CHPA Chat: Environmental Policy Meets Consumer Healthcare at the State Level

Episode Summary

What does climate change and environmental policy have to do with FDA approved self-care products? More than you’d think! Hear from CHPA’s VP of State & Local Government Affairs, Carlos Gutierrez, and Managing Partner of MainStreet Advocates, Kevin Canan, as they dig into what’s ahead for the consumer healthcare industry when it comes to environmental rules and regulations. You won’t want to miss this opportunity to get an inside look at the policy debates happening in the states.

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Episode Transcript

Anita Brikman: So, what does climate change and environmental policy have to do with FDA approved self-care products? Well, more than you think. Here from CHPA's VP of State & Local Government Affairs, Carlos Gutierrez, and managing partner of MainStreet Advocates, Kevin Canan, as they dig into what's ahead for the consumer healthcare industry when it comes to environmental rules and regulations. You won't want to miss this opportunity to get an inside look at the policy debates happening in the states.

Welcome to CHPA Chat, conversations in the consumer healthcare industry, with Anita Brikman.

Anita Brikman: Climate change and environmental issues are right at the top of global and domestic politics this year. Newly elected President Biden of course has made confronting climate change one of his top priorities. But over the last few years, many American leaders have criticized the federal government, saying the response to environmental issues has simply been too slow or just not gone far enough. This has prompted many American states to act on their own. So what does this have to do with FDA approved self-care products manufactured by the members of CHPA? Well, the answer is, an awful lot.

To explore this topic, we have two professionals on the front lines of this issue. First, we have CHPA's chief state lobbyist, Carlos Gutierrez, as well as Kevin Canan. Kevin has been at the forefront of many of the environmental debates happening at state capitals across the country. He is the managing partner and founder of MainStreet Advocates, as well as the executive director of the Product Management Alliance. Guys, thank you for joining me. Kevin, let's start with you. Explain what the Product Management Alliance, or PMA, is.

Kevin Canan: Certainly. Thanks so much for having me. The Product Management Alliance is an association of various trade associations, as well as companies that focus in on matters around state legislation and regulations having to do with product stewardship or extended producer responsibility.

Anita Brikman: Okay. So, let's talk about those. Those are two big buzzwords. What do they mean? And what's the difference?

Kevin Canan: That's a great question. They are defined as separate things, although sometimes they're thought of as the same thing. Let me get into that. Extended producer responsibility strictly holds producer solely responsible for the cost of managing their products at the end of life. That is, if companies put something into the stream of commerce, at the end of life, they need to be the ones that are responsible for that. Product stewardship, on the other, holds all of those who have a responsibility for the product lifecycle, manufacturers, retailers, users and disposers, share responsibility for reducing the environmental impacts of products. Factually though, and realistically at the state level, oftentimes they're used interchangeably. So, the strict definition is an important thing to understand. But of course, as it relates to things like laws, you have to sort of read the definition. And again, oftentimes these terms are used interchangeably.

Anita Brikman: Carlos, why does this matter to CHPA and our members?

Carlos Gutierrez: Well, it matters immensely. And I'll be honest, this issue sort of caught us by surprise. When I started at CHPA over a decade ago, I was concentrating on health committees and health policy. Never in my wildest dreams did I think I'd be working with environmental committees and environmental policy. But at the end of the day, what they're trying to do is they're trying to create a solution to a perceived problem, that's the environment, whether it's limiting packages, plastic packaging, even limiting pharmaceuticals that may end up in the water. States are looking to move that responsibility from local governments and giving it to the producers, the manufacturers of products, including those members of CHPA. These are incredibly expensive, very difficult to comply with. Unfortunately though, it does seem like a growing trend and it's something that we have to really keep our eyes and ears open for across the country. We are heavily, heavily engaged in this all around the country. Pretty much every year now, I'd say, going back for the last three or four years.

Anita Brikman: What does this mean though, the nuts and bolts of it? Does the manufacturer have to pay for the recycling of the packaging, or different kinds of things, or drug take-back? What happens?

Carlos Gutierrez: Yeah, they've come in different forms. But essentially, the manufacturers have to create an organization that is responsible for the ... in the case of drug take-back, for instance, that is responsible for the disposal of pharmaceuticals at the end of their life. So if an individual in their medicine cabinet has any sort of unwanted, undesired or expired medication, they want a system where that consumer can then go to their local pharmacy, drop those medicines off, and then it's up to the producer, that being the manufacturer of the pharmaceutical product, then takes responsibility. Currently, that means collecting them all and then incinerating them rather than having them thrown away in the trash.

