Consumer healthcare products, including dietary supplements, consumer medical devices, and OTC medicines, are some of the most highly regulated products in America today. As global climate change becomes a greater focus of policymakers around the world, over-the-counter healthcare manufacturers are seeing more environmental regulation coming their way. What exactly are states considering? How will this impact medicine affordability? And how can manufacturers lean in to become more environmentally compliant and friendly? Join CHPA’s Carlos Gutierrez, Vice President, State & Local Government Affairs, Adam Peer, Senior Director, Packaging and Consumer Markets, American Chemistry Council, and Andy Hackman, Principal Lobbyist, Serlin Haley during this episode of CHPA Chat.
- Episode Transcript
Anita Brikman: If you manufacture a consumer healthcare product, which a lot of our audience does, I'm also guessing you probably package it in plastic, but plastic is under a lot of scrutiny these days, especially by state lawmakers. Nobody wants more plastic in the environment, but laws are being past in the states that require manufacturers to pay for the recycling programs. What will that mean for what consumers pay when they buy one of our products and how can companies lean in right now to become more environmentally compliant and friendly. Lots to talk about in today's CHPA Chat.
Speaker 1: Welcome to CHPA Chat, conversations in the consumer healthcare industry with Anita Brikman.
Anita Brikman: Hello, everyone, consumer healthcare products like dietary supplements, consumer medical devices, and over-the-counter medicines, they are some of the most highly regulated industries in America today. And if you think about it, they should be. FDA regulation is important. It provides consumers with peace of mind that these products they're using for minor ailments are safe and effective. Regulation of consumer healthcare products though is now entering a new territory. As global climate change becomes a greater focus of policymakers around the world, over-the-counter healthcare manufacturers are seeing more environmental regulation coming their way. In the United States, ground zero for new environmental regs have been in the states, whether it's pharmaceutical drug take back, sunscreen bans in Hawaii or limits on plastic package, the American states are beginning to act quite aggressively on issues related to the environment. To talk with us about these very important issues, we have a great panel of experts who've been on the front lines of these state debates.
Anita Brikman: Adam Peer is senior director for packaging and consumer markets with the American Chemistry Council. Another trade association here in Washington, DC. This one comprised of chemical companies, including manufacturers of plastic and plastic products. Andy Hackman also joins us as a principal lobbyist for Serlin Haley, a government relations firm that does work for clients in multiple state capitals and city halls. Andy himself was at the forefront of groundbreaking legislation in Maine that created a first of its kind extended producer responsibility law for paper and packaging waste. Andy, you're going to have to explain that to us. And of course we have Carlos Gutierrez, vice president of State and Local Government Affairs for CHPA and a frequent guest on CHPA Chats. He is our chief state and local lobbyist and has vast experience in dealing with environmental regulation of consumer healthcare products. Gentlemen, thank you for joining me.
Carlos Gutierrez: Thank you, Anita. Good to be here.
Andy Hackman: Thank you.
Adam Peer: Thank you.
Anita Brikman: Carlos. I'm going to make you my first victim. Paint a picture for us if you will. What exactly are states doing related to environment and what does this mean for our industry?
Carlos Gutierrez: Well, I can really only speak for about the last decade. I started at CHPA in 2010 and pretty much right upon starting, we started hearing rumblings, particularly out west in California, from local governments, county governments expressing concern about pharmaceuticals in water. Now, the topic of whether or not we need to be concerned about that is an entirely different podcast, but at the end of the day, there are pharmaceuticals in water. They get there primarily because Americans take medicine, they don't always metabolize them entirely. We pass them through our bodies and they end up in the water.
Carlos Gutierrez: Now EPA has spoken to this, FDA has spoken to this. There are in very small trace amounts. We're talking about parts or trillion and they have no health impact on humans. The environmental community, however, was still concerned that they could have an impact on ecology. So they started making manufacturers pay for the disposal, the take back, if you will, of pharmaceuticals. We started to see that in California, that has now how extended to Oregon, Washington, New York, and most recently in Maine, then fast forward to about 2015 and Hawaii started talking about banning sunscreen. And that is as ironic a statement as you can make, sunscreen and Hawaii, but they had concern with their coral reef and they were suggesting that their coral was bleaching as a result of sunscreen getting to the coral and damaging it.
