California enforcing broad “stewardship program” requirement for pharmaceutical companies

California’s Pharmaceutical and Sharps Waste Stewardship Act (Public Resources Code sections 42030 through 42036.4) requires the establishment and implementation of statewide programs for the proper collection, management, and disposal of covered pharmaceutical and home generated sharps waste products (collectively, “covered products”). The Act applies to manufacturers of any brand name or generic drug, sold, offered for sale, or dispensed in the state of California in any form, with some exemptions, as discussed below. If there is no manufacturer with ties to the state, the law then applies, in descending order, to distributors, repackagers, trademark holders, and importers of covered products sold in California (collectively referred to as “covered entities”).

The law required covered entities to have a stewardship program in place by January 7, 2022, that provides for the safe and convenient collection, transportation, and disposal of drugs as well as home-generated “sharps” waste, which includes hypodermic needles, lancets and other similar items. Companies had the option to adopt their own stewardship program or join a program established by a 501(c)(3) stewardship organization; in either case, the program had to be reviewed by the California State Board of Pharmacy, and then provided to CalRecycle by July 7, 2021 for approval.

To date, three stewardship organizations have submitted program plans to CalRecycle:

• As of June 23, 2022, CalRecycle approved MED‑Project USA’s plan, that represents more than 200 covered entities, with a requirement that it be fully implemented by September 5, 2022.

• The Drug Takeback Solutions Foundation program, which applies to roughly ten covered entities, was conditionally approved February 16, 2022, with the requirement that the plan be fully implemented by November 13, 2022.

• UltiMed, Inc. submitted its own plan for home-generated sharps waste. As of June 23, 2022, CalRecycle determined that UltiMed’s plan did not yet meet all applicable requirements, and asked for a revised plan to be submitted within 60 days.

Shortly after the effective date of the Act, covered entities were required to submit a list of covered products, as well as a list and description of any drugs or sharps that did not meet the definition of a covered product, to the California State Board of Pharmacy. These lists are required to be updated annually by the covered entity or a stewardship organization on behalf of the covered entity. Stewardship programs must also submit annual reports to CalRecycle that describe program activities during the previous year, as well a budget for the stewardship program for the following year. Covered entities are responsible for paying all administrative and operational costs associated with the stewardship program in which they participate, including the costs for the collection, transportation, and disposing of covered products as well as the quarterly administrative fee that covers the state’s costs in implementing and enforcing the Act.

CalRecycle has a “Pharmaceutical & Sharps Enforcement team” that provides compliance oversight and enforcement of the Pharmaceutical and Sharps Waste Stewardship law. The inspectors determine compliance through research and field inspections. This enforcement team has already sent notice letters to several companies doing business in the state, notifying them that they appear to be out of compliance with the Act because of their failure to have a stewardship plan in place. CalRecycle can impose administrative penalties up to $10,000 per day for non-compliance with the Act unless the violation is intentional, knowing, or reckless, in which case it can pursue administrative penalties up to $50,000 per day.

No later than June 30, 2022, CalRecycle was required to post the list of stewardship programs and covered entities that are in compliance with the Act, with the list to be updated annually thereafter; it is online here. Distributors and wholesalers of covered products, as well as pharmacies and other retailers that sell covered products are required to monitor the list, and to notify CalRecycle if it determines a covered product that it sells is from a covered entity that is not on the list. Covered entities that are not on the list, but demonstrate compliance with the Act before CalRecycle posts its updated list can seek a certification letter from CalRecycle stating that they are in compliance with the Act.

The Act contains exceptions for all biological products and all combination products that include a biological product, as well as for vitamins, supplements, herbal and homeopathic remedies, cosmetics, soap, household products (e.g., laundry detergent, cleaning products), personal care products, medical devices provided they do not contain a covered drug, animal medicines, solutions used for kidney dialysis, and drugs for which a pharmaceutical product stewardship program or drug takeback program is provided in the state as part of an FDA-required risk evaluation and mitigation strategy (REMS). Companies that are not sure whether their products may be exempt should consult with legal counsel and, as appropriate, prepare to respond to the California Pharmaceutical & Sharps Enforcement team, or alternatively ensure implementation of a state-approved stewardship program.

If you have any questions on complying with California’s Pharmaceutical and Sharps Waste Stewardship Act, or have already received a letter from the state’s Pharmaceutical & Sharps Enforcement team, you may contact any of the authors of this alert or the Hogan Lovells attorney with whom you generally work.

Authored by Diana Pfeffer Martin, Michael N. Druckman, and Tom Boer