Our EU Sustainability: State of Play series focuses on regulatory developments and policy initiatives emerging from Brussels. In this series, we explore EU sustainability frameworks and their intersection with other areas of EU law.
EU sustainability regulations continue to play a key role in shaping the direction of international ESG frameworks. Latham’s European ESG Practice tracks these EU-driven developments closely by drawing on our connections with EU regulators, our presence in Brussels, and our broader European platform.
The pharmaceutical industry is facing significant challenges in reducing its environmental footprint. Pharmaceuticals reach the environment through manufacturing procedures, patient excretion, and improper disposal, resulting in an increased presence of antimicrobials in wastewater and aquatic environments. This effect accelerates the development and spread of antimicrobial resistance (AMR), a cross-cutting threat to human health, animal health, and ecosystems. AMR undermines the efficacy of existing medical treatments and increases the risk of untreatable infections, longer hospital stays, and higher mortality, with potentially broader societal and economic consequences.
Recognising these risks, and consistent with the objectives of the European Green Deal, the EU is advancing an ambitious sustainability agenda that will directly affect the life cycle of pharmaceuticals in Europe. This policy direction integrates environmental protection with public health goals while seeking to maintain industrial competitiveness and innovation capacity. By aligning pharmaceutical regulation with environmental measures, the EU aims to secure a more sustainable future for the sector and a more resilient approach to AMR.
In this article, we discuss how sustainability-related elements of the EU Pharma Package, the EU’s Urban Wastewater Treatment Directive, and the EU’s Packaging and Packaging Waste Regulation impact the pharmaceutical industry.
On 11 December 2025, the European Council and the European Parliament reached an agreement on a new EU pharmaceutical framework, known as the “EU Pharma Package”, which now awaits formal endorsement by both institutions before it can be formally adopted and take effect. Once published in the Official Journal, the EU Pharma Package will enter into force 20 days later, with transitional periods expected to last 24 months.
The EU Pharma Package targets two complementary objectives: incentivising the development of new antimicrobials and reducing the spread of AMR. One core element is the strengthening of environmental risk assessment (ERA) obligations tied to marketing authorisations. Under the emerging framework, enforceable ERA requirements are being introduced, and marketing authorisation applications may be refused where applicants fail to (i) provide adequate environmental risk data or (ii) propose sufficient risk‑mitigation measures. This elevates ERA from a formal submission component to a substantive gatekeeper, with downstream implications for development timelines and post‑authorisation compliance.
The ERA regime is grounded in Article 8(3)(ca) of Directive 2001/83/EC (Community Code for Medicinal Products for Human Use), which makes environmental risk assessments a mandatory part of marketing authorisation applications for medicinal products. The baseline scope of ERA addresses environmental risks arising from the use, storage, and disposal of medicinal products; it has not traditionally covered environmental risks linked to synthesis or manufacturing.
The ERA process typically centres on the active substance and proceeds in phases to keep data requirements proportionate to potential risk. Phase I screens the drug substance against exposure thresholds and uses assumptions to determine whether a more detailed analysis is required. Phase II then proceeds in tiers: Tier A assesses whether the active substance poses a risk to aquatic or terrestrial compartments under realistic worst‑case exposure scenarios. If a risk is identified, Tier B involves higher‑tier studies, refined exposure modelling, and a more granular characterisation of effects, with the aim of informing targeted risk‑mitigation measures.
The reforms proposed under the EU Pharma Package significantly broaden ERA applicability and heighten compliance consequences:
Collectively, these changes require earlier and more strategic data generation, alignment with current guidance, and integration of ERA considerations into clinical planning and life cycle management. For antibiotics, the increased emphasis on manufacturing‑linked environmental risks means that supply chain oversight, effluent controls, and contractual risk allocation with manufacturers will become more central to authorisation readiness and ongoing compliance.
Under the EU Pharma Package, the ERA for antimicrobials must include an evaluation of the risk for AMR selection in the environment, covering the entire manufacturing supply chain inside and outside the EU, as well as the use and disposal of the antimicrobial, including by healthcare professionals and patients. The assessment considers existing international standards that have established predicted no-effect concentration specific for antibiotics. Although not directly related to ERA, the EU Pharma Package introduces additional measures aimed at curbing AMR. As part of these efforts, marketing authorisation applications will be required to include an antimicrobial stewardship plan.
Marketing authorisation holders must update their ERA when new information emerges that could alter conclusions, such as new environmental monitoring data, updated usage patterns, or evidence of resistance selection pressure. Competent authorities may suspend, revoke, or modify an authorisation where a serious risk to the environment or public health is identified and not adequately mitigated. At authorisation, authorities may impose conditions of use, including measures to minimise environmental emissions or strengthen stewardship for antimicrobials. They may also classify a product as prescription‑only if the product is an antimicrobial or deemed hazardous to health or the environment under chemicals legislation. Post‑authorisation, marketing authorisation holders may be required to conduct additional environmental risk studies, implement targeted risk‑minimisation measures, or submit a new ERA if warranted by emerging evidence. These tools are intended to keep environmental protections current with evolving science and real‑world use.