Anita Brikman: Sunscreen in the water from people swimming in the beach.
Carlos Gutierrez: Exactly. The vast majority of scientists around the world have said, it's a function of warming waters, global climate change. That's why coral is having a rough time right now, nonetheless, they went forward and banned two ingredients, octinoxate and oxybenzone. They're found very popular ingredients in sunscreen. As recently as the end of last year, the County of Maui extended that sunscreen ban of octinoxate and oxybenzone to include all chemical sunscreens. And that's a big concern. The rates of melanoma in Hawaii are really high. And they're talking about banning about 85 to 90% of the sunscreens that are on the market today. So then fast forward to just the last two or three years, and it's extended beyond just ingredients in consumer healthcare products. And now they're focusing on the packaging that these products are sold in.
Carlos Gutierrez: And so just again, I'm sure we're going to speak more about it later in this podcast, but also last year, the states of Maine and Oregon passed groundbreaking legislation, which essentially shifts the costs of recycling from local government to the manufacturers of products in general. So that's the evolution I'd say over the last decade, it's not going anywhere. It's going to continue. I think so long as climate change is a point of discussion, states and localities are going to act, especially if the federal government continues to be a little slow to respond to that issue.
Anita Brikman: This can't be an easy side to be on for you Carlos. We're talking about coral reefs, the environment, keeping pharmaceuticals out of the water. What has this meant as far as the time and effort it takes to paint an accurate picture of the true health impact of some of these evolving trends?
Carlos Gutierrez: It takes a lot of education because it's a very complex issue. It's a very easy to say, I want to be on the side of coral. Everybody wants to be on the side of coral. No one wants to damage it. But at the end of the day, you do have to rely on science. And the science really has been on the manufacturer's side. Unfortunately, the politics has been more on the environmental side and so slowly but surely they have been able to pass legislation, which we think is going to have an adverse impact on consumers and on the cost of consumer healthcare, otherwise affordable consumer healthcare, but it's just an ongoing process. We have to be out there. We have to continue to educate lawmakers and the public as to really what's at stake. And there is an appropriate way to do environmental policy.
Anita Brikman: Andy, Carlos mentioned legislation. And in the intro we mentioned your work in Maine and the passage of legislation there, what is that law designed to do?
Andy Hackman: Yeah. And there were definitely two different visions on how to address this issue about having manufacturers involved in funding for recycling of packaging. The whole goal is to in essence, truly make manufacturers in some regards either financially or also operationally responsible for recycling, packaging or their entire product at the end of its life cycle. It started in areas where there were hard to manage materials like tires, household hazardous waste, mattresses and carpet were the floor runners in this, where there was an actual concern about the product as it entered the end of its life cycle. This is really the first time we've seen in the United States effort by government and stakeholders to have manufacturers responsible financially for paying for the recycling of packaging. And so it was certainly an intense debate in Maine.
Andy Hackman: We offered two different perspectives on where we thought there could be an effective reform to the recycling system in Maine, largely it's a system that represents the status quo and the law that passed unfortunately, a number of industry players, including some that part and CHPA's members were involved in trying to reframe that debate because as it stands now, the law in Maine will truly just fund existing activities and fund municipalities for what they're doing right now. And we had hoped for a law that would function in a way that would change the system and bring more materials into the recycling system. But at the end of the day, the legislature chose to really put a bandaid on the current situation. So it's going to be a continuing evolution as the law is implemented, but the vision as the legislature passed the bill is that manufacturers essentially are going to be taxed. And that funding will flow to a third party organization and the funding will then be formulaically dispersed out to municipalities.
Anita Brikman: Andy, but if I'm the average voter living in Maine or elsewhere, and I hear you say, okay, big business is going to have to have extended responsibility for the packaging they produced in the first place and shoulder that cost. I may not think that's a bad idea that business should pay for that, but you said they are being taxed. What does that mean for how much the product costs, how's all going to work?
