Design for Competitive Advantage:
The Business Benefits of the
EPA Pollution Prevention
Assessment Framework
In New Product Development
Thomas J. Votta
Allen L. White, Ph.D.
Submitted to:
Eastman Kodak Company
and
U.S. Environmental Protection Agency
Office of Pollution Prevention and Toxics
August 25, 2000
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| Institute
Resource and Environmental Strategies
Design for Competitive Advantage:
The Business Benefits of the
EPA Pollution Prevention Assessment Framework
In New Product Development
Submitted to:
Eastman Kodak Company
and
U.S. Environmental Protection Agency
Office of Pollution Prevention and Toxics
Submitted by:
Thomas J. Votta
Allen L. White, Ph.D.
August 2000
11 Arlington Street, Boston, MA 02116-3411 • Tel: 617-266-5400 • Fax: 617-266-8303 • www.tellus.org
Printed on recycled paper
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The Business Benefits of the EPA P2 Framework
August 2000
Acknowledgments
We gratefully acknowledge the support for this jointly funded project through Eastman Kodak
Company and EPA's Office of Pollution Prevention and Toxics (OPPT). Special thanks are extended to
Charles Ruffing at Kodak and Bill Waugh at OPPT for their keen insights and guidance throughout this
study.
We would also like to thank several individuals for their comment and input to draft versions of
this study including John O'Donoghue at Kodak; Susan McLaughlin, Rob Beekman, Maggie Wilson,
Rebecca Cool, Anna Coutlakis, and Richard Hill at EPA; Michael Hulse at Shell Chemical; Gary Rausina
at Chevron; Jean Chun and Randi Henderson at PPG Chemical; John Davis at Dow Chemical; and Nicole
Stadler, John Weeks, and Chris Steel at SC Johnson.
Any errors in fact or interpretation of information used to conduct this report are the sole
responsibility of the authors.
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The Business Benefits of the EPA P2 Framework
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TABLE OF CONTENTS
Executive Summary ES-1
Introduction 1
The Toxic Substances Control Act (TSCA) 2
The EPA P2 Framework 4
Exploring Business Applications 4
Costs of Using the P2 Framework. 7
The Product Development Process 7
The Generic Product Development Process 8
TSCA Review as Part of the Product Development Process 10
Chemical Evaluation and Screening in the Product Development Process 11
Benefits of the P2 Framework in Product
Development and Process Redesign 13
Reduced Technical Development Expenses 14
Human Health and Environmental Testing Costs 16
A More Streamlined Product Development Process 18
Benefits of the P2 Framework in Product
Development Speed 19
Benefits of the P2 Framework in Manufacturing And
Operations 21
Conclusions 23
References 25
Appendix A: Using the P2 Framework to Screen Chemicals
Early in Design A Case Study from Eastman Kodak A-l
Appendix B: Using the P2 Framework for Evaluation of a
Chemical Intermediate A Case Study from Eastman Kodak B-l
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The Business Benefits of the EPA P2 Framework
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List of Figures
Figure ES-1: Accumulated Resources Spent on a
Single Chemical Candidate in New Product Development ES-3
Figure 1: TSCA PMN Outcomes (1979-1993) 3
Figure 2: Four Phases of a Generic Product Development Process 8
Figure 3: Sequential And Overlapping Product Development Processes 9
Figure 4: Distribution Of Cumulative Costs Spent In A Sequential
Product Development Process 14
Figure 5: Lost Revenue From Late Market Introduction Of New Products 20
Figure A-l Cumulative Resources Spent Over Six Stages
Of Kodak's Product Development A-8
List of Tables
Table ES-1: Summary of Benefits of the P2 Framework ES-4
Table 1: Inputs and Outputs of the P2 Assessment Framework Methodologies 5
Table 2: Summary of Key Benefits to New Product Development
and Process Redesign 13
Table 3: Product development Costs Lost if Lead Candidate Must Be Dropped
at Progressive Phases in Product Development 15
Table 4: Typical Costs for Testing of Substances (in US Dollars) 17
Table 5: Summary of Key Benefits to Product Development Speed 19
Table 6: Summary of Key Benefits to Ongoing Manufacturing and Operations 21
Table A-l: Potential Costs Avoided by Using P2 Framework A-9
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The Business Benefits of the EPA P2 Framework
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Executive Summary
Every manager involved in the
development of new chemicals perennially faces
a complex business decision: how do I choose a
new product among the multitude of candidates
so as to minimize time to market while, at the
same time, minimizing development and
manufacturing costs?
Managers in all industries, of course,
face this same product development challenge.
However, for chemical makers, especially those
in technology-based industries, the challenge is
particularly daunting. Unlike most materials,
new chemicals are strictly regulated by EPA
under the Toxic Substances Control Act
(TSCA). Each year, between 1,500 and 2,500
applications for the manufacture of new
industrial chemicals are received by EPA. Of
this number, approximately 10 percent are either
voluntarily withdrawn by the submitter or
restricted by EPA. In either case, significant
costs are incurred by firms who sink substantial
resources into new product development before
seeking EPA approval. Moreover, chemical
product developers are well aware of the
realities of downstream costs and risks
associated with worker exposure, reporting,
testing, recalls and product liability risks.
Thus, any early warning to managers
signaling a potential "bad actor" represents a
potentially strong competitive edge. Sharper
decision-making among chemical candidates,
avoidance of regulatory delays, faster time to
market and reduced manufacturing costs are
benefits which might be expected to arise from
such an early warning system.
Based on results of a recent pilot effort,
EPA's Pollution Prevention Assessment
Framework (P2 Framework) offers such a
system. Evolved over two decades of assessing
chemicals based on chemical structure, the set of
evaluation tools comprising the Framework have
recently been evaluated by a number of
companies within their own product
development processes.
The premise of this pilot effort was
straightforward: provide companies for internal
use the same tools EPA uses to assess new
chemicals. By using these tools to evaluate
potential new products, companies gain insights
into risk concerns. Companies can use this
information to identify environmentally
preferable products. Advance screening for risk
will maximize the prospects for expeditious
TSCA review and approval of those chemicals
that eventually reach EPA. If this can be
achieved, both the environment and the
submitting company win—the former through
use of safer substances in commerce and the
latter through a more rapid product development
process.
What is the specific nature of such
business advantages? The answer lies primarily
in early detection of problematic product
attributes beginning in the earliest stages of the
product life cycle, starting with concept
development and extending through technology
development, production design, manufacture,
and use. The ability to detect problematic
materials even before a new chemical is
synthesized or formulated represents a
substantial cost avoidance and shortens time to
market of successful candidates. The converse is
also true: the longer problematic chemicals
survive in the product development cycle, the
larger the accumulated and irrecoverable costs
incurred once the chemical is abandoned. Figure
ES-1 (below) illustrates this relationship
between retention of a problematic chemical and
cumulative, at-risk resources.
ES-1
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The Business Benefits of the EPA P2 Framework
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Timely application of the P2 Framework
offers a substantial degree of protection against
at-risk product development costs. Competitive
advantage may also materialize in two other
areas: product development speed and
production costs for full-scale manufacturing.
Benefits in all three areas are summarized in
Table ES-1 (overleaf).
The benefit side is compelling. But
what about the cost of acquiring and using the
P2 Framework? The answer is that the
acquisition costs are minimal. For any medium
to large firm in the business of new chemical
product development, the P2 Framework is
affordable. Up-front costs are in the range of
$2,000 to $27,000 depending on which methods
are purchased, plus an estimated $5,000 to train
each user. Each application of one of the
methods to one chemical candidate requires
about 15-60 minutes. Compared to the benefits
of avoided product development costs and
accelerated time to market, these costs are
relatively trivial. They represent an up-front
investment in software and staff capacity which
yields a stream of benefits over many years of
repeated application.
Use of the P2 Framework is, in the end,
about a cost-effective method of obtaining better
and earlier information that leads to greater
certainty, quicker decisions, and smarter product
design. While product development processes
vary across companies, all managers grapple
with the common challenge of quickly and
continuously developing new products and
rapidly commercializing them to establish
marketplace advantage. While the quality of a
company's existing screening practices and
historical experience with chemical assessments
affects the net benefits of the P2 Framework, it
is highly probable that the framework is a source
of value-added to virtually any firm — large or
small — engaged in the chemical product
design, development, manufacture and use.
Figure ES-1: Accumulated Resources Spend on a Single
Chemical Candidate in New Product Development
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The Business Benefits of the EPA P2 Framework
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Table ES-1: Summary of Benefits of the P2 Framework
LOWER PRODUCT DEVELOPMENT COSTS FOR NEW CHEMICALS AND
INTERMEDIATES
Quantitative
Benefits
• Reduced (avoided) costs spent on technical development and R&D of new chemicals.
• Decreased resources spent on laboratory tests for human health and environmental testing.
Qualitative
Benefits
• A greater number of product combinations and product alternatives can be evaluated early in
concept development. This allows for greater technology innovation and is due to the quick
and cost-effective nature of the P2 Framework.
• Better and earlier information on environmental and health (E&H) impacts allows the
product development team to focus resources on technical performance. Knowing the E&H
profile early allows the team to anticipate any additional E&H lab testing that may be
required for PMN submittal to EPA. Such information may also alert the team to a chemical
candidate that it wants to abandon based on E&H concerns before significant resources have
been spent on investigating its technical performance.
• Better information allows companies to compare competing product alternatives and helps
them identify environmentally sound technologies.
• Greater awareness of "green design".
REDUCED TIME TO MARKET FOR NEW PRODUCTS/CHEMICALS TO MARKET
Quantitative
Benefits
• Faster time to market for new product introduction by minimizing the chances that a lead
candidate will fall out of the product development process for health, environment, or safety
concerns.
• Avoid a 5(e) regulatory action for PMN review which may require additional information or
testing, causing delays in getting EPA approval.
• Minimize cycle time for PMN review by submitting an informed and complete application to
EPA.
Qualitative
Benefits
• Reduced probability that a candidate is dropped at an advanced development stage, delaying
the product team as they evaluate another candidate.
LOWER PRODUCTION COSTS FOR FULL-SCALE MANUFACTURING OF NEW
CHEMICALS
Quantitative
Benefits
• Decreased costs associated with using hazardous chemicals (e.g., environmental reporting,
testing, employee training and personal protective equipment, waste treatment, disposal,
handling spills).
• Reduced probability the submitted chemical will be subject to 5(e) actions by EPA which
may require either monitoring and tracking or more controls and treatment during
manufacturing.
• Decreased potential for downstream interventions such as product recalls or major changes to
the manufacturing operation (related to unanticipated long-term toxicological effects of a
product or technology).
Qualitative
Benefits
• Improved performance of the health and environment team in supporting the overall product
development process.
• Enhanced ability to identify and drive P2 outcomes.