Anita Brikman: Okay. But aren't there existing locations already where people can drop stuff off? I know I've done it before at a pharmacy, where I've taken something back myself.

Carlos Gutierrez: No, you're right. You're absolutely right. That's one of our arguments, and one of the things that we try to inform lawmakers about, is that there is already pretty extensive infrastructure that already exists. And there's really no need to sort of reinvent the wheel and create this new program. What they're ultimately doing, and they fully admit this, is they want to shift the cause to the producer. That is one of the major tenants of these organizations that are promoting EPR, extended producer responsibility and product stewardship. That it should not be the responsibility of the taxpayer, it should not be the responsibility of the retailer selling it, it should be the responsibility of the producer. So that's where we get the pushback. They're essentially trying to shift those costs onto the manufacturer of pharmaceuticals.

Anita Brikman: Kevin, of course, this didn't start with the pharmaceutical or the consumer healthcare products industry. Right?

Kevin Canan: Absolutely. Yeah. To go back, just a moment if you don't mind, as to something that Carlos had mentioned. He nailed it on the head. There are typically vehicles out there for you, that you have ability to recycle goods already. And again, that's one of the problems we have. It's sort of a caution of back onto the manufacturer. At the end of the day, I've testified throughout the country on this and Carlos has as well, we want to make sure ... First and foremost, we're typically not in favor of EPR programs. We're not anti-recycling. In fact, we're pro-recycling. I often bring up the example of…consumers, at the end of the day, always want to recycle. Determine how best to recycle and how to do that.

We've all had that conundrum, that we have a container in our hand from a beverage that we want to perhaps recycle. We walk by a blue box and say to ourselves, "What's going on here? Will this be recycled or not?" It might have the circular arrows on it and you think, "Okay, perhaps it may, perhaps it may not." What about mixed paper? What else is out there that you can put in there or not? Without clear signage, it's difficult to be able to determine what's going to take place with something you may or may not put in there. That idea of simplicity and clarity is important from our perspective. We think oftentimes these EPR laws make things even more complex. So, it ultimately adds to the cost of goods and services, but at the end of the day, it also makes it more complex. And when you make something more complex for consumers, typically, they may not do it or do it in as high a percentage.

To go back to your question, more importantly, around EPR, there's something called framework laws and framework bills that were introduced going back a little over a decade ago. The state of Maine passed a bill that became a law in 2010, so 11 years now, that allows the state of Maine to take a look at pretty much any good or service out there and say, "We want to come up with a plan to recover those goods and make the manufacturers pay for it." That law has been implemented in the state. Typically, what ends up taking place is the state puts out a report once a year, says, "Hey, we might want to do something. Let's go back to the legislature and figure out what that looks like." Today, nothing new has been encumbered under that law. But that was a real rallying cry for manufacturers of all kinds of goods, to be able to say, "Well, wait a minute here, is that really the best way to get recycling rates up? And is that something that we want to do?"

Anita Brikman: Wow, that's a lot to unpack there. All right. Thank you so much, Kevin. Carlos, Maine was just mentioned. Are there states where this is more active as far as state and even local activity?

Carlos Gutierrez: Yeah, in fact, I would suggest, at least in our industry, it actually started as a local initiative. You go back to California, there were something like 20 plus localities that passed drug take-back laws. That eventually pressured Sacramento to do something as well, and we get a statewide law. Same thing happened in Washington State when you had the two largest counties pass a drug take-back law. And we saw the same thing in New York State. So what seems to be happening in government all across three layers that we have in America, is that when the larger government doesn't act, the smaller government does.

We were able to be fairly successful in educating lawmakers at the state level for a number of years. So the advocates, it was part of their strategy to go local. They would go city to city. Anyone who's ever done advocacy at the local level knows it is incredibly difficult because it moves incredibly fast. You can literally have an ordinance in a couple of days. They don't necessarily have the rules that state lawmakers and the federal government have in terms of noticing and letting the public know that there's going to be something on the agenda that they might want to come in and weigh in on. So a lot of this can be done overnight without much opposition, and before you know it you've got an ordinance. So that has been part of their game plan, and it's been a relatively effective game plan.

But luckily, when we deal with this at the state level, however, and we're able to educate lawmakers appropriately, typically they see our side of the story and we've been relatively successful in that. Now, the more progressive states, California, Oregon, Washington, New York, Hawaii, they're going to ... Look, they're the laboratories of democracy, the states are. They try things. Whether they think it's good policy or not, they want to try it. With the hope that it will either make industry move in a certain direction or the federal government.

