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By Matthew Brodsky

Scenario: Priscilla Peters felt her daughter Beth's 10th birthday party planning was going as well as could be expected. She'd ordered a catered lunch and the food, when it was delivered at 10 a.m., looked fantastic.

forth. She hoped she hadn't overdone it with the decorations, but when she saw those potted palms at the local greenhouse, she just felt they would look perfect poolside.

As noon approached, the usual motherly worries flitted through her mind. Had she picked up enough soda? Would the neighbors make it through the afternoon and early evening without calling to complain about the music and the noise?

She heard light pop music emanating from Beth's room. No doubt Beth was trying on her bathing suit, and herein lay Priscilla's chief worry. Even in the chill of winter four months prior, with everyone bundled up, it was easy to see over the past six months that Beth was developing much more quickly than her classmates.

She'd had her first menarche, or menstrual experience, at the age of nine, when 12 or 13 is considered average, and had begun developing breasts that same year. Now, a year later, her breasts and her hips were even more fully developed.

Priscilla shuddered, she just didn't want to see the faces of the other girls, not to mention the boys, when Beth came outside in her bathing suit and jumped in the water.

Unknown to Priscilla was that her daughter was part of a wave of young women and men in the years 2025 to 2035 that were beginning to show signs of hormonal and developmental imbalances. The cause of these imbalances would later be determined to be coming from the cumulative effects of decades of hormone-based medications that had been consumed by the tens of millions, and then passed through human biological systems and entered the drinking water supply.

Tragically, at the age of 17, Beth would contract brain cancer, joining hundreds of young people of her generation in falling victim to a fatal disease that eventually was tied to the overconsumption of hormones in drinking water.

Newspaper reports and some scientific circles had pointed to the danger of pharmaceuticals entering the water supply for years. But it wasn't until Beth and many other children in the high school class of 2028 became fatally ill that the plaintiffs' bar joined forces with forensic science.

That was when the plaintiffs' attorneys could point to a tangible, actionable link between the widespread production and consumption of powerful drugs and the way they changed the human body.

Cementing the pharmaceutical companies to a fate of numerous class action lawsuits was a "smoking gun" white paper, researched and written by a pharmacist's trade group, which as far back as 2012, had identified a class of medications, 26 of them in all, that looked like they could cause unintended consequences if they accumulated in drinking water supplies and other aspects of our food supply chain.

Analysis: Prozac was first developed in 1971. Nearly four decades later, doctors prescribed it to 54 million people around the world. The bodies of those 54 million people make use of only some of the ingested Prozac; the rest gets flushed out of the body with other wastes and other drugs -- illicit and legal, like antibiotics, other antidepressants, chemotherapies, pain killers, statins, hormone pills, birth control, caffeine, cologne, mouthwash and deodorant. You name the compound, it leaves millions of human bodies and enters our waste- water systems. It then flows through streams, swamps, lakes and out to the ocean, along the way getting recycled and pumped through our kitchen and bathroom sinks.

Experts estimate that the average stream of water has been through human beings three to four times on its way from its source to the ocean, said Jim Vetter, managing director with Marsh's environmental practice.

We have been drinking water tainted with drugs for years, but two things have happened. The number of drugs and the number of people taking them have metastasized. By 2010, about eight of every 10 Americans took some kind of pill every day, and that doesn't include people taking illegal drugs. And secondly, time has passed and the effects of the low-dose drugs in our tainted water have reached noticeable levels. Noticeable in particular to the media. The Associated Press ran a major exposé on the tainted water supplies of 24 U.S. cities in 2008.

The connection between pharmaceuticals and personal care products, or PCPPs, in drinking water and human health effects isn't there yet, however. Currently, the Environmental Protection Agency is following a four-pronged strategy to improve science around the issue, improve public understanding, identify partnerships to further research, and, when appropriate, take regulatory action. The World Health Organization set up an international working group on the topic, whose recent report concluded that, given the very low concentrations of pharmaceuticals in drinking water, the threat to human health is so low that the WHO didn't even think it necessary to develop a formal health- based guideline for pharmaceuticals and drinking-water quality.

That won't stop the plaintiff's bar. "Plenty of smart attorneys will want to test the waters," said Mark Ware, vice president and director at brokerage IMA Financial, who then asked forgiveness for the pun. The dearth of evidence demonstrating correlation, he added, does not mean people can't bring class actions against pharmaceutical companies.

Vetter agreed that third-party legal claims are "really where things could get potentially challenging." Nonmeritorious types of claims will be a challenge, he said.

We can only surmise whether Big Pharma knows the risk of its products tainting drinking water, year after year, pill after pill. Perhaps a smoking-gun document will emerge during lawsuits 20 years from now, just as such damning evidence came out regarding cigarettes and Big Tobacco's knowledge about adverse effects and addition.

In any case, pharmaceutical companies can act now to mitigate some of their exposure by creating "defensible space," demonstrating that they managed the issue even before regulators passed guidance, said Ware.

One way, Ware said, would be for the drug manufacturers to design drugs that have higher absorption rates in the human body. They might also develop procedures, perhaps in partnership with pharmacies, for consumers to return unused drugs (instead of, say, dumping them in the toilet.)

Getting out in front of this risk could be a wise move for the largest drug- makers in particular, given their largely self-insured risk-transfer program.

Firms with coverage in the traditional insurance market may find a duty to defend or requirement for indemnification with their general liability and product liability policies, Ware said. Sure, these policies will have a pollution exclusion. But it might not be broad enough to exclude coverage when the product itself is the pollutant.

Insurance could be available for another sector exposed to this risk, municipal water treatment facilities, according to Vetter. The coverage he has in mind, pollution legal liability environmental is for more traditional pollution scenarios -- a water treatment plant being fined or sued for releasing toxins, for example, or by the drug companies themselves having a spill at one of their facilities.

"That has a lot of potential cost," Vetter said.

When Vetter approached environmental insurance markets a few years ago when this issue first appeared on the radar, some markets were willing to entertain such risk- transfer products for these scenarios.

Drug companies and waste treatment plants might want to consider them. Where a connection has not been made between pharmaceuticals in water and human health, regulators are wary. The FDA added 13 pharmaceuticals to its Contaminant Candidate List, for possible inclusion for regulation under the Safe Drinking Water Act and the National Toxicology Program seeks to clarify how human health may be harmed by PPCP's at low levels, according to a Marsh white paper that Vetter shared.

"The EU is very, very sensitive about water discharges," Vetter said about regulators overseas.

In one recent study, released in February 2012, Alex Ford and a team of scientists out of Britain's University of Portsmouth found that antidepressants like Prozac that are polluting shrimp habitats, even in low concentrations, cause the animals to be five times more likely to swim toward light.

The ingredient in Prozac, fluoxetine, affects not just behavior in wildlife, but also growth, reproduction, maturation and other biological processes, Ford said, in a series of emails.

"Any alterations of these processes can have profound effects," he said.

In 20 or 30 years, perhaps it won't be just the shrimp that are sent to their early demise by tainted water. By then, a host of symptoms could be apparent in us. "It's almost like a horror movie," Ware said. "It's scary."

MATTHEW BRODSKY, a former Risk & Insurance® editor, is editor-in-chief of Wharton Magazine.

April 13, 2012

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