Pharma’s Alternate Solution to Disposal
Circular supply chains, the management of waste, obsolescence, and excess, have been challenging for pharmaceuticals to institute. Traditional disposal methods have dominated all forms of waste, surplus, and obsolescence from production to R&D. Many of these pharmaceutical operations consider the disposal of excess materials and hazmat waste as “the cost of doing business.” What is the cost, though? Patients paying for write-offs? Eventual environmental release of materials? Costly disposal fees? This has been the status quo perception toward this problem that has kept progress fairly stagnant. Nearly every industry had the same view in the mid to late 20th century. However, Superfund laws, offshoring, and sinking profits forced many industries to change the way they did business over the last 40 years. Many of them now prioritize reusing, recycling, re-appropriating, and reselling over the last resort of paying for disposal. It was an “adapt or die” call to action to survive in a changing world.
Pharma is slowly turning the corner, but the journey has a long way to go. The industry as a whole is highly profitable, and that can sometimes slow down progress on improving sustainability programs. Progress has undoubtedly been made in areas of forecasting, green chemistry, and single-use, but not nearly to the degree of other industries. Waste and obsolescence have different challenges for them, making it a multi-faceted effort. However, I believe pharmaceuticals has the potential to improve greatly.
Pharmaceuticals account for roughly $3B annually in written off starting materials. The number is likely higher for equipment and staggeringly higher for finished products. Pharma has the unique issue of dealing with shelf life products that are not only expensive, but are hazardous to the environment. Typically, costly items are finished capital assets such as equipment or tools where the lifecycle wears down through large amounts of time and use. If unused, it retains its value well over time. More importantly, these items are usually metal-based and have a far less impact to the environment than many of the starting materials used to make medicines.
Conversely, shelf life products are usually associated with foods and other consumables which are relatively cheap and biodegradable. Pharma has the unique position of managing complicated and expensive starting and finished materials that succumb quickly to expiration and are difficult to dispose of responsibly. Any chink in the supply chain that delays the movement of these goods encroaches on that expiration date. This makes those materials less valuable or quickly obsolete and presents an environmental problem when disposed.
Pharma has generally handled this problem using 20th century standards and thinking. When finished products are deemed unsellable, or starting materials unusable based on internal needs, pharma often disposes of these products through 3rd party vendors. Disposal companies usually charge a hefty price to either landfill or incinerate these products and wastes. These disposal companies may even resell some of the products to recyclers without ever compensating the pharma company who paid for them to be disposed. While these third-party companies are licensed to handle hazardous waste, title and liability of these products never transfer, which creates a risk to inevitable changes to current environmental laws.
So why haven’t lawmakers tried to help or provide guidance? In reality, lawmakers do not know much about the problem. Governmental agencies, such as the EPA, have made only modest progress to guide hazardous waste and disposal efforts as a whole. While many of these laws were successful in outlawing certain disposal practices, they were never meant to solve all related issues.
The EPA got off to a great start in the 1980s when they instituted the Toxic Release Inventory (TRI) as a mandatory program to make the public aware of the quantity and type of certain hazardous chemicals that have been released to the environment by specific organizations. While this was good at the time, this system still has a few holes that prove how much we still don’t know about waste and disposal handling. 1) Large Thresholds. TRI thresholds are so significant in quantity that only original suppliers of chemicals and waste management companies can typically reach them. This leaves out a vast demographic of large manufacturers who may dispose on-site or who use third parties. 2) Units of Measurement. The TRI sets thresholds using pounds. This can be a poor indicator of toxic release. There are far more potent releases that have considerably less weight. 3) Physical Release. You’ll note that most of the companies are chemical manufacturers and waste disposal organizations due to the high thresholds that have to be met. While this data is certainly helpful, it misses companies who have true responsibility, e.g., using companies and distributors who purchased the material for use.
The biggest issue with traditional disposal methods and programs are how they put an emphasis on end-of-life disposal or recycle rather than reuse. Many of these starting and finished materials continue to have significant market value for several organizations. A majority are still cGMP compliant if traceable and not expired. Instead of being resold or donated to enrich the life science community, disposal companies are made more fruitful.
There are other solutions rather than disposing of materials, equipment, and wastes that still have value through costly third-party vendors. Those traditional methods had a place, but more options now exist. The current state of the industry is to PAY TO HAVE QUALITY OUTDATED PRODUCTS INCINERATED OR PUT INTO A LANDFILL. Does that sound like a good current state in 2019? Patients, stockholders, and communities want to know their pharma companies are aspiring to achieve Sustainable Development Goals (SDGs,) make prices lower, pollute the Earth less, and be more involved in their communities.
How do you get involved? The industry is continuing to progress utilizing green chemistry, forecasting, and sustainable procurement techniques in order to be more efficient and leaner. However, these do not address the inevitable physical waste problem through demand volatility. A different tool or program is needed to react to the unpredictability of demand that ultimately will lead to excess or stockout scenarios. It starts with understanding your disposal process:
1. Who makes the reserve or write-off decision on products?
2. Who decides what is to be disposed, what still have market value, and is no longer useful to the company?
3. Who decides how it will be disposed?
At RawConnect, we help pharma organizations establish a solution that leverages our online marketplace of qualified buyers for these types of excess and obsolete products. It is our call to action to augment your current waste disposal process with our marketplace and services to ensure you can always resell or donate these products rather than paying for third party disposal. RawConnect has life science experts that will analyze your product data and find you the perfect buyer with the right terms to find a home for your products that still have value. We will find someone outside your organization to purchase for another use whether production, recycling, research, or other valuable application.
Contact RawConnect (www.rawconn.com) or 844-383-7272 to speak with one of our experts. Find us @RawConnect on Linkedin.
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