BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Wieckowski, Chair
                                2015 - 2016  Regular 
          Bill No:            SB 423
          |Author:    |Bates                                                |
          |Version:   |7/6/2015               |Hearing      |7/15/2015       |
          |           |                       |Date:        |                |
          |Urgency:   |Yes                    |Fiscal:      |Yes             |
          |Consultant:|Rachel Machi Wagoner                                 |
          |           |                                                     |
          SUBJECT:  Retail nonprescription surplus products:  
          determinations for reuse.

          Existing federal law:

          1)Under the Food, Drug, and Cosmetic Act, the Food and Drug  
            Administration (FDA) is authorized to oversee the safety of  
            food, drugs, and cosmetics.

          2)Under the Resource Conservation and Recovery Act (RCRA) of  
            1976, the management of solid and hazardous wastes is  
            regulated.  In the context of pharmaceuticals, RCRA imposes  
            strict protocols for the collection of controlled substances.

          Existing state law:  
          1) Under the Medical Waste Management Act (MWMA), administered  
             by the State Department of Public Health (DPH), 

             a)    Regulates the management, handling, and disposal of  
                medical waste, as defined, including pharmaceutical waste.

             b)    Defines "pharmaceutical" as a prescription or  
                over-the-counter human or veterinary drug including, but  
                not limited to, a drug as defined in the Sherman Food,  


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                Drug and Cosmetic Law or the Federal Food, Drug, and  
                Cosmetic Act.  "Pharmaceutical" does not include any  
                pharmaceutical that is regulated pursuant to either RCRA  
                or the Radiation Control Law; and certain items, such as  
                household waste, are specifically excluded from the  
                definition of medical waste.

             c)    Defines "pharmaceutical waste" as any pharmaceutical  
                that for any reason may no longer be sold or dispensed for  
                use as a drug and excludes from this definition those  
                pharmaceuticals that still have potential value to the  
                generator because they are being returned to a reverse  
                distributor for possible manufacturer credit.

             d)    Specifies that waste comprised only of pharmaceuticals  
                is hazardous, and is considered "medical waste," although  
                it is not subject to hazardous waste laws, as specified.  

          2) Under the Hazardous Waste Control Act (HWCA), administered by  
             the Department of Toxic Substances Control, regulates the  
             management, handling and disposal of hazardous waste, as  

          This bill:  

          1) Until January 1, 2022, would establish criteria to be  
             followed for the handling and management of retail  
             nonprescription pharmaceutical surplus products, as defined,  
             if a reasonable determination for reuse has been made or when  
             a reasonable determination for reuse cannot be made but the  
             product has been recalled as required by law. 

          2) Authorizes DTSC to adopt regulations as deemed necessary to  
             establish standards for the proper and safe handling of  
             retail nonprescription pharmaceutical surplus products.

          3) Declares the urgency of this statute.


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          Risks of pharmaceuticals in the environment.  A study conducted  
          by the United States Geological Survey (USGS) from 1999-2000  
          sampled 139 streams across 30 states and found that 80% had  
          measurable concentrations of both prescription and  
          nonprescription drugs, steroids, and reproductive hormones.   
          Since the USGS released its report in 2002, a number of studies  
          have demonstrated the low-level presence of pharmaceutical  
          agents throughout the environment and water supply.  

          While the human effects of pharmaceutical agents in the  
          environment are not fully understood, harm to aquatic organisms  
          and ecosystems due to low levels of pharmaceutical agents are  
          clearly established.

          As California further explores the re-utilization of water  
          through water recycling, prevention of contamination becomes  
          crucial to prevent public health exposure through water.

          Health risks associated with incineration.  Incinerators are  
          known to release numerous toxic chemicals into the atmosphere  
          and to produce ashes and other solid waste residues that  
          contaminate the air, water and soil as well as vegetation in the  
          vicinity of the facility.  Adverse health effects associated  
          with incineration are of great concern as large population  
          groups and workers may be exposed to derived toxic substances.    
          Many of these chemicals are known to be persistent,  
          bioaccumulative, carcinogenic or endocrine disruptors.  

          Populations living near incinerators are potentially exposed to  
          chemicals by way of inhalation of contaminated air, consumption  
          of contaminated foods, water or dermal contact with contaminated  
          soil.  Additionally, there are occupational hazards for  
          incinerator workers.