Andy Hackman: Yeah. It's the dynamic where the consumer believes that this is a good thing to do. And that was echoed in the legislature. The legislature said, we need to have these out-of-state companies pay for the cost of disposing and recycling their wasteful packaging. That was certainly the mantra, but it really doesn't get to the heart of how a system operates for recycling. And it doesn't get to the fact that cost inputs are going to be passed along to the consumer. That's how capitalism works. It's how the pricing of goods work as we are seeing the effects of inflation right now, and supply chain issues impacting consumer goods. I think 6.2% was quoted last year, and it's definitely something that will be factored into the cost of those goods. And I think as a consumer or a taxpayer in a particular state that moves forward with these policies, we want to ensure that the system is getting better as a result of more funding going into that.
Andy Hackman: And the taxpayer is not going to see in Maine in particular, recycling is funded via property tax. Municipalities collect property tax from citizens, and then use that for obviously different government services. In this case, recycling is one of those services. There's not going to be a single dollar return to consumers in Maine, as a result of this law passing yet there is going to be millions of additional dollars put into the recycling system. So as a taxpayer that's still vested in the system of recycling and not seeing my costs go down, I would want to see the recycling system necessarily and mandated to improve as a result of this law passing. And what's most likely to happen is the funding will come in for manufacturers.
Andy Hackman: The price of goods will go up to reflect the cost of that program being implemented in Maine. And the municipalities will use that money to fund existing recycling operations and then shift funding into other programs. And the transparency is not going to be there in terms of delivering on a better recycling system that consumers will see necessarily in the state of Maine. We certainly think there are ways to have a system or extended producer responsibility work in a way that does that, but the way the law is crafted right now in Maine, we don't expect that to happen.
Carlos Gutierrez: And Anita, that's an important point by the way for an industry like ours, consumer healthcare, where the average cost of a medicine or a dietary supplement, what have you is around eight dollars in change. I don't know what this new program is going to cost, but like Andy suggested it's going to be passed on to the consumer. And so what used to be eight dollars in change may now be $10 in change. And that may not seem like a big deal, but for people on the margins, it's a really big deal. And whether or not they're going to go and seek treatment for a common ailment, which could then turn into an infection, which then requires you to go to the doctor or go to the emergency room. It could become really problematic, at least in healthcare. We try to convey that to lawmakers. They may not sound like a lot. We really don't know how much that's going to be, but it will have a pretty profound impact on people's lives, particularly those that are...For common elements, the role that consumer healthcare products play.
Anita Brikman: Absolutely. And it is a big deal Carlos, Adam, we haven't heard from you yet. Why this kind of laser focus on plastic? Is it dangerous? Is it that all kinds of plastic can't easily be recycled? I don't know much about it.
Adam Peer: Well, I think you've illustrated a common misperception. Plastics are a sustainable material and play an important role in our society. It produces less greenhouse gas and alternatives because it's lighter to transport and it requires much less material to perform the same function, which is an important benefit. Plastics should never be in the environment. I think we can all agree on that and proposals to ban or restrict plastics may be well-intended, but they're very misguided. The alternatives have a greater environmental impact than plastics. And when states and local governments produce bans and restrictions, it only sets us back. Instead, we should really be focusing on creating a more circular economy by finding ways to increase recycling and bolster end markets for plastics and all materials.
Anita Brikman: All right. What you've said, plastic is a good packaging material and it's critical in the way consumer healthcare products are packaged. In fact, the FDA mandates certain types of packaging for over-the-counter medicines to ensure that they're safe, the quality is there, they're stable. And on top of that, we've got the Consumer Product Safety Commission weighing in. So these kinds of changes in the way they package their products could be really tough for our manufacturers but are there new technologies on the horizon that could help them do that? To still meet these rules and regulations, but reduce that environmental footprint so to speak that legislators are so worried about?
Adam Peer: Yeah, absolutely. And again, plastic is a sustainable material. I don't think anybody wants to go back to glass IV bottles. Again, compared to alternatives, many times plastic is two and a half times lighter to transport, which leads to less greenhouse gas emissions. And the exciting thing is that advanced recycling is going to make plastics even more sustainable. In fact, there are seven and a half-billion dollars worth of investments in advanced recycling. Advanced recycling allows us to bring greater volumes and types of plastics into greater circularity. And that's why ACC is calling on Congress to require that plastic packaging contain 30% recycled plastics by 2030. And in fact, more than 400 brands have announced that they want more recycled material in their packaging. So the demand is definitely there. And advanced recycling is critical for helping all of us to meet those demands.
