  EPA currently takes the position—in guidance—that reverse distribution systems do not trigger RCRA regulation until a credit determination, and a related disposal decision, is made.  Only at this point does a pharmaceutical become (hazardous) waste.  If the Management Standards for Hazardous Waste Pharmaceuticals rule changes the point of generation to the retail level, health care facility retailers could be considered generators under RCRA and be required to properly characterize, store and dispose of pharmaceutical hazardous waste even when they make use of the pre-existing reverse distribution system. Pharmaceutical hazardous waste could not be sent to reverse distributors without compliance with burdensome and expensive RCRA hazardous waste regulations.  On the other hand, pharmaceutical non-hazardous waste could continue to be sent in the existing system, forcing health care facilities across the country to characterize all non-dispensable pharmaceuticals to determine the appropriate pathway for management – a service typically provided by reverse distributors.

The most efficient regulatory approach would be to expressly exempt pharmaceuticals that health care facilities, drug stores and other retailers return to reverse distributors from coverage under the RCRA until the reverse distributor makes credit and disposal determinations.  Such a federal rule will level the playing field of disparate state approaches and enable reverse distributors to take a consistent approach across all states it services.  Strong industry advocacy is needed now to help ensure the proposed rule reflects this approach.

In sum, without coordination and industry advocacy, the proposed rule may create starkly different approaches for nonhazardous pharmaceuticals and pharmaceuticals containing hazardous ingredients, if “generated” at a health care facility.  Further additional inconsistencies may abound between health care facilities and other retailers — essentially, a regulatory nightmare for all parties.