Pharmaceutical companies face an evolving risk of pharmaceuticals and personal care products (PPCP) in ground and drinking water supplies. 

The PPCPs have included antibiotics, anti-convulsants, mood stabilizers, stimulants, antihistamines.

Liability will likely rest primarily with large sources that dispose of the PPCPs inappropriately (e.g. manufacturing and large end users) and those that have significant releases from operations or widespread usage. 

Select insurance markets have expressed interest in an excess coverage program to address the risk of PPCPs in water supplies via products pollution coverage. 

"Currently, the markets are able to commit to a solution and put something in place," said Jim Vetter, managing director of Marsh's Environmental Practice. "The good news is that carriers are willing to entertain covering pharmaceutical companies for the risk to individuals from drug residues in the water supply."

Coverage would be on an excess basis with a large retention, in the range of $10 million or more. A primary layer of up to $50 million could be written on a commercial Pollution Legal Liability (PLL) Form, or equivalent, that triggers on claims against the corporate legal entity. Additional limits could be secured as necessary from other carriers. The policy term would be likely to be three to five years with an ability to renew.   

"Key benefits and coverage would include bodily injury and toxic tort claims stemming from pharmaceuticals in ground water, associated defense costs, and changes in legislation that may trigger this issue into an area involving cleanup, enforcement, or a regulatory basis for establishing a nexus between pharmaceuticals in ground water and potential human health effects," noted Vetter.

The issue of PPCPs in ground water came to prominence in 2009, when the Associated Press reported that the drinking water of at least 51 million Americans contains a variety of drugs, including antibiotics, sedatives, sex hormones, and dozens of other drugs. Subsequently, congressional hearings were held.