Within five years of the (revised) Community Code’s application, the European Commission will be tasked with reporting to the European Parliament and the Council on the new ERA requirements and the impact of ERA on the protection of human health and the environment. This assessment may lead to further legislative proposals to amend the Community Code, potentially extending ERA requirements to include the manufacturing phase for all medicinal products.
The current Community Code does not impose requirements related to electronic labelling. The reforms proposed under the EU Pharma Package mandate that package leaflets for medicinal products be provided both in paper format within the packaging and electronically, in a format also known as Electronic Product Information (ePI), accessible via QR codes. EU Member States have the discretion to require electronic-only leaflets for specific categories or all medicinal products, following consultations with patients, healthcare professionals, and other stakeholders. Where leaflets are only provided digitally, the information must be easily accessible to all patients, and the patients have the right to request a printed copy free of charge.
The objective of this new regulatory measure is to establish a framework for significantly reducing the reliance on paper leaflets. While the initiative aims to implement measures that minimise paper waste, the considerable discretion granted to EU Member States could lead to a fragmented system across the EU, potentially increasing the burden on marketing authorisation holders.
The recast Urban Wastewater Treatment Directive (UWWTD), which entered into force on 1 January 2025, complements product‑specific ERA by reducing micropollutant loads at the infrastructure level. EU Member States must ensure collection and treatment of urban wastewater for agglomerations above 1,000 population equivalent, with progressively narrowing performance requirements. A key feature for the pharmaceutical sector is the introduction in the EU of an advanced “fourth treatment” stage to remove micropollutants, including pharmaceutical residues, at designated wastewater treatment plants. Financing is organised through extended producer responsibility (EPR), operationalising the “polluter pays” principle by allocating at least the majority of associated costs to sectors placing pharmaceuticals and cosmetics on the EU market. This shifts the financing of advanced treatment from general water users to the supply chains most closely linked with micropollutant loads.
UWWTD implementation will occur in phases. EU Member States will continue to report under the former directive through 2028, after which a new reporting architecture takes effect. During the transition, national authorities and operators will plan infrastructure upgrades, establish EPR collection and transfer mechanisms, conduct baseline monitoring, and refine plant‑level rollout schedules. For pharmaceutical companies, EPR under the UWWTD will have practical implications for product costing, financial planning, and supply chain disclosures, and may also catalyse collaboration with water utilities on removal efficiency, target substances, and data-sharing. While fourth‑stage treatment reduces overall loads, product‑level prevention remains critical, particularly for substances that are persistent, mobile, or difficult to remove.
The Packaging and Packaging Waste Regulation (PPWR) introduces a comprehensive overhaul of EU packaging rules, replacing the previous European Packaging Directive 94/62/EC. The PPWR, effective since 1 February 2025, is a key component of the European Green Deal and the new EU Circular Economy Action Plan. It aims to update the EU legal framework for packaging and packaging waste, promoting a growth strategy for a resource-efficient and clean economy. The PPWR seeks to significantly reduce packaging waste in the EU and strengthen the circular economy through uniform standards and enhanced recycling and reuse initiatives. Its transition periods extend until 2030. For more information on the Circular Economy Action Plan, including the relevant legislative initiatives, obligations, and timelines, refer to this Latham article.
The PPWR imposes mandatory requirements on all economic operators involved in the manufacturing, use, or marketing of packaging, regardless of their industry or company size. These requirements apply across all sectors for any packaging placed on the market, used, or disposed of within the EU. Companies must adhere to the design-for-recycling principle when developing new packaging. They are accountable for the entire life cycle of their packaging, with stringent transparency and documentation obligations regarding materials used, recyclability, and carbon footprint.
Pharmaceutical packaging often functions as a sterile barrier and must adhere to stringent stability and patient safety standards. The PPWR framework anticipates sector-specific exemptions or tailored criteria, where necessary, to ensure patient safety and product integrity, and to minimise contamination risk. In practice, companies should be prepared to:
Complementing these efforts, a broad range of EU initiatives plays a crucial role in enhancing pharmaceutical sustainability. Chemicals regulations establish hazard classifications that may require additional risk management measures, labelling, or restrictions. Industrial emissions guidelines oversee manufacturing site permits and increasingly focus on controlling water emissions of hazardous substances, with particular attention to antibiotics and resistance selection. Water policies shape the environmental monitoring and control of specific pharmaceuticals, ensuring that the industry addresses its environmental impact comprehensively.
Fast-evolving EU sustainability frameworks are steering the pharmaceutical industry in the EU towards a more holistic management of environmental externalities and AMR risks throughout the value chain. Pharmaceutical companies will increasingly be required to integrate environmental sustainability considerations and AMR control into their operations. Those which proactively adapt by enhancing ERA capabilities, improving supply chain controls, and planning for packaging transitions will reduce compliance risks and strengthen their reputation with regulators and patients.
Latham’s European ESG and Healthcare and Life Sciences practices have experience advising on a broad range of EU and global sustainability topics. Should you have any questions or would like further information on any of these topics, contact one of the authors below, or another member of your Latham & Watkins team.