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Long-Awaited Reverse Distribution Rule Signals Big Changes for Healthcare Facilities, Reverse Distributors


Got hazardous waste? Many healthcare facilities do, in the form of medications that have passed their expiration date or were refused by patients. On August 31, 2015, U.S. EPA Administrator Gina McCarthy signed the Management Standards for Hazardous Waste Pharmaceuticals, a rulemaking slated to be published in the Federal Register in the next few weeks. The rule has been under development since 2008, when a prior version was proposed, and seeks to clarify the requirements under federal hazardous waste regulations (specifically those developed under the Resource Conservation and Restoration Act, known as “RCRA”) to pharmaceuticals that have not been prescribed to patients for their end purpose. While simplifying the patchwork of existing state policies, the new rule appears broader than prior proposals, and creates new recordkeeping and notification requirements.

The traditional RCRA Subpart C requirements for hazardous waste—requiring registration of sources based on the amount of waste generated; hauling by licensed hazardous waste haulers; and storage only at licensed treatment, storage, and disposal (TSDF) facilities—is ill-fitted to hazardous pharmaceutical waste generated at healthcare facilities. For example, at a typical RCRA-regulated manufacturing facility, hazardous waste is generated in large, predictable volumes at certain points of the production process and is overseen by trained personnel. In contrast, pharmaceutical hazardous waste generated at a healthcare facility is generated in small, unpredictable amounts, at unpredictable locations and frequencies, and by any number of individuals who are not trained in hazardous waste disposal regulations. Additionally, many pharmaceutical products themselves are often shipped by healthcare facilities to third-party “reverse distribution” centers, where manufacturer’s credit is assigned before disposal. Some products may be shipped to one reverse distributor, which—depending on the type of medication—may in turn ship it to a secondary (or even tertiary) reverse distributor for assignment of credit, after which the medication is evaluated for disposal.

To address these differences in the pharmaceutical arena, EPA proposed in 2008 to classify pharmaceutical waste as “universal waste”—similar to fluorescent light bulbs and other waste types containing only small amounts of hazardous materials. That proposal was criticized for having insufficient notification and tracking requirements so as to address the risk of diversion given the high value of many unused pharmaceuticals. In response, EPA decided to not add hazardous waste pharmaceuticals to the universal waste program.

Instead, EPA is now taking a sector-specific approach by proposing a separate set of regulations that would be applicable to hazardous pharmaceutical wastes managed by healthcare facilities and pharmaceutical reverse distributors. In particular, EPA has proposed new regulations, to be codified at 40 CFR Part 266, Subpart O, with the goal of avoiding application of the full Subpart C requirements to healthcare facilities that produce small quantities of waste on an unpredictable basis, and addressing the potential for dual regulation of pharmaceuticals under both RCRA and Drug Enforcement Agency (DEA) requirements, including the high cost of disposal and the risk of diversion.

EPA also states that the proposed rule has another goal—to protect waterways by reducing the amount of pharmaceuticals that are currently being flushed down drains. The Agency cites studies that have found many healthcare facilities routinely use drain disposal to dispose of pharmaceutical wastes. Under the proposed rule, there would be a sewer ban on all hazardous waste pharmaceuticals managed by healthcare facilities and reverse distributors—including those facilities that generate very small amounts of this waste, and thus would generally not be subject to the rule.

EPA’s proposed rule has broadened the scope of regulation from the earlier 2008 proposal in several key respects. First, EPA defines pharmaceuticals to include medication, dietary supplements, and any items containing pharmaceutical residuals, such as IV bags, unit dose packages, personal protective clothing contaminated with medications, and any spilled materials. This broadened definition means that the rule covers IV bags and other waste containing trace pharmaceuticals generated at long-term care facilities such as nursing homes that in the past were exempted from RCRA regulation as household waste. Second, EPA also proposes to broadly define waste to include not only pharmaceutical containers or damaged medications, but all medications sent by a healthcare facility to a reverse distributor, regardless of whether they are eligible for credit. Third, EPA proposes numerous additional requirements for reverse distribution facilities, including notification to EPA; requiring all shipments be evaluated for hazardous waste content within 21 days of receipt; maintenance of records of all shipments received and maintenance of an inventory of all potentially creditable waste materials; and additional security, closure, and reporting requirements for such facilities.

By issuing this sector-specific pharmaceutical hazardous waste rule, EPA seeks to bring consistency to the varying approaches currently taken by states. For example, Michigan and Florida consider unused pharmaceuticals to be universal wastes subject to 40 CFR Part 273, while Minnesota treats all such medications as hazardous waste as soon as they enter the reverse distribution pipeline. At the same time, the EPA rule will undoubtedly create new and significant recordkeeping and tracking requirements for healthcare facilities generating that waste, as well as for reverse distribution facilities.

Upon publication in the Federal Register, the rule will be subject to a 60-day public notice period. All comments received from interested parties will need to be addressed by the Agency at the time the rule becomes final. If you have questions regarding the proposed rule, or would like to evaluate how the proposal will affect your healthcare facility, please contact Peter Tomasi at (414) 277-5677/peter.tomasi@quarles.com, George Marek at (414) 277-5537/george.marek@quarles.com, Lauren Harpke at (414) 277-5183/lauren.harpke@quarles.com, or your local Quarles & Brady attorney.

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