ES-3
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The Business Benefits of the EPA P2 Framework
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Introduction
Each year, the New Chemical Program
at the US Environmental Protection Agency
(EPA) receives an average of 2,000 applications
for the manufacture of new industrial
chemicals.1 Under the Toxic Substances Control
Act (TSCA), EPA's Office of Pollution
Prevention and Toxics (OPPT) is responsible for
ensuring new chemicals do not pose an
"unreasonable risk" to workers, consumers, and
the environment. As the chemicals are new
products by definition, there are often no
existing data with which EPA can adequately
evaluate health or environmental risk. Moreover,
TSCA does not require companies test new
chemical substances prior to submission to EPA
With the implementation of TSCA
requirements, EPA immediately saw the need
for new predictive techniques that could be used
to identify chemicals and chemical processes
that could pose an "unreasonable" risk. A
variety of screening tools have been developed
over the years by EPA scientists and Agency
support contractors to assist in characterizing the
fate and hazard likely to arise from the
manufacture, use, and disposal of new
chemicals. Collectively known as the EPA
Pollution Prevention Assessment Framework
(P2 Framework), these methods include OPPT's
most important computer-based methods
developed to quickly evaluate chemicals when
test data are lacking. Some methods help predict
potential hazard based on chemical structure;
others help anticipate human and environmental
exposures; and still others help estimate fate and
movement of chemicals in the environment.
These tools reflect 20 years of concerted effort
by OPPT to automate the process of evaluating
chemicals based on chemical structure and
standard scenarios.
1 U.S. EPA Office of Pollution Prevention and Toxics, New
Chemical Program
Bolstered by years of every-day use and
refinement within the Agency, the methods were
viewed as a potentially valuable resource that
could be used by companies in developing new
chemicals and processes. The premise was
simple —companies sometimes choose which
chemicals to develop without the benefit of
hazard- and/or risk-related information. The
OPPT recognized that the P2 Framework could
serve as a resource for companies, allowing
them to easily incorporate risk considerations
early in the product development process. If the
P2 Framework could be successfully employed
in this way, , a win-win situation may result:
reduced use and release of harmful substances
into the environment, and reduced costs and risk
to business.
The P2 Framework was viewed as a
valuable resource that could be used
by companies in developing new
chemicals and processes.
Thus, EPA initiated an effort comprising
distribution and technical support of the
methods. A key component was the recruitment
of an industry partner to participate in a
technology transfer pilot project to help assess
the P2 Framework's overall utility to industry.
In 1994, Eastman Kodak agreed to participate in
the technology transfer project.2
2 For a more detailed account of the EPA/Kodak project,
see "EPA-Developed Methodologies for the Fate and
Elazard of Industrial Chemicals, A summary of Eastman
Kodak Company's Experience with the Use and
Applicability I Risk Assessment." Kodak Technology
Transfer Team, May 13,1996.
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The Business Benefits of the EPA P2 Framework
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In addition, EPA hosted a number of
regional three-day workshops to introduce and
train a broader industry audience in the use of
the P2 Framework. Successive workshops were
held in San Jose, California; Durham, New
Hampshire; and Chicago, Illinois. During the
workshops participants listened to a presentation
on each method describing how EPA uses the
method, its development, limitations, inputs and
outputs, and interpretation of results.
Participants then received hands-on experience
using the methods by working on examples and
case studies provided in the P2 Framework
Manual.
The 2-year EPA/Kodak collaboration
yielded positive results for both sides. From
EPA's standpoint, the project demonstrated a
new and valuable application of fate and hazard
assessment methods that previously had been
used only for internal Agency purposes. From
Kodak's perspective, these same methods, used
in conjunction with professional judgement and
effective internal communication, augmented
existing procedures to evaluate new chemicals
and processes. These methods allowed company
scientists to make sound business decisions in
the very earliest stages of R&D and product
development.
This report assesses these business
benefits gained by using the P2 Framework
and provides a conceptual model which a
broad industry audience can apply to their
unique product development processes. Use
of the P2 Framework methods, as we shall
see, also presents opportunities for pollution
prevention (P2) since information from the
methods allows companies to utilize P2
approaches at the earliest possible stages of
the product development process.
In constructing a model to illustrate
these benefits, we first discuss chemical
screening and evaluation, both in the context of
the TSCA regulatory approval process and, more
importantly, in the broader context of the
product development process. A brief
description of the P2 Framework is presented,
followed by a discussion of the potential
benefits, some quantitative and some qualitative,
of the P2 Framework. Quantitative benefits from
two discrete applications at Kodak are provided
in the appendices.
The Toxic Substances Control Act (TSCA)
When TSCA was enacted in 1979 (40
CFR §700-799) chemicals were divided into two
categories: existing and new. Existing
chemicals, defined as those chemicals already in
use prior to 1979, were listed on the TSCA
Chemical Inventory. Any company can
manufacture "existing" chemicals on the
Inventory without notifying EPA. For such
"existing" chemicals, the burden is on EPA to
show an unreasonable risk exists before it can
act to restrict their production, distribution, or
use.3
Any firm proposing to manufacture or
import a new chemical or chemical intermediate
not on the existing TSCA Chemical Inventory
3 This report provides a cursory review of the PMN process
for new chemicals under TSCA. For a more detailed
discussion of TSCA and New Chemical Review, visit the
EPA OPPT New Chemical Program website at
www, epa. gov/opptintr/newchms/. Specific questions can
also be directed to the TSCA hotline at 202-554-1404.
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The Business Benefits of the EPA P2 Framework
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must notify EPA 90 days in advance. For any
such new chemical, EPA must review potential
risk and decide if the chemical should be
allowed to enter commerce freely, or whether it
should be controlled in some manner. The
manufacturer or importer is not required to test
the new substance or assess its expected health
or environmental impacts. Instead, a company's
premanufacture notification (PMN) must
contain, only to the extent "reasonably
ascertainable," the identity of the substance, its
expected use and exposure, its expected
production volume, and any available health,
safety and environmental information.
If EPA concludes, within the 90-day
review period, that the proposed chemical may
pose an unreasonable risk and that further data
are necessary to determine whether it does or
does not, the Agency can restrict the
manufacture and use of the chemical, pending
the development of additional data. Restrictions,
described in section 5(e) of TSCA, are called
"5(e) orders." These orders generally involve a
consent order specifying additional data,
additional controls, restrictions on a chemical's
manufacture and use, or other actions which
mitigate potential risk. If EPA finds the
chemical does indeed present an unreasonable
risk, then EPA may issue an order to restrict or
ban the chemical under Section 5(f). 5(f) actions
occur much less frequently than 5(e) actions.
If EPA does not act to restrict the
proposed new chemical during PMN review, the
chemical can be manufactured or imported
without restriction. Once a newly manufactured
or imported chemical has successfully passed
through the PMN process, the chemical may be
commercialized. It is not placed on the TSCA
Chemical Inventory until EPA receives a notice
of commencement of manufacture/import
(NOC) from the manufacturer signaling the
chemical is in the marketplace.
Figure 1 displays the outcome of PMN review
for 20,100 applications received by EPA
between 1979-1993. During this time, the
number of PMN applications averaged around
1,500 per year.4 The 1,500 PMN applications
amount to roughly 7-8 new chemical notices per
work day of the year. EPA has imposed Section
5(e) restrictions pending receipt of additional
data on more than 4 percent of the PMNs
reviewed between 1979 and 1993. Only four
other PMNs were restricted as unreasonable
risks under section 5(f). In addition, submitters
withdrew an additional 5 percent of PMNs
during the same period. The withdrawal usually
occurs in the face of regulation. Thus, in total,
nearly 10 percent of new chemicals have either
been voluntarily withdrawn from PMN review
or restricted by EPA.
Figure 1: TSCA PMN Outcomes
(1979-1993)
Total: 20,100 PMNs
Source: INFORM, 1995
Given the volume of PMN
applications and the short review period
specified under TSCA, EPA has spent
considerable resources to develop methods and
processes to fulfill its regulatory mandate—to
ensure new chemicals that present an
4 The 1,500 per year PMN average as well as statistics for
5(e) and 5(f) actions between 1979 and 1993 are taken
from "Toxic Watch 1995, " INFORM, 1995. According to
OPPT's New Chemical Division, the average number of
PMN applications in recent years has grown to 2,000 per
year while the combined average of 10% of PMN
applications either withdrawn or restricted by EPA has
remained essentially constant.
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The Business Benefits of the EPA P2 Framework
August 2000
unreasonable risk are identified and do not enter
commerce. The P2 Assessment Framework is an
outgrowth of such efforts.
The EPA P2 Framework
The P2 Framework is a collection of
computer-based methodologies that each assess
a particular aspect of a chemical's potential
impact on humans or the environment. The P2
Framework methods provide information in four
general areas:
• physical/chemical properties,
• chemical fate in the environment,
• hazard to humans and the environment, and
• exposure and/or risk.
These methods, along with the outputs and
required input, are shown in Table 1 (overleaf).5
Methods included in the P2 Framework
are intended to provide information to help
assess the risk posed by a chemical or group of
chemicals. Most methods deal with two steps of
the four-step risk assessment process: hazard
identification and exposure assessment. (The
complete risk assessment process also includes
dose-response assessment and risk
characterization.)
The original purpose of the P2
Framework was to contribute to more informed
regulatory decision-making. These are screening
level methodologies that are of most value when
chemical-specific data are lacking. In cases
where validated data are available for a given
5 For a more detailed discussion of the methods in the P2
Framework, see The Pollution Prevention Assessment
Frame-work, US EPA, Office of Pollution Prevention and
Toxics, October 1997.
endpoint from a well conducted test, they should
be used in lieu of data predicted by the P2
Framework assessment method for that
particular endpoint.
The methods are based largely on
quantitative structure activity relationships
(QSAR). QSARs are predictive methods which
estimate the properties of an untested chemical
(e.g., melting point, vapor pressure, toxicity and
ecotoxicity) on the basis of the similarity of its
structure to that of a tested chemical. In most
cases the primary input required is the chemical
structure of the substance being evaluated. In
addition, the assessor needs an understanding of
organic chemistry and ecotoxicity. Overall, the
methods are user friendly and require minimal
data input.
Exploring Business Applications
To learn if data generated by the P2
Framework could reduce developmental costs of
new chemicals and processes and lead to
development of environmentally preferable
products, OPPT shared the P2 Framework with
five major companies who frequently submit
PMNs. OPPT wanted to learn if industry could
use the P2 Framework to generate previously
unavailable chemical-specific data. Initial results
are encouraging. EPA found that the P2
Framework can substantially affect the way
companies develop new chemicals and
approaches to reformulating existing products.
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The Business Benefits of the EPA P2 Framework
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Table 1: Inputs and Outputs of the P2 Assessment Framework Methodologies
Models to Estimate Physical/Chemical Properties
Model
Source
Output
Input
MPBPVPWIN
SRC
Melting point; boiling point; vapor pressure
Chemical structure
KOWWIN
SRC
Octanol-water partition coefficient
Chemical structure
WSKOWWIN
SRC
Water solubility
Chemical structure
PCKOCWIN
SRC
Soil organic carbon sorption coefficient
Chemical structure
HENRYWIN
SRC
Henry's law constant
Chemical structure
BCFWIN
SRC
Estimated bioconcentration factor
Log Kow
Models to Estimate Chemical Fate in the Environment
Model
Source
Output
Input
AOPWIN
SRC
Atmospheric oxidation
Chemical structure
BIOWIN
SRC
Biodegradation
Chemical structure
HYDROWIN
SRC
Hydrolysis
Chemical structure
STP
EPA
Percent removal
Chemical properties
Models to Estimate Hazard to Humans and the Environment
Model
Source
Output
Input
OncoLogic
LogiChem
Cancer hazard ranking
Chemical structure
ECOSAR
EPA
Ecotoxicity values (concentration of concern
(COC), etc.)