Anita Brikman: And how do they do that? How do you change the makeup of the plastic in your products? Is that a long-term process? Is it costly?
Adam Peer: Well, one of the important things it's going to be is working with the value chain to look for more opportunities to incorporate recycled plastics into packaging. And that's the best way that we can help reduce plastics' environmental footprint is by finding ways to bring it back into circularity. The exciting thing about advance recycling is that the feed stock is more virgin like which allows you to put it into a greater amount of packaging products.
Anita Brikman: Okay. When you say virgin like, you mean more like the original, so is it, it's safe, it's not contaminated, right?
Adam Peer: Yeah. And I should clarify the output of advanced recycling is virgin like which allows you to put it into more packaging products.
Anita Brikman: Got it. Okay. And you said there is a demand for this?
Adam Peer: There is. Over 400 brands have announced that they want more recycled content in their packaging. And advance recycling is one of the ways that we can help those brands meet their obligations.
Anita Brikman: All right. It sounds like industries getting on board, but Andy, you've got states out there like Maine and Oregon that are already shifting the cost of recycling and disposal to the private sector. I'm going to ask you to pull out your crystal ball. Do you have it ready? Do you have your crystal ball? Just kidding. All right. Is this just the beginning? Do you polish it weekly? Well, any good lobbyist does, as I know, Carlos has several in his office. All right. Do you expect other states to follow suit in this trend of shifting the cost and responsibility?
Andy Hackman: Yeah. I definitely think that there's going to be the introduction of probably another dozen or so bills in 2022 here. I would predict there's a high likelihood that one or two will potentially move forward this year. The real question is, will be the continued intersection with inflation. I think there's a sensitivity to that now that will impact this issue in ways that it did not last year when we were debating it. But I do think the issue-
Anita Brikman: So you mean Andy, now that things are already costing so much more, people are going to say, wait a minute, just adding that couple extra dollars on top of what more I'm paying that may shift some of the debate.
Andy Hackman: I think it may shift some of the debate. And I think even if we had had the significant inflationary factors in front of the public in April or May of 2021, we may have seen more change to the laws in Oregon and in Maine particularly. But I don't think it's a guarantee that this issue is going to go away. The recycling system continues to be challenged in finding markets for certain materials. And there continues to be the perception, at least in the public that there needs to be something done about this and the perception that our recycled materials go overseas, whether or not that's completely true anymore or not. But the perceived problems in flaws in the recycling system, there's definitely a belief that needs to be fixed and that's galvanizing policymakers. I think there will be perhaps some additional consideration given as these laws are considered in this coming year.
Andy Hackman: But I think that the overall trend is that we're likely to see a couple of more states adopt packaging EPR bills in 2022. And there continues to be interest at the federal level as well in this area of policy, whether or not we'll get to a federal legislative package on this issue. Typically as you see issues bubble up in the states, there begins to become some norms that are set in different states and occasionally that results in federal legislation. I won't predict yet if that's going to happen here, but I definitely think the dialogue is growing, not just at the state level, but also at the fed federal level.
Anita Brikman: Carlos, you mentioned drug take back, sunscreens, kind of where all of this started before it shifted to packaging, going back to those issues, what do you expect this year into 2022?
Carlos Gutierrez: Well, there's currently five drug take back statewide laws in place in Oregon, California, New York, Maine, and Washington. We've had the states of Rhode Island, Massachusetts, Hawaii, and Illinois all consider it as well. And I expect them to continue in 2022 to at the very least file a bill debate it. And then just depending on the priorities of the legislature, whether or not they get passed. In terms of sunscreen, fortunately, it's only been Hawaii that has really acted on this, Key West acted on it in the past, but the state determined that they didn't have the authority to do that in Florida. I don't expect that to move beyond what is happening in Hawaii. Now, what Maui passed in 2021 and late 2021 about this expansion of the band to include all chemical sunscreens that could very well move on to the big island and some of the other islands in Hawaii. But I don't, I don't anticipate that that's going to move beyond the state of Hawaii.
Anita Brikman: Can tourists still bring it with them?
Carlos Gutierrez: That's a good question. The way the statewide bill is written, it is only a ban on the sale, but the way that Maui wrote their ordinance late last year was to include use as well. So I don't know how they're going to enforce that. I don't know how you enforce that even, if people are bringing it in from the mainland, but I think it's a poorly written ordinance. I don't think it'll be enforced and we've heard testimony to that effect. And I think they view it as more look, we just want it in writing, it'll change behavior over time. And so we'll see how it nets out.
