California's Safer Consumer Products regulations, currently in draft form and set for implementation in early 2013, pose a serious challenge to US over-the-counter (OTC) drug manufacturers by imposing a new layer of bureaucratic oversight on top of what already exists through federal statutes. There is a high potential for contradictory labeling and information requirements as well as greater liability exposures—even an outright ban on sale of OTCs in the state. Nevertheless, there is little awareness of the extent of the threat. To date the pharmaceutical industry has been largely missing from the dialogue.

On first blush, the regulations, like the federal Toxic Substance Control Act, appear to exempt drugs, devices, and food, which are regulated by the Food and Drug Administration (FDA). However, the regulations only exempt "dangerous drugs," which are defined in the text as prescription (Rx) drugs, not OTC products. Therefore, the entire range of OTC medicines and their packaging—from aspirin to sunscreen—is susceptible to the state's expanded powers of oversight.

Although the pharmaceutical industry is pressing the argument that state-level OTC controls are preempted by the FDA regulations, not everyone in California agrees. And it is unclear whether the industry strategy of obtaining a legislative amendment to make OTC drugs exempt will succeed before the regulations are enacted.

This threshold is of great concern for the pharmaceutical industry, as a concentration over 0.01 percent of a chemical is often necessary for the efficacy of an OTC drug. For example, aspirin, a chemical included on the initial Chemicals of Concern list, is available in a 325mg tablet, at a concentration of 85.98 percent.

The regulations require DTSC to evaluate and prioritize products containing a Chemical of Concern based on vague criteria concerning "safety" and "exposure." It must develop a list of priority products for which the responsible party (usually the manufacturer) must conduct a life-cycle-based Alternative Assessment (AA) to determine how to design the product without using the Chemical of Concern. The cost of conducting an AA is estimated to range from $500,000 to $6 million, including obtaining information from the global supply chain as well as the cost of conducting the chemical analysis (along with fees paid to DTSC to conduct review).

Based upon DTSC and public review of the AA, a manufacturer could also be subject to a state-mandated redesign of the product to replace the Chemical of Concern with what DTSC considers to be a safer chemical. Designing an OTC drug without a Chemical of Concern will be impossible for products where—as in the case of aspirin—the Chemical of Concern is the active pharmaceutical ingredient.

In addition to the AA and redesign requirements, manufacturers of products sold in California may be required, at the sole discretion of DTSC, to provide to that agency, for public review, data on the "toxicity" characteristics of the product. This data will be based on newly created California "hazard traits," many of which are not considered to be hazards anywhere else, have no known test methods to measure hazards, and are inconsistent with recognized global hazard trait standards. DTSC may use this data to expand both the list of Chemicals of Concern and the list of Priority Products. The cost of this toxicity review could cost from $5,000 to $100,000 (depending upon availability and cost of the test method) to test for 40-plus hazard traits for chemical ingredients, retool lab equipment to meet a 0.01 percent threshold, and to hire third-party labs.

As a result of this analysis, DTSC may implement labeling requirements, such as requiring that a product be labeled as hazardous. Although FDA strictly regulates the labeling of OTC drugs, DTSC will have the authority, under the Safer Consumer Product regulations, to impose an additional labeling requirement on OTC drug products. A label of hazardous on an OTC drug will drive consumers away from the drug and damage the reputation of the drug manufacturer.