Chemical structure, melting point,
log Kow
Models to Estimate Exposure and/or Risk
Model
Source
Output
Input
DERMAL*
EPA
Consumer dermal potential dose rate (PDR)
Weight fraction
SCIES*
EPA
Consumer inhalation PDRs
Molecular weight, vapor pressure,
weight fraction
ReachScan*
EPA
Chemical concentration at the drinking water
intake point
Facility location, concentration data
PDM3*
EPA
Days per year the COC is exceeded
Release quantity, COC
SEAS*
EPA
Stream concentration,
Drinking water & fish ingestion PDRs
Flow data, release quantity, BCF
Occupational
Spreadsheets**
EPA
Worker exposure to vapors
Molecular weight, vapor pressure,
hrs/day of operation, hrs/day of
worker exposure
Notes: SRC = Syracuse Research Corporation, located in North Syracuse, NY. The SRC methods can be purchased in packages
ranging in cost from $1,500 to $2,000 depending on which models are included.
LogiChem is located in Boyertown, PA. OncoLogic costs $25,000.
All EPA models are available free of charge.
* These exposure models are being integrated into a single windows-based model, E-FAST, which will allow for single data entry.
** This model is being upgraded into a windows-based model, ChemSTEER.
Source: USEPA, Pollution Prevention Assessment Framework Manual, October, 1997
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The Business Benefits of the EPA P2 Framework
The following comments are a
representative sample of industry
perspectives and appear in no particular
order:
"...The P2 Framework helps us
understand potential risk-related
concerns associated with new
chemical substances under
development." (Shell)
"The methodologies supplied by the
Agency allowed those chemicals with
the greatest potential hazard to be
eliminated from further consideration
at a point in time when the economic
impact of the decision was minimal."
(Eastman Kodak)
"Use of the P2 Framework gives us a
sense for potential health and safety
concerns early on in the product
development cycle — a definite plus
for Shell." (Shell)
"...[The tools are] particularly useful
when used to minimize the potential
synthesis or generation of hazardous
wastes and chemicals before
production processes have been
decided upon." (Eastman Kodak)
"P&G found EPA's environmental
assessment methods of critical
importance in the early stages of our
R&D efforts." (Procter & Gamble)
"...We regularly use the EPIWIN and
ECOSAR software...to assess our
products from an environmental
standpoint." (S.C. Johnson Wax)
"The P2 Framework provides a
logical, consistent structure for
comparing competing products and
processes..." (Shell)
August 2000
"...these methods, if applied early
enough in a chemical or product
development cycle, can have an
immediate and positive impact on
programs to reduce the potential
hazards from chemical manufacturing
operations." (Eastman Kodak)
"As industry strives to achieve
Sustainable Development, the kind of
guidance these...methods provide will
increase in importance." (Procter &
Gamble)
"The P2 Framework reduces
uncertainty around health and
environmental impact... we can
manage or prevent risk as long as we
know what it is early on in our
process" (PPG)
"EPA ...may underestimate the true
value of these tools." (Procter &
Gamble)
"...Other industries will benefit from
use of the P2 Framework." (Shell)
The P2 Framework also provides
substantial benefits in instances
where TSCA regulatory approval
is not required.
A strength of the P2 Framework is both
the ease and rapidity of individual methods. A
general theme echoed by companies who have
used the methods and EPA is that the most
important economic and environmental benefits
of the P2 Framework are realized when the
methods are applied early in the product
development cycle, before significant resources
are spent on the leading chemical candidates.
The P2 Framework also provides
substantial benefits in instances where TSCA
regulatory approval is not required. This is often
the case when a customer specifies a particular
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The Business Benefits of the EPA P2 Framework
August 2000
chemical or specifies strict technical parameters
that only one or a select group of chemicals can
meet. Early risk-related information in this
context allows the manufacturer to understand
the true costs associated with producing the
chemical. Regulatory reporting and monitoring,
storage and transportation issues, cleaning
during process shutdowns, personal protective
equipment and handling waste are all recurring
operational costs related to the toxicity of a
chemical. Such costs directly affect the
product's profitability. The P2 Framework can
provide data to help a company incorporate
estimates of such production costs into decision
making.
Costs of Using the P2 Framework
The P2 Framework incorporates both
EPA- and contractor-developed tools. Table 1
shows where individual methods in the P2
Framework can be obtained by indicating the
source of the methods:
• The EPA developed methods in the P2
Framework that are available at zero cost to
interested parties.
• The methods developed by the Syracuse
Research Corporation can be purchased in
packages for a cost of $l,500-$2,000,
depending on which methods are purchased.
• The OncoLogic® program developed by
LogiChem is more expensive, costing
$25,000. The total cost to purchase all the
methods in Table 1 amounts to no more than
$27,000.
In addition to the purchase costs of the
methods, resources are required to train
assessors (who should have a good
understanding of chemistry) in their use.
Another resource required is the actual time to
run the methods and analyze the results. Based
on the experience of Eastman Kodak, it is
estimated that the training costs no more than
$5,000 per person. Applying and analyzing the
results from individual methods can take a
trained assessor anywhere from 5 to 15 minutes
depending on the complexity of the individual
method. A more complete assessment, requiring
output from several methods, may take up to an
hour.
In sum, the initial up-front costs are up
to $27,000 for all the methods in the P2
Framework and most likely no more than $5,000
to train each user. Each time the methods are
applied, it will take the individual running the
model between 5 minutes to one hour to
complete an assessment.
The Product Development Process
In general, any new chemical or new
chemical intermediate is part of new product
development or product redesign. If a TSCA
PMN is required, the chemical must pass the test
of not posing an "unreasonable risk" to health or
the environment. Any chemical that does not
meet this requirement will incur further
development costs and the costs and competitive
consequences resulting from a delay in getting to
market. In this context, screening chemical
candidates early in the product development
process for health and environmental hazard is
the optimal point of application of the P2
Framework. An overview of a generic product
development process can help demonstrate how
the P2 Framework enhances chemical screening
and evaluation.
7
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The Business Benefits of the EPA P2 Framework
August 2000
Figure 2: Four Phases of a Generic Product Development Process
Concept
Technology
Production
Development
Development
Design
Marketplace
Presence
The Generic Product Development
Process
Broadly speaking, the product
development process is a sequence of steps
employed to conceive, design and
commercialize a product. The process typically
involves the creation of a varied set of
alternative product concepts and the subsequent
narrowing of alternatives and increasing
specification of the product until the product can
be reliably and repeatedly manufactured in a
cost-effective manner. Some organizations
define and follow a precise and detailed process,
while others may not even be able to describe
their process (though all firms have one, even if
by default). One thing is certain; every
organization differs. Each has a process that is at
least slightly different from every other
organization.
Figure 2 depicts four phases common to
most product development processes. Though
there will be differences among companies on
the detailed tasks under each of the four phases,
chemical technologies are managed broadly as
follows:
1. Concept Development. This phase is
geared toward developing several alternative
concepts that will meet the needs of the
customer. With most chemical-related
technologies, the product development team
will generally know what end result is
desired. For example, they may want a
chemical to perform a certain function, or to
replace an existing chemical for other
performance reasons. Experimentation and
creativity are essential in this phase so the
team can investigate a complete range of
potential alternatives. During concept
development, the team will also look at the
feasibility of alternative technologies and
often make and assess samples or
prototypes. Once the team starts making
prototypes or samples, the product
development process transitions into the
technology development phase.
2. Technology Development. This phase
generally involves actually making the
technologies conceived in concept
development. Existing equipment and
processes are used to determine the
appropriate route to make the chemical. The
goal is to select a technology that is most
efficient to manufacture. Experimentation
and iteration with work performed during
the concept development phase is not
uncommon during technology development.
Testing and refinement of different chemical
technologies are routinely performed.
Typically at the end of this phase, the
product development team selects a single or
a select few chemical(s) to be brought
through the final two phases.
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The Business Benefits of the EPA P2 Framework
August 2000
3. Production Design. Producing the chemical
on a larger volume scale is the focus of this
phase. Chemical specifications defining
acceptable performance, variability, and
other criteria are finalized. Performance
testing and further refining of the chemical
technology also is a common activity of this
phase.
4. Marketplace Presence. Production ramp-up
usually marks the beginning of this phase.
Workers are trained and any remaining
problems are worked out. Oftentimes
intensive testing continues during
production ramp-up. Preferred customers
may also be asked to use the product so the
company can evaluate how well it meets
their needs and how it performs. The
transition from production-ramp up to full-
scale production is usually gradual and
continuous, culminating in the launch of the
product in the marketplace.
Though Figure 2 suggests a linear and
sequential process, most organizations will have
some level of overlap, iteration, or feedback
loops among the different phases in their product
development process. Figure 3 shows three
variations of a generic product development
process. Each has four phases in its development
process but a different internal procedure by
which the activities within each phase are
conducted. The top diagram, Type A, shows a
strictly sequential process whereby work is
passed on, like a baton in a relay race, at the end
of each phase. The middle variant, Type B,
depicts a process where activities are extended
into the next phase. A highly active, integrated
and iterative process is illustrated in the bottom
variant, Type C. Which of these three internal
procedures a manufacture uses is often
dependent on the product being produced.
Significant time and resources are
required to bring a new product through the four
phases, with costs for chemical technologies
accruing and increasing as one moves from
concept development to marketplace presence.
For product development processes that follow
Types B and C processes, the distribution of
spent resources differs from a sequential
process. In general, the resources spent in
technology development and production design
occur early in the overall product development
process. The magnitude and timing of these
costs differs across firms, depending on the
internal procedure used to bring the product
development team through the four phases and
the type of product being developed.
For example, an entirely new product
requiring extensive research and new process
design can be very expensive, taking years to
develop. This type of product might follow a
Figure 3: Sequential and Overlapping Product Development Processes
Type A
Sequential
Type B
Overlapping
Overlapping
Development Phase
1. Concept Development
2. Technology Development
3. Production Design
4. Marketplace Presence
Source: Adapted from " The New New Product Development Game", Takeuchi and Ikujiro, 1986
9
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The Business Benefits of the EPA P2 Framework
August 2000
more overlapping product development process.
In contrast, a product that builds off an existing
technology, or chemicals that are intermediates
of final chemicals produced, usually follows a
sequential process and moves through the
product development process quicker with less
downstream impacts.
Regardless of whether total costs to
bring a new or modified chemical are in the
hundreds of thousands of dollars or the millions,
streamlining the process is a high priority for
any product development team. Each delay
directly translates into potential lost profits and
market share.
TSCA Review as Part of the Product
Development Process
Submitting a PMN application under
TSCA typically occurs in the middle to latter
end of production design when the team is
confident they have the best chemical candidate
to manufacture and incorporate into a product. A
company can expect three possible outcomes
once it submits a PMN application: (1) no action
is taken by EPA and the chemical can enter the
market without restrictions; (2) the chemical
may be regulated under a 5(e) consent order
with some restrictions or; (3) the chemical is
either banned by EPA or withdrawn by the
manufacturer.
The financial consequences of a
restriction or withdrawal of a PMN can be
severe. Section 5 (e) restrictions can include
consent orders requiring additional studies (such
as long-term toxicity studies), worker protective
clothing, emission controls or treatment
technologies, and other forms of use restrictions.
