Pharmaceutical and cosmetic companies targeted by revised urban wastewater treatment directive – A critical moment to assess legal recourse under EU law?

Overview

The European Commission recently revised the Urban Wastewater Treatment Directive (“UWWTD”), a key piece of environmental legislation aimed at reducing urban waste water pollution across the EU since its adoption in 1991.¹ The UWWTD establishes standards for the collection and treatment of waste water and outlines monitoring requirements for water discharges from urban areas. While the original Directive focused primarily on improving waste water treatment, the latest revision aims to address new challenges, including the presence of micropollutants in urban waste water. 

These changes are particularly significant for pharmaceutical and cosmetic companies, which are now facing extended producer responsibility (“EPR”) obligations for the first time under the UWWTD. This development represents a major shift in regulatory responsibilities for these industries, requiring them to bear a substantial portion of the cost associated with removing micropollutants from urban waste water streams. Residues of medicines and cosmetics are the main sources of micropollutants present in urban wastewater. These micropollutants are difficult to remove using traditional treatment methods, and they accumulate in the environment, posing risks to the environment and public health. 

In order to limit the financial impact on European taxpayers and avoid water tariffs, while providing an incentive to pharmaceutical and cosmetic companies to develop greener products, the EPR approach was deemed the most appropriate way to finance quaternary treatment.²

^{Opportunities to challenge EPR obligations}

Following its entry into force on 1 January 2025, EPR obligations introduced by UWWTD are facing scrutiny, with some stakeholders arguing that they unfairly single out the pharmaceutical and cosmetic sectors, while other industries that also contribute to micropollutants in urban wastewater streams are not subject to these obligations. This selective focus opens the door for potential legal challenges, as companies question whether the financial and administrative burden is being fairly distributed across all relevant sectors. Companies may consider bringing legal actions against provisions with direct legal effect on their activities–provided they have standing–particularly in instances where there is limited evidence linking their products to significant environmental harm compared to other industries.

As direct illustration, on 3 March, EFPIA announced its intention to challenge the UWWTD before the EU General Court to seek greater clarity on how the decision to require only two sectors—pharmaceuticals and cosmetics—to bear responsibility for urban wastewater quaternary treatment aligns with the EU’s polluter pays principle. EFPIA believes that the EPR obligations laid down in the UWWTD are not in line with key principles of EU Treaties, namely the polluter pays principle, proportionality and non-discrimination.

EPR obligations under the UWWTD

One of the key revisions in the Directive is the introduction of EPR obligations for pharmaceutical and cosmetic companies, in line with the “polluter pays” principle. Producers of medicinal products and cosmetics placing their products on the EU market will be required to cover:

1. at least 80% of the costs for the installation or expansion and operation of wastewater quaternary treatment facilities to capture and remove micropollutants from urban waste water; 
2. the costs related to monitoring of micropollutants in urban waste water, including collection and verification of data on the products they place on the market; and 
3. any other administrative costs required to exercise their EPR obligations in relation to quaternary treatment of wastewater (including financial contributions to Producer Responsibility Organizations (“PRO”) they are a member of). 

Despite the far reaching scope of the EPR obligations, companies are exempt if they meet one of the following conditions:

• the quantity of the substances contained in the products they place on the EU market is below 1 tonne per year; or 
• the substances contained in the products they place on the EU market are rapidly biodegradable in wastewater or do not generate micropollutants in wastewater at the end-of-life stage. 

EPR national-level implementation challenges and next steps

EU Member States must transpose the provisions of the Directive into national law by 31 July 2027. Affected companies must comply with EPR obligations by 31 December 2028.

The implementation of EPR obligations will vary across EU Member States, as they develop their own strategies to comply with the requirements of the Directive. Companies involved in the supply chain of pharmaceutical and cosmetic products will need to closely monitor national developments, as some countries may introduce stricter pollutant limits, expand the scope of EPR obligations to additional sectors or mandate higher financial contributions beyond the 80% threshold envisaged in UWWTD. Some countries may even opt for early transposition and application of EPR obligations before the 31 December 2028 application deadline.

At the same time, companies have an opportunity to leverage this regulatory shift by leading efforts in innovation, reformulating products to reduce environmental impact, and exploring greener production practices. Engaging with national regulators and wastewater treatment operators will be key to both managing compliance costs and positioning themselves as leaders in sustainable business practices.

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Please get in touch with a member of our team should you wish to discuss how this legislative development may affect your business activities in the EU or to set up a meeting with our EU litigation team and explore your legal options. 

Authored by Fabien Roy and Anastasia Vernikou.