Yesterday, the European Parliament approved a new (recast) Urban Wastewater Treatment Directive (“UWWTD”) that will impose new additional costs on producers marketing pharmaceutical and cosmetic products in the European Economic Area by the end of 2027.  Some studies suggest that the costs that producers would have to collectively pay could be around €1 billion per Member State.  This is well above the figures published in the Commission’s impact assessment, which estimated the annual cost of implementing the various requirements of the UWWTD in all Member States at €3.8 billion, including €1.2 billion for micro-pollutants treatment.

The upcoming UWWTD lays down rules on the collection, treatment, and discharge of urban wastewater, and puts particular emphasis on the implementation of the polluter pays principle.  The Directive aims to address the environmental and health concerns resulting from the presence of micro-pollutants, other pollutants (e.g., heavy metals, PFAS), microplastics and antimicrobial resistant (“AMR”) bacteria in European waters.  It introduces new measures for the treatment of wastewater, including quaternary treatment for micro-pollutants, and makes producers of pharmaceutical and cosmetic producers pay for such treatment.

Extended Producer Responsibility on Producers of Pharmaceuticals and Cosmetic Products

In particular, the UWWTD obliges EEA Member States to require producers who place on the market products falling within the scope of the EU Medicines Directive and EU Cosmetics Regulation to pay for:

•  at least 80% of the full costs, including investments and operational costs, of the required quaternary treatment of wastewaters to remove micropollutants; and
• 100% of the costs of gathering data on products placed on the market and other associated costs necessary to ensure the payment of the quaternary treatment costs.

Micro-pollutants are substances (and their breakdown products) that are usually present in the aquatic environment, urban wastewater and/or sludge and that are hazardous to human health or the environment in accordance with the CLP Regulation even in low concentrations (less than one microgram per litre).

A Recital of the UWWTD emphasizes that producers marketing pharmaceutical and cosmetic products in the EEA must pay for the wastewater treatment costs independently of whether individual components of the products were manufactured in a Member State or third country, or whether the producers have a registered office in the European Union, or the products are placed on the market via digital platforms.

The UWWTD requires Member States to exempt producers if they can show that they meet one of the following two conditions:

1. the quantity of the substances contained in the products they place on the Union market is below 1 tonne per year; or
2. the substances in the products they place on the market are rapidly biodegradable in wastewaters or do not generate micro-pollutants in wastewaters at the end of their life.  The Directive requires the Commission to adopt detailed criteria (including on biodegradability and hazardousness) to assess what products can benefit from this exemption.

Obligation to Join Collective Producer Responsibility Organizations

Member States must ensure that producers of pharmaceutical and cosmetic products comply with the extended producer responsibility obligations by joining collective producer responsibility organizations (“PROs”).  Each producer will be required to:

1. report to the PROs the annual quantities of pharmaceutical and cosmetic products that it places on the market, the hazardousness of such products, and whether they benefit from the exemptions mentioned above; and
2. pay a contribution to the PRO that must be based on the quantities and hazardousness in the wastewaters of the substances contained in the products that are placed on the market.

PROs will be required to publicly disclose the information on the financial contributions paid by producers.

In addition, producers are defined as including professional importers and distributors and the rules are triggered by the first making available of a product in a specific Member State.  Local distributors and parallel importers can thus also be covered.

Next Steps

The Council is expected to formally adopt the text of the UWWTD during the second quarter of this year.  Thereafter the Directive is expected to be published in the EU Official Journal and to enter into force in the third quarter. 

Member States will be required to adopt national legislation transposing the requirements of the UWWTD within 30 months from the entry into force of the Directive (i.e., first quarter of 2027).  By the end of 2027, Member States will have to establish PROs for producers of pharmaceutical and cosmetic products and ensure that these producers comply with their extended producer responsibility.

Producers of pharmaceutical and cosmetic products should monitor the Commission’s adoption of criteria on hazardousness and biodegradability on the basis of which products can be exempted.  They should also closely monitor the national transposition of the UWWTD’s requirements in those Member States where they market their products.  The provisions of the Directive are sufficiently ambiguous to allow for significant variations on the PROs and the amounts that individual companies will have to pay.  For example, it is still unclear whether the PROs should be public or private bodies and the determination of the exact costs may vary considerably from country to country.

There may also be legal challenges of key aspects of the Directive, such as the singling out of pharmaceutical and cosmetic sectors for extended producer responsibility.