The magnitude of potential additional costs from
a 5(e) restriction can easily be in the hundreds of
thousands of dollars and sometimes reach
several million should the manufacturer decide
to comply with 5(e) restrictions and manufacture
the chemical. Additional documentation and
paperwork accompany most consent orders and
their binding legal nature offers an additional
incentive for manufacturers to do their best to
avoid them.
Opting to withdraw the PMN
application is not necessarily a way to avoid
costs for a potentially hazardous chemical. All
the resources spent during conceptual
development, technology development and
production design are irrecoverable. Assuming
the manufacturer is still interested in making the
new product, another chemical candidate must
be identified and brought back through the
product development process. In this respect,
costs for development, up to the point the
potentially hazardous chemical is detected, can
double.
It is in a company's interest to bring
only one chemical candidate through
the product development process and
obtain PMN approval on the first try.
The additional costs incurred by
withdrawing a chemical from the PMN process
or manufacturing a restricted chemical are
discussed in more detail in later sections of this
report. It is safe to say that it is in a company's
interest to bring only one chemical candidate
through the product development process and
obtain PMN approval on the first try. In doing
so, the manufacturer is avoiding withdrawing the
chemical after significant resources have been
spent on its development, or manufacturing it
with use restrictions. The best way to ensure no
use restriction on a PMN application is to
effectively screen out chemical candidates with
undesirable human health or environmental
impacts. The P2 Framework can help a company
meet these objectives.
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The Business Benefits of the EPA P2 Framework
August 2000
Chemical Evaluation and Screening in
the Product Development Process
Many companies have developed
internal systems for rapid, inexpensive chemical
screening to help collect some hazard- and risk-
related information on chemical candidates at
earlier phases of product development.
The P2 Framework enhances these
systems, in many cases significantly, because
data that previously did not exist can be obtained
rapidly, cost-effectively, and with minimum
prior information on the chemical being
evaluated. An examination of typical chemical
screening and evaluation methods with and
without the P2 Framework methodologies
illustrates the value of early information.
Screening new chemicals is complex.
The mere fact that a chemical is new means
there are little or no existing data about its
potential health or environmental impacts.
Companies can use several approaches to try to
learn about the health and environmental risks of
a given chemical candidate:
• A company can undertake literature searches
to see if a similar chemical is in the market
or has been previously researched internally.
• Some companies have an internal group of
specialists in health, safety, environmental,
and regulatory issues to try to estimate
health and environmental risk for a new
chemical. Specialists generally rely on
expert judgment and literature reviews to
assess potential hazard. Such assessments
will inevitably vary according to the prior
experience and qualitative judgment of the
assessors.
• Finally, environmental and health risk can
be assessed through laboratory testing.
Literature reviews and expert panels give at
best a qualitative assessment while the
results from laboratory testing are more
quantitative in nature.
Recall that under TSCA, the
manufacturer or importer is neither required to
test the new substance nor proactively assess its
expected health or environmental impacts when
submitting a PMN. Instead, the PMN
submission must contain, only to the extent
"reasonably ascertainable," the identity of the
substance, its expected use and exposure, its
expected production volume, and any available
health and safety data. Presently, there are few
positive incentives for a company to evaluate a
PMN chemical early in the product development
process. There are, however, significant
disincentives in the form of financial resources
and time required to thoroughly evaluate a
chemical prior to a PMN submission.
Qualitative and quantitative assessments
consume valuable financial resources. On the
qualitative side, there is no guarantee of
obtaining better information through literature
reviews and convening internal experts even if
the company is willing to commit the required
resources. Quantitative laboratory tests do
guarantee results, but can easily run in the tens
of thousands of dollars for each candidate
chemical. The larger the number of chemical
alternatives under consideration, the higher the
costs to gather quantitative data for chemicals or
intermediates. Since numerous alternative
candidate chemicals usually are identified early
in the product development process, the
resources and time required to perform
qualitative assessments and/or laboratory tests
on each candidate can become prohibitive. As
development costs, including assessment and
testing, are passed on to the consumer, the
product may be put at a competitive
disadvantage compared to a competitor's
product that did not undergo testing. In addition
to the direct financial costs, testing of a chemical
and subsequent data analysis takes time. Since a
primary objective in any business is to get
products to the market in the shortest time
possible, adding time to the product
development cycle also adds a strong
disincentive.
11
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The Business Benefits of the EPA P2 Framework
However, delaying health and
environmental information also carries business
risks. First, postponing such information until
later in the process (when the team is confident
they have a viable candidate) increases the
potential that regulatory barriers will be
identified too late in the process after significant
resources have been expended on the
candidate's research and development. More
importantly, risk-related information reduces
uncertainty early in product development. This
allows a company to better anticipate and
manage business risk through more informed
design of production processes and treatment
controls. It also allows business mangers to
understand the true costs of a chemical's
production—from measures to ensure worker
safety, to environmental controls, to handling
waste and byproducts. When decisions are made
in the face of high uncertainty, such costs may
not be factored into profitability projections. In
some cases omissions can significantly alter
conclusions regarding the financial viability of a
new product or process. Thus comprehensive
and timely health and environmental information
support both regulatory concerns and business
objectives.
Regulatory concerns and business
objectives drive the need for
comprehensive and timely health and
environmental information.
The objective of the product
development processes is to select the best
possible candidate in the shortest time with the
August 2000
least expense while minimizing health and
environmental impacts. It is appropriate that
technical performance (i.e., how well the
chemical meets its intended function) is the
primary focus of the product development team.
While chemical and environmental information
is viewed largely as a support function in the
overall product development process, these
kinds of data have enormous strategic value.
When incorporated early in the product
development process, such data can add
significant economic and environmental benefit
to the entire product development process.
The P2 Framework provides data that
previously were not available in a cost-effective
manner. Without the P2 Framework, health and
environmental evaluation very early in the
product development process can become very
time and resource intensive.
Benefits from information provided by
the P2 Framework impact three major areas:
1. Product development and process redesign
2. Product development speed and the impacts
on the time to bring new chemicals and
products to the marketplace
3. Production costs for the full-scale
manufacturing of new or existing products
We consider the benefits as they apply to each of
these areas in turn.
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The Business Benefits of the EPA P2 Framework
August 2000
Benefits of the P2 Framework in
Product Development and Process Redesign
The P2 Framework improves the overall
product development process, and increases the
value that the health, safety and environment
function within a given company delivers to this
process. The greatest opportunity for health and
environmental screening to positively affect
product development is in concept development,
the earliest phase of product development. At
this phase, insight into costly downstream health
and environmental effects can quickly remove a
candidate from the selection process.
The challenge for most companies is to
determine the most timely and cost-effective
manner to gather and integrate health and
environmental effects information into the
product development process. On some level,
the product development process is attempting
to balance the timing and resources required to
gather health and environmental hazard
information with the value of this information.
Table 2 summarizes the key benefits
of the P2 Framework associated with new
product development and process redesign.
More detailed discussion follows the table.
Table 2: Summary of Key Benefits to New Product Development and Process Redesign
LOWER PRODUCT DEVELOPMENT COSTS FOR NEW CHEMICALS AND INTERMEDIATES
Quantitative
Benefits
• Reduced (avoided) costs spent on technical development and R&D of new chemicals.
• Decreased resources spent on laboratory tests for human health and environmental testing.
Qualitative
Benefits
• A greater number of product combinations and product alternatives can be evaluated early in
concept development. This allows for greater technology innovation and is due to the quick and
cost-effective nature of the P2 Framework.
• Better and early information on environmental and health (E&H) impacts allows the product
development team to focus resources on technical performance. Knowing the E&H profile early
allows the team to anticipate any additional E&H lab testing that may be required for PMN
submittal to EPA. Such information may also alert the team to a chemical candidate that it
wants to screen out from the selection process based on E&H concerns before significant
resources have been spent on investigating its technical performance.
• Better information allows companies to compare competing product alternatives and helps them
identify environmentally sound technologies.
• Greater awareness of "green design".
Comments
The entire product development process is streamlined by better and earlier E&H information. The
quafitative benefits ail contribute to the potential realization of the two primary quantitative benefits.
13
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The Business Benefits of the EPA P2 Framework
August 2000
Reduced Technical Development Expenses
The benefit of having health and
environmental data on alternative chemical
candidates early in the product development
process can have a major impact on the overall
costs incurred in developing new chemical
technologies. Though the benefits are
probabilistic in nature, a closer look at the
resources spent in the first three phases of
product development points to the potential
savings associated with using the P2 Framework
as early as possible to screen out undesirable
candidates. Figure 4 illustrates the cumulative
resources spent on a single candidate as it goes
through the first three phases of the product
development cycle6. The activities under each of
the three phases were discussed earlier in the
product development process section of this
report. The far right of the graph corresponds to
the point a manufacturer typically submits a
PMN notice.
A goal of the team is to have a lead
candidate emerge from the pool of potential
candidates identified in concept development.
Any time a lead candidate is ruled out in one of
the later phases of product development, the
team must start over with a new candidate back
in the early phases of product development.
Accordingly, all the money and time spent
developing the lead candidate are irrecoverable -
the team must start the process over from the
beginning and commit resources to the next best
lead candidate.
The graph shows how the percentage of
total costs increases as a chemical progresses
through the first three phases in the product
development cycle. The distribution of costs
follows a linear product development process.
Companies that use a highly iterative and
integrated process, where some activities in
technology development and production design
overlap earlier phases, will have a cost structure
more front-loaded than that depicted in Figure 4.
Each company, of course, operates differently.
Thus, the average cost of bringing a chemical
candidate through the process will vary. In
general, the costs are substantial and may vary
between hundreds of thousands of dollars to
several million for each chemical (or process)
evaluated.
Figure 4: Distribution of Cumulative Costs Spent in
a Sequential Product Development Process
00
c
GO Q
° V.
o o
CM
100%
80%
60%
40%
20%
"ConceptTechnology
development developrrent
Reduction
design
Prnrhict Hevelnnment nhases Ihrnnph time
The distribution of costs approximate a typical linear
product development process and is based in part on an
example of the use of the methods at Eastman Kodak.
This example is presented in Appendix B.
14
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The Business Benefits of the EPA P2 Framework
August 2000
The graph illustrates how substantial
savings lie in avoiding increased product
development costs during the three phases of
product development. Note that, normally, the
majority of these costs are geared toward the
technical aspects of a chemical's performance
and its method of manufacture. As a technology
gets further and further along in product
development phases, the costs invested in a
single candidate can be quite significant.
Clearly, the earlier any adverse environmental
and health effects are known about all
candidates, the less likely a technology will
progress into the later phases of product
development. When a candidate is ruled out in
later phases of product development, the team
must select the next best alternative identified in
concept development and invest time and
resources in bringing it through the product
development process. The further downstream
the product development process an unfavorable
candidate is discovered, the higher are lost
product development costs.
The P2 Framework methods can help
improve the company's chance that a viable
Table 3: Product Development Costs Lost if Lead Candidate Must Be Dropped at
Progressive Stages in Product Development
Scenario ...
