Traces of painkillers, antibiotics, and other pharmaceuticals can now be detected even in rivers and lakes – despite modern wastewater treatment plants. With the new Urban Wastewater Treatment Directive, the European Union is tightening requirements for clean water. The directive mandates a fourth treatment stage to filter out these micropollutants. Pharmaceutical and cosmetics manufacturers, in particular, will bear most of the costs in the future. The pharmaceutical industry is pushing back.

Keeping an eye on antibiotics and pain meds

According to the German Environment Agency, the new directive represents a major step forward for water protection. It requires wastewater treatment plant operators to introduce additional treatment stages in order to remove persistent substances more effectively, thereby improving protection for ecosystems, drinking water, and ultimately human health. The issue is not residues from pharmaceutical manufacturing – production facilities are already subject to extremely strict regulations. Rather, the focus is on pharmaceutical residues that have already been used by patients and enter wastewater either as metabolic byproducts through human excretion or after being washed off following topical application.

For the first time, the UWWTD also mandates systematic monitoring of pathogens and antimicrobial resistance in wastewater. This can strengthen public health preparedness by enabling early detection of infection waves or potential pandemics. “In addition, the revised Urban Wastewater Treatment Directive sets new benchmarks for climate protection and energy efficiency through targets for energy-neutral municipal wastewater treatment plants. In addition, it promotes circular economy principles and resource conservation measures such as phosphorus recycling,” explains Gudrun Winkler, Head of Energy Management and Technologies within the Management Systems and Technology division at HAMBURG WASSER.

Building blocks of the energy transition

The UWWTD requires wastewater treatment plants to operate energy-neutrally by 2045 and climate-neutrally by 2050, for example through the use of sewage gas, waste heat, or photovoltaic systems. The directive also mandates regular energy audits to identify efficiency potential and requires methane and nitrous oxide to be systematically monitored as relevant greenhouse gases in the future.
Stricter limits for nitrogen and phosphorus are also intended to curb eutrophication – a process in which excessive nutrient levels in bodies of water trigger intense algae growth, oxygen depletion, and ecological damage – and establish more consistent water quality standards across Europe.

Manufacturers to take responsibility – and foot the bill

Since the directive was adopted, financing has sparked intense debate.
Through Extended Producer Responsibility (EPR), the UWWTD applies the polluter pays principle to pharmaceutical and cosmetic residues in waterways: manufacturers are expected to bear a large share of the costs for the newly required fourth treatment stage. The German Association of Energy and Water Industries (BDEW) describes this as an “environmental economic milestone.” HAMBURG WASSER also views EPR as an incentive for developing more environmentally compatible products.

According to Winkler, EPR creates opportunities for innovation and competitive advantages, as well as stronger brand positioning for manufacturers investing in more sustainable products. “Investments in sustainable product design pay off because they help avoid downstream costs.” In this way, the directive lays the groundwork for genuinely fair pricing and a market environment that monetarily reflects a product’s environmental impact. Products developed according to the “safe-by-design” approach would increasingly have the opportunity to succeed in the marketplace.

The implementation of producer responsibility marks a paradigm shift and sets a precedent for the economic systems of the future.”

Gudrun Winkler

Pharmaceutical industry pushes back

The financing model has drawn sharp criticism from the pharmaceutical industry. “A high-risk burden on the pharmaceutical industry,” says Hauke Kuhlmann, Head of Health Policy at G. Pohl-Boskamp GmbH & Co. KG. While the industry supports the directive’s core objective, associations such as Pharma Deutschland and Pro Generika criticize what they see as a one-sided financial burden placed on pharmaceutical manufacturers.

Product modifications may be feasible for cosmetics, Kuhlmann argues. But they are rarely an option in pharmaceuticals. Here, the active ingredient defines the medicinal product and cannot simply be replaced without triggering a new approval process. In addition, many active ingredients have no therapeutically equivalent alternatives. Pharmaceutical manufacturers also cannot simply pass the costs on through pricing. Rigid rules such as fixed reimbursement amounts, price moratoriums, and rebate agreements prevent this.