          1) Purpose of Bill.  According to the author, SB 423 is intended  
             to build on recent California legislation that has helped to  
             streamline the safe and efficient handling of  


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             pharmaceuticals, other health care products, and household  
             consumer products sold by retailers in this state.  The  
             author states that when these products are not sold at an  
             initial point of sale for various reasons, the products are  
             often processed at a reverse distribution center where the  
             center performs various activities such as consolidation,  
             repackaging, donation, disposal upon completion of any of  
             these management activities.  The author further states that  
             jurisdiction over these products at the point they are  
             considered discarded or recycled under current law, including  
             when they are considered stored or accumulated for discard or  
             recycling, can fall under either the California Medical Waste  
             Management Act or hazardous and solid waste provisions of the  
             Health and Safety Code.  The author asserts that this dual  
             jurisdiction has led to confusion in the regulated community  
             and threatens to undermine positive aspects of the reverse  
             distribution system for managing pharmaceuticals, including  
             over-the-counter pharmaceuticals and household consumer  
             products in California.

             The author states that multiple stakeholder discussions have  
             taken place on the issues of retail waste, including  
             over-the-counter pharmaceutical waste in California.   The  
             author believes that SB 423 would provide waste management  
             options that would reconcile the confusion over dual  
             jurisdiction by providing a unified waste management option  
             for the over-the-counter pharmaceuticals.

          2) The confusion over "pharmaceutical waste."  According to  
             federal and California law, a pharmaceutical is anything that  
             contains a "drug fact" label.  A drug fact label is affixed  
             to any product that makes a health claim.  These products  
             must meet specified federal Food and Drug Administration  
             ingredient testing, disclosure, labeling and verification of  
             health claim requirements.  This includes prescription and  
             over-the-counter drugs as well as some consumer products that  
             make health claims, such as sunscreen, toothpastes,  
             mouthwashes or lotions that contain sunscreen.  

             Pharmaceuticals are medical waste and are required to be  
             managed under MWMA, which is designed to ensure that medical  
             waste does not enter the environment and does not present a  
             risk to public health.


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             However, toothpaste, mouthwashes, lotions and other  
             over-the-counter products that do not contain drug facts are  
             not medical waste.  Depending on their characteristics and  
             risks posed they must be handled pursuant to either hazardous  
             or solid waste statutes, as defined and specified.

             Retail establishments argue that the various statutory and  
             regulatory requirements of when a product becomes a waste and  
             how it must be handled make it difficult for their employees  
             to determine the appropriate handling.  Additionally, MWMA  
             requires that medical waste be incinerated.  The retailers  
             argue that because of the complexity of the current  
             regulatory scheme, they are currently not separating products  
             that may be able to be donated or liquidated from those that  
             are deemed waste if there is any question that they may  
             instead be required to be disposed of, in order to ensure  
             that they don't violate the various statutory waste handling  
             requirements.  The retailers assert that the result is a far  
             greater than necessary rate of disposal/incineration of items  
             that could have been retained for their useful life.

          3) Striking a balance.  MWMA, HWCA and other state and federal  
             waste laws have specific requirements for handling,  
             transportation and disposal to protect public health and the  
             environment.  When alternative management standards are  
             adopted, the standards are narrowly crafted and contain  
             specific conditions for tracking, handling, transportation  
             and disposal to accommodate the unique nature of the  
             wastestream.  SB 423 recognizes the public policy benefit of  
             diverting more waste and crafts an alternative management  
             scheme that provides some flexibility within the statute for  
             the point at which this category of items is determined to be  
             a waste.  While it is important in providing this  
             flexibility, it is equally important that it be balanced with  
             appropriate tracking and accountability to ensure safe  
             handling and enforceability of the statute.

          4) Does this bill indicate (again) a need to reform MWMA for  
             pharmaceutical waste?  The California Legislature has heard  
             bills each year reforming the MWMA for the management  
             concerning the reuse of unused prescription drugs, transport  
             of unused prescription drugs from retails, take-back of  
             prescription drug waste for disposal, take back and disposal  
             of sharps waste.  Is this bill further indication that MWMA  


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             needs to be reformed to better accommodate pharmaceutical  

            Related/Prior Legislation
          SB 1014 (Jackson, 2014) would have required a producer of a  
          pharmaceutical sold in this state, individually or through a  
          stewardship organization, to submit a plan to CalRecycle by  
          January 1, 2015.  The plan would have needed to provide for the  
          development of a program to collect, transport, and process  
          home-generated pharmaceutical drugs and to include specified  
          aspects, including the minimum amount of collection sites,  
          including by January 1, 2016, at least one collection service  
          within 10 miles per person in the state.