Lost Cost per $100,000 in Total
Product Development Costs*
• Lead candidate drops out at the beginning of technology
development
• Lead candidate drops out at the end of technology
development
• Lead candidate drops out at the beginning of production
design
• Lead candidate drops out in the middle of production design
• Lead candidate drops out at the end of production design
(does not get PMN approval)
$15,000 - $25,000
$25,000-$35,000
$40,000 - $50,000
$60,000 - $80,000
$100,000
*Distribution of costs for product development phases is based on Figure 5.
15
technical candidate will not be eliminated on
environmental or human health grounds in later
phases of product development. Ideally, the P2
Framework methods should be applied as early
as possible in concept development to minimize
resources spent on technical aspects of chemical
candidates. Table 3 looks at the increased
product development costs lost for each
$100,000 of total costs if the lead candidate must
be dropped at progressive phases in the product
development process. The magnitude of the
irrecoverable costs will vary with where in the
process the lead candidate was screened out.
Based on the distribution of costs in Figure 4,
the following rough estimates that can be made
are shown in Table 3.
As an example, if a lead candidate
requiring $500,000 in total product development
costs drops out at the beginning of production
design, an estimated $200,000-$250,000 is lost.
These lost costs translate into higher product
development costs as the next best candidate is
brought through the same set of activities
costing another $200,000-$25 0,000.
Though these costs are rough estimates
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The Business Benefits of the EPA P2 Framework
August 2000
and variable, candidates historically have been
dropped at all the phases listed in Table 3 for
environmental or human health concerns. Recall
that roughly 10% of all PMN submittals are
either voluntarily withdrawn from PMN review
or receive a 5(e) restriction by EPA. Assuming
the manufacturer still intends to make the
product, in either case they must now go back to
the beginning of product development process
and invest in resources in developing an
alternative chemical. Such a scenario results in
the greatest loss of product development cost to
the submitter.
The P2 Framework doesn't eliminate
product development costs but it does strengthen
the team's ability to minimize them. From a
business perspective, an organization wants to
do everything possible to increase the
probability that only one candidate needs to go
through the latter phases of the product
development cycle. In such a scenario, product
development costs are kept at a minimum.
Companies who employ some level of
qualitative health and environmental evaluation
early in the product development process may
eliminate some undesirable candidates, but
without quantitative data it is difficult for the
company to be certain of their decision.
Chemicals with undesirable health and
environmental characteristics still make it to
later phases of product development. No matter
at what phase a candidate is dropped, some spent
resources are irrecoverable, and are, in effect,
wasted.
Some managers consider various
failures and associated increases in product
development costs as an expected part of the
"cost of doing business" for the research and
development of new products. The P2
Framework can help eliminate avoidable
"failures" arising from health and environmental
concerns.
Human Health and Environmental
Testing Costs
Although there is no requirement that a
company submit toxicological data under the
TSCA PMN application process, many
companies will conduct some level of testing if
they suspect adverse health or environmental
risk. Companies typically decide, on a case by
case basis, what tests are needed to help meet
regulatory approval or minimize risk in their
operations, to their workers and to the
environment
The level and extent of testing varies by
company and by the chemical under
consideration. Table 4 below provides typical
costs for testing of substances using OECD
Testing Guidelines and good laboratory practice.
For human health, common tests may include
acute oral, dermal, and inhalation toxicity. Based
on data presented in Table 4, this would amount
to $21,650. Common tests for environmental
effects might include acute toxicity to fish, acute
toxicity to invertebrates (Daphnia), and aerobic
aquatic degradation costing an additional
$28,000. Some companies may spend much
larger amounts; following the Organization for
Cooperation and Development (OECD)
Guidelines the total cost for typical "base set"
testing is between $140,000 to $200,000.7
In addition to TSCA regulatory
approval, several companies who have used the
P2 Framework expressed its utility for new
chemical submission programs worldwide,8
notably in Canada and the European Union.
7 OECD, 1998.
8 Based on conversations with John Davis at Dow
Chemical, Randi Henderson at PPG Chemical, and
Chuck Ruffing at Eastman Kodak Company.
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The Business Benefits of the EPA P2 Framework
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Table 4: Typical Costs for Testing of Substances (in US Dollars)
Mammalian Toxicity
Physical-Chemical Properties
Acute oral toxicity
$ 2,840
Melting point/melting range $
440
Acute dermal toxicity
$ 4,560
Boiling point/boiling range $
490
Acute inhalation toxicity
$ 14,250
Density/relative density $
420
Repeated dose oral toxicity
$ 51,840
Vapor pressure $
2,140
Repeated dose oral toxicity with
Partition coefficient octanol/water $
3,490
reproductive/developmental screen
$ 154,930
Water solubility
3,440
Reverse mutation assay
$ 5,960
Dissociation constant in water $
1,450
In vivo cytogenetics-
Soil adsorption/desorption isotherm $
19,470
micronucleus assay
$ 34,820
In vitro mammalian cytogenetics
$ 14,690
Ecotoxicity
Developmental toxicity test
$ 79,240
Fish acute toxicity $
10,950
Reproduction and fertility effects
$ 425,730
Aquatic invertebrate acute (Daphnia) $
7,230
Chronic oral toxicity
$ 324,600
Algal toxicity $
8,830
Carcinogenicity
$ 539,000
Aquatic invertebrate chronic (Daphnia) $
26,400
Environmental Fate and
Pathways
Hydrolysis as a function of pH $
9,140
Aerobic aquatic degredation $
10,030
Source: Organization for Economic Co-operation and Development, 1998.
In addition to regulatory approval, need
for chemical assessment is also driven by
product recall, brand image, and competitor
issues. To manage such risk, companies are
presented with several alternatives: test all
chemical candidates, test the most likely
technical winners, or test only the best technical
candidate.
Regardless of the total cost for testing,
the P2 Framework can reduce environmental
testing costs in two ways. First, in some cases,
information from the P2 Framework
methodologies will allow a company to avoid
some tests altogether, thus lowering the amount
of money spent on laboratory testing in the PMN
submittal process. This is especially true for
cases where a company may decide to test at an
early point a particularly promising chemical
candidate with highly uncertain health and
environmental impacts. The second benefit is
realized in those circumstances where the P2
Framework screens out a candidate that
otherwise would have survived the entire
product development process up through PMN
submittal and ultimately be dropped. If the tests
indicate that the chemical presents potential
health and environmental effects and the
company decides to withdraw the chemical and
start the entire process from the beginning, a
second chemical also will go through the
product development process, including a
similar series of tests.
Though these costs are insignificant
compared to the costs spent on technical
development of the second candidate, the money
spent on testing the first candidate is
irrecoverable. By using the P2 Framework, the
team already has estimated the health and
environmental characteristics of the new
chemical and tests can be conducted to confirm
these predictions. The P2 Framework greatly
increases the probability that a company will test
17
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The Business Benefits of the EPA P2 Framework
August 2000
only one candidate prior to submitting their
PMN application.
The most significant testing cost may
come if a new chemical receives a 5(e) action in
the form of a consent order requiring additional
toxicological data. For example health tests for
reproductive and fertility effects, chronic oral
toxicity and carcinogenicity all run in the
hundreds of thousands of dollars. Note that a
company can choose not to manufacture the
chemical because of the consent order. This is
not necessarily an attractive alternative from the
standpoint of time or money-the company
would still need to develop an alternative
chemical.
A More Streamlined Product
Development Process
Early and more definitive chemical
screening will further streamline any company's
product development process. The P2
Framework reduces uncertainty and allows the
product development team to focus its resources
on its core function - the technical performance
of the new chemical in relation to the overall
design criteria of the product being developed.
In addition, timely and accurate information
allows the team to better manage risk and can
decrease time and resources spent on problem
identification.
An important way in which the P2
Framework streamlines the product development
process is that it allows the product development
team to consider a larger number of chemical
candidates. Without using the methods,
narrowing down 12-15 chemicals to one or two
in the early phase of product development can
be a lengthy and costly process. This can be a
daunting, or sometimes an impossible, task
especially if the team must narrow the chemical
candidates in a short period of time. The P2
Framework actually can reduce this burden
because candidates can be screened quickly and
inexpensively. More chemical candidates can be
considered early in concept development by
using health and environmental concerns as a
preliminary screen.
The P2 Framework allows the product
development team to consider a larger
number of chemical candidates.
There is a more subtle point to
increasing the number of candidates evaluated—
the product development team may find a much
better candidate from the larger potential pool.
The higher the number of candidates to choose
from, the greater the chances that the best
possible technical and environmentally
preferable candidate will be selected. In getting
down to a manageable number of candidates for
more resource intensive evaluation, the product
team does not falsely rule out some of the initial
candidates due to uncertainty of their health and
environmental impacts. Thus, in addition to
screening out undesirable chemical candidates,
the P2 Framework also will help prevent
potential technically superior candidates from
being ruled out due to uncertainty regarding
their health and environmental characteristics.
In using the P2 Framework
methodologies, EPA's process for review
becomes more transparent to the applicant. An
applicant also becomes a better judge of when a
chemical may require additional information. In
such cases, the applicant can perform the tests
and submit the information as part of the TSCA
PMN application. A more informed application
greatly reduces the chance of an unfavorable
action by the EPA.
The P2 Framework provides a logical
framework for comparing chemical technologies
and helps companies identify environmentally
preferable products. Consistent, quantitative
information gives the product development team
the ability to rank, in a relative fashion, the
leading candidates according to environmental
and health hazard. Such rankings can be
incorporated into other corporate efforts such as
Design for the Environment, or can be used to
help develop new environmentally preferable
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The Business Benefits of the EPA P2 Framework
August 2000
product lines. Over time, the product
development teams learn to design chemicals
that effectively minimize environmental impacts
yet satisfy all cost and performance goals. By
making the use of health and environmental
information standard business practice, use of
the P2 Framework provides long-term and
recurring benefits.
Together, the benefits of being able to
evaluate more candidates and having consistent
and quantitative information can greatly
strengthen a company's entire product
development process. Put simply, better and
earlier information leads to more certainty,
quicker decisions, and smarter design. This is
perhaps the greatest impact the P2 Framework
has on product development in that it
institutionalizes positive change to a company's
evaluation component in new technology
development.
Benefits of the P2 Framework in Product
Development Speed
The P2 Framework has demonstrated a
great potential for decreasing costs through
streamlining the product development process
and by increasing the probability that only one
candidate will need to go through the latter
phases of the product development cycle.
However, these avoided costs only tell half the
story of the possible benefits of the P2
Framework. For cases where the profitability of
a new product is dependent on its introduction
into the marketplace, the savings in the speed of
new product development can be equally or
perhaps more, important. Table 5 provides a
summary of the benefits of the P2 Framework as
they relate to product development speed.
Figure 5 depicts potentially lost
revenues when a new product does not meet its
target date for market introduction. There are
two situations contributing to potentially lost
revenue. First is decreased market share from
entering late into the market place. Second, a
new product can lose revenue from a shorter
sales life. Technology-based new products are
susceptible to lost revenue from both types of
situations. Aggregating lost revenue from slow
introduction of all product poses serious risk to a
Table 5: Summarv of Kev Benefits to Product Develornnent SDeed
REDUCED TIME TO MARKET FOR NEW PRODUCTS/CHEMICALS TO MARKET
Quantitative
Benefits
• Faster time to market for new product introduction by minimizing the chances that a lead
candidate will fall out of the product development process for health, environment, or safety
concerns.