Anita Brikman: So what do you do about that when you go into a state legislature? Especially if you're dealing with a patchwork of local laws, which can make it very difficult for the manufacturer of any product to comply with, because there's not one standard. What do we do about that?

Carlos Gutierrez: Well, that is the challenge is, we would much prefer a uniform law so that we're not going to 50 different state laws, or even worse, a number of local ordinances that we have to deal with. For us, typically, on a normal year...I would say 2020 and 2021 were not normal at all. In a normal year, it means boots on the ground. You got to get out and you got to educate. We do a lot of our advocacy in the off season before state legislature convenes. It's literally just educating. Lawmakers are not all-knowing, no matter what level of government, right? Some of them are teachers. Some of them are construction workers. Some of them are lawyers and they have their niche knowledge in a certain area, but they're not going to know how FDA approves our products and what we're mandated to do already in our packaging. So it's up to us to educate them.

Under a normal year, you'd find me on an airplane going to all 50 states. Unfortunately, what's been a really big challenge, and I don't know if it's been the same for Kevin, but this year, everything is virtual. I testified at a hearing yesterday, virtually. I've had a couple of meetings on this very issue with lawmakers over a Zoom call. It's just not the same. When you're not in the hallway talking to folks, building those relationships, it makes it incredibly challenging. Hopefully this will be the end of it this year and we can get back to normal in the future. But at the end of the day, to answer your question, it just requires a lot of education.

Anita Brikman: Kevin, do you agree with that, in this virtual environment that it's harder to build those relationships, and even to read the room? I know that's a challenge for me, "Are people following what I'm saying? Am I losing them? Are they starting to nod off?" I mean, what does the virtual environment mean for a state lobbyist?

Kevin Canan: Yeah, I would agree with what Carlos has said. Absolutely. That can be very difficult. A lot of the best lobbying and meetings that take place oftentimes are between the actual meeting, or before or after the actual meeting. Quite frankly, some states did allow virtual testimony or telephone testimony prior to the pandemic. I found when I was actually in the room, how I felt about meetings oftentimes was different than folks who had called in or had Zoomed in virtually.

Going back to something else that Carlos had mentioned around the patchwork of local laws or state laws. One of the dirty little secrets, I suppose, that folks who spend a lot of time focused in on state and local government, and I've worked in both state and local government, is two things that Carlos said. One, it's the patchwork. When you have the patchwork, typically, if it's among the local laws, you wish the state would pass some law and preempt the localities. Just for simplicity sake, quite frankly. It just makes business work that much easier. And the same can be true oftentimes of state laws. That despite that not being the purview of Carlos and I, you wish that the federal government would pass something. Just to give a baseline so that companies aren't confused as to what it means in one jurisdiction versus another jurisdiction, overall.

Anita Brikman: All right, guys, but let's be honest. This doesn't mean that our companies are anti-environment, right? I mean, everybody, like we said at the beginning, we all want to protect planet Earth. So what is it about some of these complexities, these laws that really make it difficult for them to do that?

Carlos Gutierrez: No, you're right, Anita. Our members actually are at the forefront. Many of them have sustainability programs in place to try and be as sustainable as possible with both their products and their packaging. I think what we are trying...What we're grappling with with state and local governments is for them to understand the process that already exists. For instance, with the FDA, or, for instance, with the Consumer Product Safety Commission, we have to comply with federal regulations on packaging. Whether it means child tamper resistance. Whether it means that the box has to be able to withstand different temperature changes during transport. Or to be able to...If it's got a shelf life of two years before it expires, that it's not going to go bad while it's on the shelf.

All those are heavily managed by the federal government, require a lot of testing. So even if it was our desire to change our packaging tomorrow, it wouldn't happen tomorrow. We've got to go through testing, we've got to apply to the FDA, they've got to approve that, and then we can change our packaging. I think that's where it gets really complex, particularly with our industry. We have to explain that to lawmakers. That there could be a potential conflict with existing federal law and the state laws they're pursuing. That's what we're trying to avoid.

Anita Brikman: Makes total sense. Kevin, were you going to say something?

Kevin Canan: Yeah. I would totally agree. Going back to the way we started this out, talking about the word lobbyist and what a lobbyist does. I worked in state government and I always welcomed lobbyists to come speak to me. The reason why is, and I came out of a full-time legislature, the majority of states don't have full-time legislatures or legislators, is I just didn't know. I didn't know the complexity and the unintended consequences of something, perhaps, in a law that I had...in a bill that I had written on behalf of my boss, or even an amendment. So to be able to be educated about something, understand unintended consequences, and really understand what something does is critically important.