          AB 1442 (Wieckowski, Chapter 689, Statutes of 2012) defines  
          pharmaceutical waste for purposes of the Medical Waste  
          Management Act, and exempts a pharmaceutical waste generator or  
          parent organization that employs health care professionals who  
          generate pharmaceutical waste from specified medical waste  
          hauling requirements if the generator, health care professional,  
          or parent organization retains specified documentation and meets  
          specified requirements and if the facility receiving the medical  
          waste retains specified documentation and meets specified  
          requirements.  This bill also authorizes pharmaceutical waste to  
          be transported by the generator or health care professional who  
          generated the pharmaceutical waste, a staff member of the  
          generator or health care professional, or common carrier, as  
          defined, pursuant to these provisions.
          SOURCE:                    California Retailers Association  



          None received  

           ARGUMENTS IN  
          SUPPORT:    Proponents for SB 423 state their support for SB 423  
          but have concerns where they seek additional amendments:


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          The purpose of SB 423 is to add a new provision of the Health  
          and Safety Code, relating to the reverse distribution of unsold  
          household consumer products, and to amend the California Medical  
          Waste Management Act (Act) to provide an alternative management  
          option for unsold non-prescription drugs. SB 423 is needed to  
          address regulatory confusion under current law regarding reverse  
          distribution and strengthen environmental protection programs at  
          retail facilities in California.  This legislation could  
          potentially create an opportunity for waste minimization by  
          chain drug stores and others that manage large volumes of unsold  
          consumer products and non-prescription drugs, also known as  
          over-the-counter pharmaceuticals (OTCs). 

          Current law can be read to require that all unsold consumer  
          products are potential solid, hazardous, or medical wastes at  
          retail locations unless the retailer knows with certainty at the  
          store that the product can be reused for its intended purpose or  
          reclaimed by thousands of original manufacturers.  The timing of  
          this knowledge does not match typical retail processes that rely  
          on reverse distribution to consolidate products for business  
          purposes, including potential donation, sale to third-party  
          liquidators, and waste minimization, prior to any decision to  
          discard the products.  Further, and related to this product  
          management, the Act can be read to require that OTCs must be  
          managed and incinerated as medical waste. 

          Currently, recycling or waste minimization is not an option for  
          OTCs because the Act can be read to mandate incineration.   
          Mandatory incineration for OTCs is excessive and contrary to  
          good environmental stewardship where there may be other options  
          for managing these products when they can no longer be sold to  
          the public. 

          Primary areas for further discussion should the bill move  
          forward include: 

           1) Regarding generator knowledge, retailers do not know at  
             retail locations whether a product will be donated or  
             liquidated.  The role of the reverse distributor is to help  
             direct the products for reuse or return to the manufacturer,  
             manufacturer's agent or vendor.  Thus, so long as the retail  
             location does not know that the ultimate disposition of the  
             product will be disposal, and the product is in a condition  
             that it can be reused, we trust this is sufficient knowledge  


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             by the retailer to qualify for the option. 

           2) Regarding licensing for reverse distributors and reverse  
             distribution centers, further clarification is needed to know  
             whether there is flexibility on these requirements because  
             reverse distributors under SB 423 should not need the same  
             licensing as those facilities under AB 1442 that are  
             accepting prescription and dangerous drugs for disposal. 

           3) Regarding transportation requirements, because retailers  
             will be shipping surplus products back in a manner like the  
             products are shipped to stores, we trust that the packaging  
             and transportation requirements for surplus product shipments  
             can match as close as possible current safe and secure  
             transport practices that must meet the requirements of other  

           4) Regarding product tracking requirements, we would hope to  
             rely on current shipping documentation such as bills of  
             lading to track surplus products.  Because these shipments  
             are valuable to retailers for credit, tax purposes and  
             inventory, documentation exists today to track these  
             shipments that could be used for purposes of SB 423.  We  
             trust there is flexibility on this point as well.
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