• Avoid a 5(e) regulatory action for PMN review which may require additional information or
testing, causing delays in getting EPA approval.
• Minimize cycle time for PMN review by submitting an informed and complete application.
Qualitative
Benefits
• Reduced probability that a candidate is dropped, delaying the product team as they evaluate
another candidate.
Comments
The magnitude of the benefits can be very large owing to increased revenues from a longer sales
life and potentially larger market share for early or on-time market introduction. Benefits will vary
from project to project and depend on factors such as missed product sales, volume for the delayed
time period, product price and profit margin, and the overall competitive environment of the
product.
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The Business Benefits of the EPA P2 Framework
August 2000
business's ability to compete.
Figure 5: Lost Revenue from Late Market
Introduction of New Products
Revenue from
« longer sales life
'•R
Early Late Time
intro intro.
Source: adapted from Product Innovation Pure
and Simple (Robert, 1995).
The P2 Framework can enhance the
product development team's ability to meet their
target market introduction schedule. Any time a
candidate falls out of the product development
process, the entire schedule is delayed as the
product development team must start over with
the next best candidate. The length of the delay
will depend on exactly where in the product
development process the candidate was screened
from consideration. This can amount to weeks or
months or in extreme cases greater than a year.
The P2 Framework can eliminate such delays by
providing information at the earliest phases of
concept development.
Any chemical or intermediate that must
go through New Chemical Review under TSCA
is also susceptible to two types of delays:
1. Delays caused from a 5(e) action
during PMN review. The length of
delay will depend on the type of
action. For example, demands for
additional data or testing can
involve several weeks or months for
some types of laboratory testing and
up to several years if long-term
toxicity testing is required.
2. Delays from regulatory approval
cycle time. Under TSCA, the EPA
can extend the review period from
90 days to 180 days with a showing
of cause (e.g. concern may exist but
there may not be enough
information in the PMN application
to make a conclusive determination
in the 90-day review period).
Conversely, manufacturers can
shorten the 90-day review time
under certain TSCA exemptions.9
Savings from reduced development time
will depend largely on whether the sales volume
is sensitive to the window of opportunity for
product sales. This is often the case for new
products and technologies where few existing
products can compete or where the leading
technology is highly dynamic. Computers and
imaging technologies are examples. In such
cases, meeting the target time for product
introduction takes on a critical role as a driver of
profitability.
Delayed introduction of a new product
can result in huge financial losses, amounting to
hundreds of thousands or millions of dollars.
Technical, production-oriented and regulatory
factors contribute to a new product reaching the
market. Though a complex and dynamic
process, the more control the product
development team has over any of these factors,
the better the chances of meeting the desired
market introduction schedule. The P2
Framework helps ensure products with
undesirable health and environmental impacts
are screened out as early as possible. This helps
avoid costly interventions where the product
development team is forced to drop an
undesirable candidate and re-start the
examination of an alternative chemical
candidate.
9 For further detail on extensions and exemptions, see the
EPA OPPT New Chemical Program website at
www, epa. gov/opptintr/newchms/. Specific questions can
also be directed at the TSCA hotline at 202-554-1404.
Revenue from
larger market share
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The Business Benefits of the EPA P2 Framework
August 2000
Benefits of the P2 Framework in Manufacturing
And Operations
The focus of this report has
been on new chemical development and
chemical screening as part of product
development. However, the P2 Framework also
provides substantial benefits long after PMN
submittal in downstream manufacturing
operations. The benefits described in this section
can also be realized for chemicals where a new
chemical does not go through screening (there
are no alternatives) or even for chemicals not
subject to PMN approval under TSCA.10 While
the same challenges associated with chemical
screening do not exist, information from the P2
Framework provides strategic value relating to a
chemical's production. Table 6 provides an
overview of these benefits.
Early, quantitative information on health
and environmental hazard allows companies to
make more informed decisions that impact
manufacturing operations. Usually, there is more
than one technically feasible method for making
any given chemical product. The challenge to
companies is to find the most economical way,
in order to compete effectively against others
who may offer the same or similar product.
Table 6: Summarv of Kev Benefits to Ongoing Manufacturing and ODerations
LOWER PRODUCTION COSTS FOR THE FULL-SCALE MANUFACTURING OF NEW
CHEMICALS
Quantitative
Benefits
• Decreased costs associated with using hazardous chemicals (e.g., environmental reporting,
testing, employee training and personal protective equipment, waste treatment, disposal,
handling spills).
• Reduced probability the submitted chemical will be subject to 5(e) actions by EPA which
may require either monitoring and tracking or more controls and treatment during
manufacturing.
• Decreased potential for downstream interventions such as product recalls or major changes to
the manufacturing operation (related to unanticipated long-term toxicological effects of a
product or technology).
Qualitative
Benefits
• Improved performance of the health and environment team in supporting the overall product
development process.
• Enhanced ability to identify and drive P2 outcomes.
Comment
Increased production costs typically result when environmental and health risk information is
unknown or unanticipated. Bv providing this information earlv in product development, the team
can make informed decisions about the tradeoffs in technical performance and the production
costs related to using competing chemical candidates.
10 The case study in Appendix B documents the benefits
from estimating chemical properties of a chemical to
determine safe handling procedures.
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The Business Benefits of the EPA P2 Framework
August 2000
Sometimes there are significant differences in
the health, environmental or safety
considerations amongst alternative chemical
inputs, synthetic routes or processes.
Increasingly, chemical manufacturers must
consider such factors in their choice of
approach. As chemical facilities are one of the
largest producers of toxic waste and the source
of significant releases to the environment, the
environmental stakes in these decisions are high.
So are the financial stakes and the P2
Framework can help companies evaluate such
considerations as a source of competitive
advantage.
Consider the example when a customer
submits a request for proposal (RfP) for the
manufacturer of a specific chemical and there
are no alternatives to consider. The P2
Framework can provide data to allow a
manufacturer to accurately help capture costs
associated with the manufacturing and
management of byproducts from the specific
chemical at the RfP stage. Early data can also be
used during process design to look for cost
savings opportunities (by reducing waste
through P2, eliminating waste altogether, or
finding more cost-effective ways to manage
waste). The absence of health and environmental
data increases the likelihood that significant
costs will be overlooked or cost-saving
opportunities will be missed—either one will
negatively impact the bottom line. The P2
Framework can help provide such data quickly
and at minimal cost.
Manufacturing chemicals by nature
carries many additional, and often hidden,
costs.11 When considering any chemical
manufacturing process, a company must specify
correct personal protective equipment, process
controls and proper safety guidelines. Sound
waste management techniques also must be
defined. Issues such as storing and transferring
chemicals and cleaning during production
shutdowns all must be worked out. Once in the
marketplace, a new chemical-based product may
require hazard communications vehicles such as
material safety data sheets and product labels.
Communication on proper use may also be
required so customers are properly informed. In
addition, a company must be prepared to
respond to customer inquires and concerns. All
of these activities translate into additional costs
or labor and are incurred throughout the
production lifetime of the chemical. The
magnitude of these costs is often related to the
toxicity of a chemical. If they are not recognized
or factored in to early decision making, they can
greatly alter the profitability projections of a
new product.
Manufacturing chemicals by nature
carries many additional, and often
hidden, costs.
For the case of new chemicals, many of
these same costs can be triggered by a restriction
under Section 5(e) of TSCA. In addition, many
orders may require extensive monitoring and
reporting. Whether the costs are driven by
TSCA actions or a company's internal health,
safety and environmental policy, it is crucial to
understand the health and environmental impacts
of proposed manufacturing as early as possible.
The P2 Framework can strengthen the health and
environmental team's capabilities in this area.
By highlighting possible risk issues, a company
can identify the otherwise unanticipated costs of
production and management of toxic chemicals.
This allows the entire product development team
to make more informed decisions and to balance
the technical performance of a chemical with its
health and environmental impacts.
Better health and environmental
information also decreases the potential for
downstream interventions such as product
recalls or major changes to the manufacturing
operation (related to unanticipated long-term
toxicological effects of a product or technology).
While such occurrences are less frequent, the
11 For a more detailed discussion on the full costs of
chemical use in manufacturing processes, see Kauffman
Johnson et al.
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The Business Benefits of the EPA P2 Framework
August 2000
financial consequences can be enormous. Once a
chemical is fully integrated into the economy, it
becomes more difficult and costly to address
than before it is introduced. PCBs in electronic
equipment and other applications are a case in
point. By knowing whether a chemical candidate
is potentially hazardous early in the product
development process, the health and
environmental team can avoid having these
chemicals enter the marketplace and create
unnecessary and unwanted financial risk for the
company.
Conclusions
Competitive advantage in today's
market is achieved and retained by a constant
replenishment of new products and services. In
technology-based companies, product
development costs, time-to-market, and full-
scale manufacturing costs are all key ingredients
to achieving this competitive edge.
EPA's P2 Framework helps firms obtain
a competitive edge by enriching health and
environmental information early in the concept
development phase of the product development
process. Benefits from the P2 Framework vary
across companies because product development
processes and products themselves are highly
diverse. For some applications, the primary
benefits will be from reduced product
development costs; in others, it may be reduced
manufacturing costs; in yet another, it may be in
meeting the target date to bring a new product to
market.
In addition to these project-specific and
predominantly economic benefits, there are less
tangible benefits that will be realized every time
the company uses the P2 Framework methods.
These include the benefits associated with
streamlining the product development process
and improving the performance of the health,
safety and environmental team. These benefits
can greatly enhance a company's ability to
proactively produce environmentally preferable
products and design processes with distinct
pollution prevention outcomes.
Given the project and company-specific
nature of the benefits, this report attempts to
provide a conceptual model that a company can
apply to its unique context. Internal
communications between the health, safety and
environmental team with other members of the
product development team are critical to the
realization of the full benefit potential of the
methods in the P2 Framework.
In thinking about how the P2
Framework may enhance a company's product
development process, two considerations merit
attention. First, it is important to describe the
process a company currently uses to conduct
health and environmental evaluations. In
particular, at what stage in the product
development process and at what level of detail
is health and environmental screening currently
performed? Do staff conduct literature reviews
and try to assess a chemical candidate's health
and environmental hazard early in the concept
development phase? Are they able to screen
candidates on health and environmental criteria
early in the chemical process? Or does technical
performance evaluation of new technologies
predominantly guide the product development
process with health and environmental issues
investigated later in product development? Do
staff rely predominantly on laboratory testing to
assess health and environmental hazard? The
answers to these questions will help determine
the strategic potential of earlier, better, and more
definitive health and environmental information
provided by the P2 Framework.
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The Business Benefits of the EPA P2 Framework
August 2000
The second consideration is the
company's past experiences in product
development with chemical technologies. What
is the track record with submitting PMN
applications under TSCA? How frequent are
5(e) actions? How much are they costing and
how much did they delay product production?
Have applications been withdrawn from the
PMN process? Has it been discovered very late
in the product development process that a
chemical technology has unacceptable health
and environmental characteristics? Have the
environmental properties of any chemicals used
in processes, or in products caused costly
downstream interventions in the marketplace? In
managing wastes? In protecting workers? In
legal liability?
A challenge in quantifying the benefits
of the P2 Framework methods is that a company
will never conduct a parallel "control" study to
see what types of decisions would have been
made if the methods were not used. However,
looking at past experiences and associated
product development costs provides a strong
indication of the types and magnitude of costs
the P2 Framework can help reduce or avoid.