“As a result, the costs of the fourth treatment stage will largely be imposed on pharmaceutical manufacturers, who are unable to incorporate these costs into pricing for around 80% of all prescription medicines due to the strict pricing framework,” Kuhlmann voices his concerns. The pressure would increase further, particularly for generic drugs, where margins are already thin. The consequences? As margins decline, low-cost generics can no longer be manufactured profitably and disappear from the market. For patients and insurers, this means rising prices. Additionally, Kuhlmann fears that pharmaceutical supply security in Germany and Europe could be put at risk. This applies in particular to supply-critical active ingredients that are essential for the broader population but difficult to replace with alternatives. After all, 90% of supply-critical active ingredients are generics.

The introduction of Extended Producer Responsibility in its current form could ultimately jeopardize the security of pharmaceutical supply within the EU. Unfortunately, there is still no sound analysis of the impact the UWWTD could have on pharmaceutical supply, particularly in the generics sector.

Hauke Kuhlmann

Pharma Deutschland and Pro Generika also consider the directive scientifically flawed. The associations criticize the fact that, while the European Commission refers to a scientific study, its assumptions regarding the origin of micropollutants are not based on verifiable data. “Producer responsibility […] is intended to apply exclusively to human pharmaceuticals and cosmetics,” explains Kuhlmann. “The fact is that there are additional contributors that are not required to share the costs under the directive.”

Practical feasibility and obstacles

Experts vary significantly in their estimates of the costs involved in upgrading wastewater treatment plants: While the European Commission projects approximately €1.2 billion, the Association of Municipal Enterprises (VKU) estimates costs could reach as much as €8.7 billion by 2045. One key implementation risk lies in the practical design of the EPR system itself, including how contributions are calculated, which organizations will be responsible, and how funds will be monitored. Potential hurdles such as high administrative complexity and possible legal disputes over contribution calculations could further complicate the process.

BDEW and HAMBURG WASSER emphasize that the increased treatment performance required for the fourth stage will significantly raise energy demand. Smaller wastewater treatment plants in particular may struggle to achieve the mandated energy neutrality.

Conclusion and outlook

The Urban Wastewater Treatment Directive marks a strategic shift in European environmental policy. It creates opportunities for water protection, climate action, and technological modernization. At the same time, environmental protection and supply security must be carefully balanced. Municipalities and operators are calling for planning certainty, financial support, and additional skilled workers.

To achieve the environmental goals of the Urban Wastewater Treatment Directive without compromising supply security, the financing model must be adjusted. A balanced solution that aligns environmental and public health policy while adequately accounting for the specific conditions of the pharmaceutical market is essential.

Hauke Kuhlmann

To achieve environmental goals without compromising supply security, Hauke Kuhlmann argues that an adjusted financing model is needed that takes into account the specific conditions of the pharmaceutical market. He points to the Swiss model: Since 2016, Switzerland’s Water Protection Act has mandated a fourth treatment stage financed collectively through water fees paid by households and businesses. Winkler disagrees: “Fee payers should not be broadly burdened with costs that clearly originate with manufacturers. Manufacturers – especially in the over-the-counter medicines market – have considerable flexibility in pricing and profit margins, while environmental follow-on costs have so far largely been externalized and shifted onto society. Producer responsibility creates a fair distribution of costs and provides incentives for more environmentally compatible products.”

Extended Producer Responsibility must be structured in a timely and legally secure manner. Municipalities and plant operators need planning certainty as quickly as possible.

Gudrun Winkler

Most recently, Pharma Deutschland and companies such as Teva and Fresenius Kabi failed in their legal challenges before the General Court of the European Union. After the cases were dismissed on procedural grounds, nearly all companies filed appeals. The industry continues to stand by its criticism. Ultimately, the practical implementation will determine whether the UWWTD can become an effective long-term instrument of environmental responsibility – or whether it will falter in execution.

Text: Uta Mommert
Feature image: Avatar_023 / Adobe Stock