Anita Brikman: All right. So all three of you, as we get ready to close out this podcast, some final thoughts, you all either advise your trade association, your member companies. If right now you were saying to a company about the importance, the imminent risk involved with this environmental movement in the states, what advice would you offer to private companies? How big of a deal is this number one, and number two, what should they be doing in their own manufacturing processes to get ready for this? Andy, can we start with you?
Andy Hackman: Sure. I think these issues are here to stay and the depth and breadth of state legislatures engaging in these issues are certainly going to continue to be at the forefront of the sustainability movement across the board impacting companies. And I think there has been a continued shift in some legislatures for better or worse, into different sectors in terms of political interest in these issues. And I think just given the dichotomy of views that we've got right now, companies are going to have to prepare for potential compliance in a number of different jurisdictions. And I think in terms of best practices for companies, one communication within your supply chain is going to continue to be critical and help manage your own destiny with a vision of what the future's going to look like and how you're going to achieve goals and compliance in some of the states that have programs that will have a definite regulatory hook, and really understanding your product supply chain and the packaging sector in particular, and the ability to meet some of the obligations in these different states.
Anita Brikman: Adam, your thoughts.
Adam Peer: Well, I would encourage everybody in the value chain to keep leaning in. Some of the policies that we're promoting to support are things like the 30% by 2030 national recycled plastic standard. And we're also encouraging states and the federal government to modernize the recycling regulatory system to develop a more circular economy. These are things like supporting advanced recycling legislation. We also need national recycling standards for plastics, so that we're all playing from a level playing field, and we're using common terms and denominations, and we also need to continue studying the impact of greenhouse gas emissions from all materials to make sure that we're pursuing evidence-based policy. And so these are just some of the things that we're asking policymakers to support the value chain as they lean into using more recycled content to bring us closer to a circular economy.
Anita Brikman: And Carlos, last question for you, if our companies lean in, if we have a story to tell that industry is leaning in and trying to do the right thing, even while making sure they're meeting all of the regulatory requirements of the packaging around the medicine, does that make your job easier?
Carlos Gutierrez: Well, it's always great to have a story to tell. And as we go around the country and educate lawmakers on the complexities of packaging, particularly for consumer healthcare products that even if we wanted to change our packaging tomorrow, we couldn't necessarily do it. We would have to get it tested. You had mentioned the consumer product safety commission earlier. So even if we wanted to change it, we can't just do it overnight. So as to crafting legislation, lawmakers please be aware of that, that things can't happen overnight for a variety of reasons beyond just environment. You can't really look at this strictly as an environmental law that you're passing, but also safety of medicines and efficacy of those consumer healthcare products. It's very complex. We just got to be out there educating lawmakers.
Carlos Gutierrez: And Andy can speak to this, can be a pretty tough, daunting thing to do when there's so much turnover in states, but it just requires being on an airplane, getting out and real, always being at the table. The days of ignoring this as an issue are over they're here. And so for companies, I would encourage having some sustainability program in place. And like the other panelists said really lean into this. It's not only lawmakers that are expecting this, but I think surveys have shown even consumers are now expecting this. In the end, it's it even becomes a marketing tool for manufacturers.
Anita Brikman: I was going to say, you see it in marketing more and more. I received something in the mail the other day where it was like same product, less packaging. That is part of the cell that you're getting what you always did, but with less of a footprint. So wow. Very insightful conversation. And I want to thank all three of you for joining me. Clearly, we all want what's best for the environment. There's no doubt about that. And we all believe climate change is real and needs to be addressed.
Anita Brikman: It is critical, however, though, that policymakers understand the consequences of these types of laws and that they will undoubtedly have an impact on not only what the consumer pays, but there is a potential impact on the safety and effectiveness of products as well. A truly complex issue. We all want to address the environment's degradation. We have to, but we need to do so in a carefully thought out manner that doesn't compromise the integrity of medicine, dietary supplements, and medical devices. So many millions of people and families rely on. That is another edition of CHPA Chat for Carlos, Andy, and Adam, I'm Anita Brikman. See you next time.
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