Product development processes can always be
improved and the P2 Framework can greatly
enhance health and environmental evaluation
and screening capability by providing definitive
data early in the process.
With a baseline of what constitutes
health and environmental evaluation and
screening protocol as well as knowledge of past
experiences in product development, a company
can use this conceptual model to see where and
how certain methods can benefit the product
development process. Since the costs of
purchasing and training individuals to use the P2
Framework methods is relatively low and the
methods can be used over and over again, their
overall potential for continuous cost and
environmental improvement is substantial.
Reflecting on the application of the P2
Framework in chemical-related product
development, it is again made clear how the
traditional lines between environmental
concerns and core business functions are
increasingly blurred. This, in turn, is another
sign of the integration of environmental
considerations into strategic decision-making.
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The Business Benefits of the EPA P2 Framework
August 2000
References
Anastas, Paul T., et al., "Promoting Green Chemistry Initiatives," Environment Science and Technology,
March 1, 1999.
Davis, John (Dow Chemical). Personal Communication, July 1999.
Henderson, Randi (PPG Chemical). Personal Communication, July 1999.
Hulse, Michael (Shell Chemical). Personal Communication, July 1999.
INFORM, Toxics Watch 1995, INFORM, New York, NY, 1995.
Kauffman Johnson, Jill, T. Votta, E. Reiskin and J. Claussen. Tools for Optimizing Chemical
Management. Chemical Strategies Partnership: San Francisco, 1999.
Kodak Technology Transfer Team, EPA-Developed Methodologies for Assessing the Fate and Hazards of
Industrial Chemicals, A Summary of Eastman Kodak Company's Experience with their Use and
Applicability in Risk Assessment, Health and Environment Laboratories, Eastman Kodak Company,
Rochester NY, Final Report, May 13, 1996.
O'Donoghue, John (Eastman Kodak Company). Personal Communication, July 1999.
Organization for Economic Co-operation and Development, "Savings to Governments and Industry
Resulting from OECD Environmental Health and Safety Programme," Paris: OECD Environment
Steering Group, ENV/EPOC/MIN(98)5, February 19-20, 1998.
Organization for Economic Co-operation and Development, "US EPA/EC Joint Project of the Evaluation
of (Quantitative) Structure Activity Relationships," Paris: OECD Environment Monographs No 88,
OECD/GD(94)28, 1994.
Rausina, Gary (Chevron Corporation). Personal Communication, July 1999.
Robert, Michael. Product Innovation Strategy Pure and Simple: How Winning Companies Outpace Their
Competitors, McGraw-Hill, New York, 1995.
Ruffing, Charles J., Waugh, William, T. "Quantitative Structure Activity Relationships as Pollution
Prevention Tools in the Product Development Cycle, " presentation paper for QSAR98 Conference,
Baltimore MD, May 17-20, 1998.
Smith, Preston, G., and Reinertsen, Donald, G. Developing Products in Half the Time, Van Nostrand
Reinhold, New York, 1991.
Stadler, Nicole, Chris Steel and John Weeks (SC Johnson). Personal Communications, July 1999.
Takeuchi, Hirotaka and Nonaka, Ikujiro. "The New New Product Development Game," Harvard Business
Review, reprint 86116, January-February, 1986.
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The Business Benefits of the EPA P2 Framework
August 2000
Ulrich, Karl, T., and Eppinger, Steven, D. Product Design and Development, McGraw-Hill, New York,
1995.
US EPA, Office of Pollution Prevention and Toxics, Assessment Methods Used in the Office of Pollution
Prevention and Toxics, An Overview, Revised Draft, April 28, 1997.
US EPA, Office of Pollution Prevention and Toxics, Pollution Prevention Assessment Framework
Manual, October 1997.
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The Business Benefits of the EPA P2 Framework
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Appendix A : Using the P2 Framework to Screen Chemicals Early in Design
A Case Study from Eastman Kodak
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Using the P2 Framework to Screen Chemicals
Early in Design - A Case Study from Eastman
Kodak
Application of the P2 Framework
The EPA P2 Assessment Framework
(P2 Framework) was used to screen chemical
candidates during the design of a new product—
a reformulation of a chemical developer for one
of Kodak's major film lines. A major part of the
reformulation involved replacing one of the
chemical components, a lengthy and costly
process as Kodak evaluates the technical
performance of the replacement chemical. Since
the reformulated developer has other chemical
constituents, the compatibility of the
replacement chemical is also part of the overall
product development process. The process by
nature is iterative. It entails taking anywhere
from 5 to 20 or more potential chemical
candidates, identifying "lead" candidates, and
finally selecting a replacement ready for
commercialization.
The reformulation in the proposed film
line is significant because it affects all customers
that process this type of film. Compared to many
reformulation activities, it is also noteworthy
because it involves actual chemical replacement
rather than modification to an existing
formulation.
The largest research costs incurred
during product development are related to the
technical evaluation of individual chemical
candidates for their photographic properties. The
product development team is encouraged to be
innovative during the initial creation of chemical
candidates. However, due to the high cost of
technical evaluation for each and every
candidate, Kodak will narrow the candidates to 4
or 5 lead candidates very early in the product
development process. As it gets further in the
product development cycle, the product
development team will focus on a single "lead"
candidate.
Narrowing the initial list of candidates
to 1-2 lead candidates is accomplished through a
series of screens on photographic performance,
potential human health impacts and potential
ecological hazard. In Kodak, as in most
companies, the product development team's
primary focus is on the technical evaluation of a
chemical's photographic performance while
Health and Environmental specialists provide
support through the assessment of health and
environmental risk. Since these chemicals by
nature are new, there is limited information on
their potential health and environmental impacts.
Compiling such data through laboratory tests
and controlled studies is a costly and sometimes
lengthy process, often reserved for the later
phases of product development when the team
believes the "lead" chemical has satisfied
technical performance criteria. With little health
and environmental information, the product
development team is often forced to screen the
initial pool of chemical candidates down to a
manageable 4-5 without knowing the risk
tradeoffs amongst the 19 initial candidates.
The P2 Framework was designed to
provide quantitative health and environmental
data based on the chemical properties of a given
chemical. Thus, the P2 Framework can provide
timely information in a cost-effective manner so
data can inform decisions made early in the
product development process. Kodak's Health,
Safety, and Environment (HSE) department
recognized an opportunity to enhance their
knowledge of potential replacement candidates
for this reformulated developer through use of
the P2 Framework. In this case, the P2
Framework was aimed at enhancing ecological
hazard information at the earliest possible point
in the product development process. By
screening out chemicals with undesirable
ecological properties, the team could avoid
expending resources on technical performance
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The Business Benefits of the EPA P2 Framework
August 2000
tests and human health evaluation in later phases
of the product development process. This case
study highlights a primary benefit of using the
EPA developed P2 Framework — to provide
valuable, quantitative information early in the
chemical design process.
Kodak relied primarily on two models
within the EPA P2 Framework: ECOSAR, a
model that estimates acute toxicity and, where
available, chronic toxicity for fish, invertebrates,
and algae; and KoW, a model that estimates a
chemical's octanol/water partitioning
coefficient. (ECOSAR requires limited input,
including the octanol/water partitioning
coefficient and the molecular weight of the
substance.) The assessor needs a basic
understanding of organic chemistry, ecotoxicity
and structural activity relationships. He/she also
needs to be familiar with the Simplified
Molecular Line Entry System (SMILES)
notation. SMILES is a system to translate a
chemical's structure into a string of symbols that
is easily understood by computer software. In
summary, the P2 Framework, SMILES notation
and molecular weight allow a user to estimate
acute and chronic toxicity to aquatic
organisms.12
Summary of key findings
Note that this case study compares the
benefits of applying the EPA P2 Framework in
the chemical selection process to a hypothetical
"business as usual" (BAU) scenario where
chemical selection is made without using the P2
Framework. When the EPA P2 Framework was
actually applied, Kodak did not simultaneously
perform a control study to try to make the exact
same decision without the EPA P2 Framework.
Consequently, the BAU scenario is based on the
best estimates from those individuals directly
12 At Kodak many employees already had the requisite
skills and were aware of SMILES notation such that no
additional resources were needed to train users in the
SMILES system. This will likely be true at most large
companies but may net be true at some smaller
companies.
involved in the project on what would have
happened if the EPA P2 Framework were not
used.
The major benefits for this case are outlined
below. Further discussion of each benefit can be
found in the discussion following the summary.
• Between $13,500 and $100,000 of
additional costs were avoided for each
$100,000 dollars Kodak spends in
photographic testing for a new chemical
candidate. The P2 Framework doesn't
eliminate costs of photographic performance
testing; rather, the P2 Framework
strengthens the ability of the product
development team to minimize them.
Benefits are realized by reducing the
probability that that such costs will be
expended on a chemical candidate that will
eventually be dropped from consideration on
health or environmental grounds.
For example, assume it costs Kodak
$100,000 to bring a single candidate through
photographic testing. If the lead chemical
candidate drops out for health or
environmental concerns after Kodak invests
$13,500 in time and resources, then this
$13,500 is irrecoverable. Kodak must begin
again with the next best candidate with the
goal of having it go through the entire
process successfully at a cost of $100,000.
The total money spent if this second
candidate makes it through the product
development process is $113,500 ($13,500
on the first candidate that was dropped and
$100,000 for the second candidate that made
it through the entire process). If an
unacceptable candidate is discovered very
late in the process then the amount of
irrecoverable resources spent approaches the
full cost of bringing a single candidate
through photographic performance testing
(in this case $100,000). Similarly, the
magnitude of savings from the P2
Framework increases if more than one
candidate gets screened before resources are
expended on photographic performance
testing.
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• The P2 Framework reduced Kodak's
ecological evaluation costs by roughly 80%
($100 per chemical with the P2 Framework
compared to $500 per chemical without the
P2 Framework). Further, the P2 Framework
provides quantitative estimates of ecological
risk whereby assessments without the P2
Framework often must rely on the judgment
and experience of internal experts. Note that
the magnitude of the costs to obtain
quantitative data with the P2 Framework is
minimal compared to overall product
development costs.
• The number of initial chemical candidates
identified that could be investigated as
potential replacement chemicals increased
from 4-5 without the P2 Framework to 19
with it.
Discussion
A comparison of how chemical
candidates are evaluated with and without the
EPA methods is followed by a discussion of the
benefits from using the P2 Framework.
Analyzing the Reformulation Components
With and Without the EPA P2 Framework
The product development team initially
identified 19 potential candidates as a
replacement for the chemical in the reformulated
developer. In general, the product development
team is encouraged to be innovative in coming
up with the initial pool of chemical candidates.
The number of these initial 19 chemical
candidates chosen for further investigation in a
given product development scenario will depend
on many project-specific factors, including:
available information on any similar chemicals,
available resources, and the target date to
manufacture the new product. Time and
resources, as always, dictate the overall number
of initial candidates that can be more fully
investigated.
The product development team's goal
was to reduce the number of initial candidates
down to a manageable 4-5 "lead" candidates
very early in the product development process.