That's not to say that legislators are ignorant of these facts. By no means, whatsoever. They're typically well-intended. I think on this issue, specifically, I've found time and time again that we're on the same page, we just disagree as to the best way to get there. That means increasing recycling, which is no problem for everyone involved, but, what's the best method to be able to do that? Oftentimes, we found that these pieces of legislation around extended producer responsibility and product stewardship come from a specific instance or a situation that a legislator had. Ultimately, when they understand how complex the legislation is, the cost involved on the manufacturer side as well as potentially the government side, they take a harder look at it. I think to a large extent, that's why we've been successful in pushing these things down and coming up with other solutions and alternatives that make sense to encourage people to recycle.

Anita Brikman: There are already programs for paint, batteries, things like that. Is that right, Kevin?

Kevin Canan: Absolutely. Yeah. There are 20 some states that have different extended producer responsibility laws on the books already for things like thermostats and carpet, paint you mentioned as well, among other things. Batteries is another area that are out there. So, there are laws out there for specific goods already as it relates to different industries around the country.

Anita Brikman: All right. Do we see that coming for consumer healthcare products, or is it here, Carlos?

Carlos Gutierrez: Well, unfortunately, it is here. I think the train has certainly left the station. One of the distinguishing differences between some of the other programs and what they're installing for consumer healthcare products is ... In paint, for instance. Last time I went and bought paint to do some work around the house, think I went to a local hardware center, they have a fee. It's on your receipt. That fee goes towards ... for you to bring back the paint and for it to get properly disposed. We are prevented as an industry in the laws that are passing now from charging any sort of fee to the consumer.

Now, naturally, it's going to be part of the cost of the product. That's another thing that we try to instill in lawmakers is, as you make just the cost of doing business more expensive, the cost of consumer healthcare products are going to go up as well. For us, that's a serious issue. We take great pride in the fact that over-the-counter medicines, and dietary supplements and consumer medical devices, are all fairly affordable. For some people, that's their only form of healthcare. So when you think about a product that's only about on average $8 a unit, any sort of increase in cost is going to be passed to the consumer. And hey, if it's an additional 50 cents, if it's an additional dollar, for people on the margins, that can mean a lot. That can mean whether or not they seek treatment or not. We want them seeking treatment. I think during this pandemic, we've really shown the value of over-the-counter products.

The first thing a doctor has told...I've had friends and I've even had family who have unfortunately got COVID-19, the first thing they tell you was, "Well, go home and take Tylenol." Or to take medicine to bring your fever down. So it matters, and that's what we try to convey to lawmakers. That we understand what you're doing, but you can't do it in a tunnel. You can't make this decision solely based on the environment. Please also understand, as Kevin brought up earlier, the unintended consequences that it might have on healthcare costs.

Anita Brikman: Very good point, Carlos. Now, earlier, you said that there's more of this activity in progressive states. Is this a partisan issue in your opinion?

Carlos Gutierrez: I'm going to be really curious to hear Kevin's take on this. From my point of view, right now, it is. The more liberal states tend to care more about environmental issues, and therefore they're going to take greater risks in trying to achieve their goal. But what I've learned ... What my experience over the last few years is that it's becoming less so a partisan issue and much more so a generational issue. I've come across moderate Republicans who support some sort of action. It may not be what the advocates of EPR want. It may be more leaning towards what we think is a appropriate solution. But really, the younger the lawmaker, the more interested they are in the environment. The older the lawmaker, the...I wouldn't say less interest, but their solutions are a lot less bold, if you will.

So I think right now, sure, bluer states are going to be a bit more aggressive on trying to pass EPR laws. But I know the advocates, the organization of the Product Stewardship Institute, the National Stewardship Action Council, they're having conversations with states like Oklahoma, like Texas. Far from being progressive states, but they're in there anyway. They're there for a reason. I think it's because this is becoming...The environmental concerns are so great that it's getting everybody's attention.

Anita Brikman: Kevin, what do you think about that?

Kevin Canan: Yeah, I would agree with what Carlos said. In general, you do see more in the blue states, the coastal states. We track legislation in all 50 states at the state and local level, and the vast majority of that comes from those states that are blue. And they've had more success in those states. But to Carlos's point, that's not universally true. I think ultimately, the environment is not a red or blue, a Democrat or Republican issue, it's an issue that I think Carlos is exactly right on, that the younger you are, the more you may care about that.

