Europe’s increased focus on the environment and corporate sustainability: an expensive game changer for the pharma industry

Both are now covered by the provisional agreement on the Omnibus I Simplification Package, reached by the European Parliament and the Council mid December 2025, or by more specific, targeted actions, such as the revision of the Industrial Emissions Directive or the Urban Wastewater Treatment Directive (UWD). Here we explore what these frameworks mean for the life sciences and healthcare sector.

New general pharmaceutical legislation

In April 2023, the European Commission announced a complete review of the pharmaceutical acquis and released a proposal for a revised directive on the Union Code relating to medicinal products for human use, as well as for a regulation laying down Union procedures for the authorization and supervision of medicinal products for human use and rules governing the European Medicines Agency, amending and repealing Directive 2001/83 and Regulation 726/2004, both now under a provisional agreement.

The provisional agreement introduces new requirements for environmental risk assessments (ERAs), which need to be added to every marketing authorization application. The goal of an ERA is to evaluate the risks to the environment arising from the use and disposal of medicinal products, and, in the case of potential risks, to propose adequate mitigation measures. This may, for example, include steps to minimize the quantity of products released into the environment, specific risk-minimization activities for patients, or appropriate labeling to facilitate the correct disposal of the product by patients and healthcare professionals.

The European Commission considered the existing ERA requirements insufficient to address environmental concerns because there are currently no hard consequences associated with a defective ERA or non-compliance with the identified risk mitigation measures. However, the new rules contain several far-reaching measures that will be available to the competent authorities to address these shortcomings. 

One of them makes ERAs a substantial part of the marketing authorization application process, to the point where a marketing authorization shall be refused and may be revoked, suspended or modified, and medicinal products may be prohibited or withdrawn from the market, if an ERA is insufficient, incomplete or if there are serious environmental risks that are not adequately addressed by the applicant. In addition to the ERA becoming a substantive part of the marketing application process, national penalties could also be imposed for lack of compliance with the legislation if the ERA is not updated or required post-authorization ERA studies are not performed.

While ERAs have historically been considered a voluntary measure with no stringent consequences attached for non-compliance, the European legislator now appears to have addressed this shortcoming. Substantial criticism has been expressed over the new rules, including that, while significant consequences are proposed for non-compliance, there are no clear criteria introduced for regulators to assess ERAs.

The new system may therefore leave substantial room for discretionary assessments by the authorities on what is considered “insufficient,” leading to uncertainty for companies over the fate of their marketing authorization and product launch.

Urban Wastewater Treatment Directive (UWD)

While the UWD is a first substantial step in addressing pollution in wastewater, and the aim of the UWD is to be applauded, it is questionable to what extent the pharma and cosmetics industries alone should be held accountable for quaternary wastewater treatment.

As a result, the innovative pharmaceutical industry organization, the European Federation of Pharmaceutical Industries Association (EFPIA), has challenged the UWD under various principles of European law, such as the “polluter-pays” principle, proportionality, legal certainty, and, most importantly, non-discrimination. However, the European General Court dismissed it as inadmissible on February 18, 2026.

Another action for annulment brought by Poland is still pending before the European General Court. As a mere annulment action does not have suspensive effects, companies should prepare to comply with the requirements under the UWD as from December 31, 2028.

Further developments

Additional requirements stemming from non-pharma-specific legislation on corporate sustainability due diligence and corporate sustainability reporting directives, which aim to foster sustainable and responsible corporate behavior across companies’ entire global value chains, are also expected after the Omnibus I Simplification Package is formally adopted, published, and applicable.