Extended producer responsibility (EPR) is gaining notoriety as a smart production and marketing strategy, as product take-back programs emerge as a major consumer trend.
Extended producer responsibility (EPR) is gaining notoriety as a smart production and marketing strategy, as product take-back programs emerge as a major consumer trend. Illustrating the business value of engaging one’s customer base around sustainability, companies such as Nike, Patagonia and Garnier offer product take-back at the end of life cycle, keeping their merchandise out of landfill. These programs benefit the environment and encourage positive consumer behavior, while providing a rich, interactive customer experience that builds fierce brand loyalty. Product take-back programs offer promising solutions in the healthcare supply chain, as the industry begins to improve on its well-established throughput model that pushes large volumes of single-use disposable supplies and pharmaceuticals in a straight line from manufacturer to consumer to landfill. Healthcare sustainability groups have long called for greater responsibility from suppliers. While largely viewed as an environmental issue, waste reduction should also be recognized as a growing market opportunity. Both pharmaceutical and supply manufacturers can capitalize on product take-back programs to ensure customer loyalty in a commoditized market and build brand value in an industry increasingly focused on sustainability. While medical suppliers are beginning to embrace EPR, drug makers have been slower to change. Let’s take a closer look.
The pharmaceutical industry could use an updated customer outreach strategy. Direct-to-consumer marketing has driven the industry for the past thirty years, as drug makers funded costly R&D by moving high-priced, patented drugs off pharmacy shelves and into the hands of newly empowered patients at a record pace. While netting impressive sales, we know this model is ultimately unsustainable, and the pharmaceutical industry is beginning to feel the effects. In a 2012 industry brief, Booz&Co noted that the industry currently faces a host of threats, including expiring patents, competing generic medications, sagging demand, drug shortages and increasingly demanding stakeholders. These threats are amplified within a business model that focuses on aggressively driving throughput to maximize short-term gains. Worse yet, industry throughput now threatens environmental and public health, as we witness a growing pharmaceutical waste crisis. In 2008, an AP investigation found trace levels of pharmaceuticals throughout the nation’s tap water supplies, caused in part by over-prescribing and improper drug disposal. Recent legislative and community efforts have promoted take-back programs for unwanted or expired medications, aimed at halting the flow of drugs into the environment. The pharmaceutical industry could support such programs, connecting with consumers while addressing industry driven pollution. Instead, when Alameda, California required drug makers to fund the county take-back program, the industry responded with lawsuit, citing discrimination against interstate commerce.
Pharmaceutical companies should be fully funding take-back programs, as this opportunity to display a true commitment to community health is a public relations gift to an industry under increasing scrutiny. Such programs would inspire customer loyalty while offering a positive marketing alternative to the constant onslaught of drug advertisements in the United States. Furthermore, companies should be conducting R&D on reuse of wasted pharmaceuticals, closing the loop on products while offering a low-cost alternative to the generic drugs currently limiting revenues. Innovators are already capturing waste anesthetic gases and distilling them back into original product, pursuing distribution as generic medications. Drug makers should be racing to capture their waste products and make good use of them before someone else does. Instead of fighting stakeholders, the industry could be crafting billion dollar solutions, and plugging a hole in their long-term business strategy.
If the pharmaceutical industry wants a glimpse into its closed-loop future, it need look no further than medical supply and device makers. The once-prevalent stream of single-use, disposable supplies (SUDs) used in clinical areas and procedure rooms is steadily changing. Reusable and reprocessed supplies leverage EPR to save scarce health dollars, reduce waste and create a profitable alternative to the one-way flow of yesterday’s supply chain, for both vendor and client.
Companies such as Ascent and SterilMed have been sterilizing, reprocessing and remanufacturing SUDs for years, curbing waste and pollution while maximizing revenue per individual product. Not unlike the pharmaceutical industry, manufacturers responded to early reprocessing efforts with threats of legal action and negative publicity. Despite these actions, reprocessing continues to grow, as take-back programs meet a consumer need overlooked by suppliers for years. While practitioners need high-quality tools to perform procedures, they never asked for an expensive, disposable, waste-intensive supply stream. Considering that many of these supplies are disposed of as regulated medical waste, the full product cost increases dramatically. A recent study by the Commonwealth Fund estimated that the nation’s hospitals could save a combined $540 million annually if facilities were to adopt supply reprocessing. This EPR model supports environmentally conscious, cost-effective care.
The acquisition of both Ascent (now Stryker Sustainability Solutions) and SterilMed by major medical device manufacturers is a testament to the changing view of product life cycle within the industry. Companies are now forging creative partnerships in waste reduction, and attracting loyal customers as partners in sustainability. While suppliers have made advances in extended producer responsibility, we are just witnessing the beginning of major changes in consumption patterns.
Healthcare is a dynamic field, as new advances, driven in partnership with pharmaceutical and medical device manufacturers, improve health outcomes daily. It’s now time to advance product life cycle. Industry leaders must close the loop on products or lose market share to the enterprising companies who beat them to it. Extended producer responsibility is a promising business opportunity and a way forward for the healthcare industry, improving outcomes through improved financial and environmental stewardship.
Published Feb 4, 2013 1pm EST / 10am PST / 6pm GMT / 7pm CET