As it relates to extended producer responsibility, I think oftentimes it's something that, we've talked about this before, legislators are often part time, they are well-intended on all sides of the aisle, but they may not fully understand exactly what something does. Again, that doesn't mean they're ignorant, it simply means they've been told that this is a good solution or a good tool that they might want to explore. And quite frankly, that's healthy for the democratic process and the legislative process to explore that. To take testimony from all sides and explore whether or not, for your locality or your state, that that makes sense. But at the end of the day, we do see a lot more of that in the coastal states, and they've had more success, which tend to be a bit more blue.

Anita Brikman: Now I'm going to ask you to look into a crystal ball. Do you see this issue spreading, maybe from the coasts toward the middle part of the country? Carlos?

Carlos Gutierrez: Well, it's definitely spreading. I can tell you, drug take-back, there's already five statewide laws. This year alone, there have been four states that have filed bills. Two of those states we're pretty worried about, that they're going to get good traction. One of them has already passed its initial committee, and frankly is likely to become a law here soon. In packaging, that has just come out like gangbusters. I think last year we had a couple of states, California and Maine were the two states. A little bit in Washington, but it was mainly a study that they want to do. They wanted to study the issue.

This year, Maryland, New York, Washington, California, Vermont, Massachusetts, Hawaii, there's at least a couple of other states, are all considering some form of packaging EPR. Specifically, packaging that will impact our members. So to me, this is not stopping anytime soon. We've talked a lot about this already, that our members are already...they already have programs in place for sustainability. But I think my advice to all companies would be, get a game plan going because this is definitely coming. It's getting much more difficult for us to stop. So, yeah, for me, it has left the train station and it is really catching momentum.

Anita Brikman: Kevin, given your experience with other industries, would you agree with that, that the consumer healthcare products industry really needs to be aware that this is an issue?

Kevin Canan: Without a doubt. Carlos nailed it. It is spreading, without a doubt, around the country. I can't emphasize enough, lobbying and educating lawmakers is critical on this. It's something that we've seen around the country. And again, well-intended legislators don't fully understand what EPR does. Again, I'm not trying to belittle them by any means. It's a complex...these are complex laws that would require a lot of money, a lot of time, and ultimately, it oftentimes makes things less convenient for the consumer. If your goal is take-back overall for the consumer, oftentimes this isn't the answer. Quite frankly, I think another thing that makes it attractive for legislators is they think, "Well, there might not be a [cost to the] state because we're going to have manufacturers pay for any sort of program like this."

At the end of the day, states oftentimes, regardless of how they make folks pay for it, have to put something in place that the state has to oversee and control and manage the program, regardless of that. And, in addition, ultimately the consumers, as Carlos said previously, end up paying even more for things. For things that may be duplicative already of their ability to take back drugs or to recycle goods.

Anita Brikman: Carlos, one last question for you. You mentioned the FDA guidelines that put a framework around so much of our products, the way they're packaged, as well as what's in the bottle. Given that, do you see companies starting to change their packaging to make it more environmentally friendly or less onerous to recycle?

Carlos Gutierrez: I have. That's, again, great to see companies like Procter & Gamble, companies like Johnson and Johnson, I know GSK as well, they all have really targeted goals into trying to achieve some form of sustainability, whether it's with their products or with their packaging. And again, you're limited to what you can do based on what the FDA and what the consumer product safety commission will allow you to do. And then even when you want to change, it's going to have to undergo testing and make sure that it's safe, and if it's going to be made out of recycled plastic.

My understanding, for instance, that you can't package...The FDA has guidance that suggests you shouldn't package dietary supplements in recycled plastic. Unfortunately, some of these state laws want to require that all your packaging should be in recycled plastic. So that, again, to Kevin's point earlier, requires a lot of education. But luckily, I do think manufacturers understand that this is something that's coming and they're trying to get to the bottom of. The unfortunate reality is that it takes a little bit of time. Unfortunately, these states move very quickly, and localities even quicker.

Anita Brikman: Such a complex issue. Gentlemen, thank you so much for joining me to explain this. Wow. And as you said, the train has left the station. So happy you are in the office next to me at the Consumer Healthcare Products Association, Carlos. I love having you as a neighbor. But I will love it even more when you are back on those airplanes, going all over the country, advocating on behalf of our members. So whenever that time comes, safe travels, my friend.

Carlos Gutierrez: Thank you very much, Anita. I really had fun on the podcast today. Kevin, thanks for joining us. I know Kevin feels the same way. We belong on airplanes and in hotels. As tiring as it may get, it's really the way to...You've got to be on the ground, educating folks for you to be effective.

Kevin Canan: Agreed. Thank you very much for having me as well. Very appreciative.