Screening was based on 3 criteria: 1) technical
performance, 2) potential health impacts and 3)
potential environmental hazard. A challenge for
the product development team is minimizing the
resources expended to gather data while getting
enough data to make informed decisions on
screening out the initial 19 candidates. On one
hand, they do not want to expend significant
resources on a chemical candidate that may be
dropped early in the process as they narrow the
initial 19 candidates down to 4-5. On the other
hand, there is a risk in going forward with a
select 4-5 chemicals when little is known about
the potential health and environmental hazard;
the risk being that a chemical could be dropped
for unacceptable health and environmental
reasons late in the product development process,
after significant resources have been expended
on evaluating its photographic performance.
Prior to the use of the P2 Assessment
Framework, Kodak employed internal
procedures and processes to estimate health and
environmental risk of new chemicals. During the
early phases of product development, when there
are many potential chemical candidates, an
internal group of specialists in health, safety,
environmental, and regulatory issues would be
used to estimate health and environmental risk
for a given chemical. The group of specialists
rely on expert judgment, literature reviews, and
their past experience with similar chemicals to
assess potential hazard. The assessments
therefore vary according to the prior experience
and qualitative judgment of the assessor.
Obtaining quantitative data on new
chemicals typically is done through costly
laboratory testing or long-term studies.
Consequently, the team relies on the qualitative
assessments an internal group of specialists
during the early phases of product development.
Because these qualitative assessments take time
and resources, Kodak would have not have
performed them on all of the initial 19
candidates. Therefore, the first screen going
from the initial 19 candidates down to 4-5 lead
candidates would have been based on known or
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The Business Benefits of the EPA P2 Framework
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anticipated technical properties of each
chemical.
Using the EPA P2 Framework, All 19 of
these candidates were screened using ECOSAR
which estimates the toxicity of a given chemical
to aquatic organisms. Through the use of the
EPA P2 Framework, these 19 candidates were
reduced to five "leading" candidates based on
estimated ecological toxicity. These five
"leading" candidates then underwent initial
technical performance and human health
screening. Using ecological hazard information
as the first screen represented a departure from
the typical process of narrowing down the initial
The EPA P2 Framework augments
the existing process by providing
quantitative estimates for each
chemical candidate based on its
chemical structure.
19 candidates primarily on technical grounds.
Even with the EPA P2 Framework,
Kodak continues to use its internal panel of
experts to lend knowledge and help make
decisions to screen chemicals with unacceptable
human health or ecological risk. The EPA P2
Framework augments this process by providing
quantitative estimates for each chemical
candidate based on its chemical structure.
Without the use of the EPA P2
Framework, Kodak would not have been able to
adequately consider all 19 of the originally
identified candidates. The process of relying on
literature reviews and expert judgment of
internal specialists is a time consuming process.
Further, even if Kodak judged it a valuable
investment of time and resources, this qualitative
process does not guarantee quantitative data on
the ecological impacts of the chemical
candidates. This is especially true if the new
chemical is not similar to any known chemical
and the literature search falls short. To get from
19 initial candidates down to these 4 or 5 "lead"
candidates, preliminary evaluations are made
with the "best available information" and often
rely on an expert's best judgment. Given the
limited resources and high development costs of
designing new chemicals, it is sometimes safer
to be conservative and possibly rule out one
candidate over another very early in the product
development process simply because there is no
ecological data or human health data.
In summary, the primary differences in
Kodak's chemical screening and evaluation
process with and without the EPA P2
Framework in this case are:
1. The EPA P2 Framework allowed
the team to evaluate more potential
candidates (19 compared to 4-5)
2. The EPA P2 Framework provided
quantitative data for each chemical
candidate evaluated. Without the P2
Framework, the ability to gather
quantitative ecological hazard
information is often infeasible.
3. Better and more consistent data
fundamentally changed Kodak's
chemical screening evaluation
process. With the P2 Framework,
Kodak was able to use ecological
hazard screening as a primary
screen, followed by more resource
intensive screens of human health
and technical performance. This is
in contrast with simultaneous
screening of human health,
environmental and technical criteria
under BAU.
Benefits of The EPA P2 Framework
Overall, the use of the EPA-developed
P2 Framework aided in the development of a
more complete and quantitative health and
environmental assessment for this product
reformulation. It provided Kodak with an
understanding of the environmental effects for
the new chemical and the feedstocks used in its
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The Business Benefits of the EPA P2 Framework
August 2000
synthesis. This information was obtained in a
cost-effective manner and was able to be used
early in the product development process to
allow for more informed preliminary screening
decisions.
• Increased Number of Chemical Candidates
can be Evaluated Early in the Product
Development Process.
As mentioned above, the Kodak product
development team was able to evaluate 19
candidates instead of 5 by using the P2
Framework. Increasing the throughput of
candidates analyzed allowed the team to spend
limited resources on a larger pool of candidates.
The higher the population to choose from, the
greater the chances that the best possible
technical and environmentally preferable
candidate will be selected and designed.
Allowing a larger number of candidates also
gives the product development team more
flexibility to create innovative designs. In short,
through the process of getting down to a
manageable 4-5 candidates for more resource
intensive evaluation, the product team did not
falsely rule out some of the 19 candidates
because of uncertainty in ecological impacts.
• Reduced Costs for Ecological Assessment of
Chemical Candidates.
The P2 Framework reduced the costs for
ecological evaluation. The estimated per
candidate cost to perform literature reviews and
conduct ecological assessments without the P2
Framework was between $500 and $1,000 per
candidate. In using EPA's ECOSAR method,
these costs are reduced to roughly $100 per
candidate. The cost estimate includes the labor
cost associated with gathering input data,
running the computer model, and evaluating the
results. This amounts to an 80% reduction per
candidate screened (from $500 per candidate
without the P2 Framework to $100 per candidate
with the P2 Framework). Looking at the overall
costs to perform ecological evaluation, it costs
$1,90013 to screen all 19 candidates with the
methods compared to $2,500 without them (5
candidates at the lower bound estimate of $500
per candidate). Thus the overall savings amounts
to $600.
The monetary savings do not adequately
capture the value the P2 Framework on
ecological assessment. Consider that Kodak was
able to assess more candidates with the P2
Framework at a lower cost. Further, the P2
Framework provided quantitative data while
evaluation without the P2 Framework often
leads to qualitative assessments based on limited
available data. Together, the benefits of higher
throughput and consistent and quantitative
information have greatly strengthened Kodak's
entire product development process. This is
perhaps the most significant impact the P2
Framework has had in that it represents an
institutionalized change to Kodak's evaluation
component in new technology development.
The indirect benefits of the P2
Framework are strategic in nature -
better information leads to more
certainty, quicker decisions, and
smarter design.
Ecological hazards screening savings,
while the most quantifiable, are actually minor
in comparison to indirect benefits. These indirect
benefits are strategic in nature - better
information leads to more certainty, quicker
decisions, and smarter design. In this case, the
P2 Framework provided quantitative estimates
of acute and chronic toxicity to aquatic
organisms for each candidate. Better information
allows the expert panel to make decisions
13 This cost ($100 per candidate for 19 candidates)
represents the labor cost of using ECOSAR and KoW.
The programs are free from EPA. It is also estimated that
it costs $5,000 to train each person on the entire P2
Assessment Framework. The one time training cost was
not attributed to this single case study as the training will
serve numerous uses and users of the P2 Frameworks.
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quicker and with more certainty. Consistent,
quantitative information allows the team to
attempt to rank the leading candidates according
to ecological hazard. A recommendation can
then be made to the product development team
as to which candidate should be chosen that will
be the least likely to be eliminated for
environmental reasons in later phases of
development. This level of confidence allows
the product development team to focus its
resources on its core function - the technical
performance of the new chemical in relation to
the overall performance of the product being
developed.
Of course these indirect benefits are
difficult to quantify since they are probabilistic
in nature. Recall that we are comparing
decisions that were aided by use of the P2
Framework to some alternative decision we have
to assume would have occurred if the P2
Framework were not used. Nevertheless,
significant benefits of the P2 Framework are
realized and can be more fully appreciated when
viewed in the context of the overall product
development process.
• Reduced Product Development Costs
Related to Evaluation of the Technical
Performance of New Chemicals.
The graph below illustrates the
cumulative resources spent on a single candidate
as it goes through the product development
cycle. The product development cycles is broken
into six stages representing activities done at
Kodak to bring new chemicals to the market.
These stages begin with initial synthesis and
testing of chemical candidates and continue
through manufacturing scale-up to clearance for
chemical manufacturing. The six stages are:
1. Initial synthesis of new chemical
candidates and early testing and
screening. The product team is
encouraged to be innovative in this
phase with the goal being to
determine whether a given chemical
or molecule can be made.
2.
3.
4.
5.
Analyze the most efficient "route"
to make the chemical. The goal in
this phase is to make the chemical
or molecule in the fewest steps
possible.
Analyze how to make chemical(s)
on a larger volume scale. Up to this
point, the team is working with
small samples. During this phase,
the team is concerned with the
feasibility of manufacturing the
chemical in larger volumes.
Develop chemical specifications
(acceptable quality, variability in
performance, etc.).
Extensive photographic
performance testing and verification
of chemical.
6. Final testing and
notification to EPA.
chemical
The graph shows the costs of each stage as a
percent of the total costs for all six stages in
Kodak's product development process. Because
details on the magnitude of the costs are strictly
confidential information, we have illustrated the
percent of total costs accumulated through each
of the six stages. The total development cost per
chemical at the end of all six stages is in the
"hundreds of thousands of dollars"14.
The distribution costs are specific to Kodak's process
and represent an estimate of the average cost for the
entire cycle assuming a relatively smooth product
development process.
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Figure A-l: Cumulative Resources Spent Over Six Stages
in Kodak's Product Development Process
100%
O
o
- 80%
03
O
60%
40%
£ 20%
TO
E
3
° 0%
Product Development Stages
The six stages are shown as a linear
process but in reality, some activities performed
in later phases of product development are
sometimes done much earlier. For example,
some of the activities involved with designing
chemical specification (phase 4) and
performance testing (phase 5) are often done in
the second or third phases. For the purposes of
this case study, we assumed a linear process.
The far left of the diagram depicts when
Kodak screens the 19 initial candidates down to
a manageable 4-5. Normally, by stage 3, Kodak
has selected a single lead candidate to bring
through the rest of the process. Preliminary
evaluations of potential human health and
environmental impacts occur at the beginning
and sometimes continue into the first stage of
product development. They are revisited and
usually confirmed with laboratory testing in the
sixth stage of product development when Kodak
submits a Premanufacture Notification to EPA.
Any time a lead candidate is ruled out in
one of the six stages of product development, the
team must start with a new candidate back in the
early stages of product development.
Accordingly, all the resources and time
expended developing lead candidate(s) that are
eliminated are irrecoverable as the team must
start the process over from the beginning. In this
case, Kodak found that by systematically
applying the P2 Framework and using the
ecological information as a preliminary screen,
they were able to greatly reduce the probability
of having a chemical get dropped in later stages
of the product development cycle.
The graph makes it readily apparent that
the significant benefits of the P2 Framework lie
in reduced product development costs. As a
technology gets further and further along in the
product development phases, the cumulative
costs can be quite significant. Clearly, the earlier
any environmental and health effects are known
about all candidates, the less likely a technology
will progress into later phases of product
development. The further into the product
development process an unfavorable candidate is
discovered, the higher the irrecoverable product
development costs.
The table below looks at the increased
costs per $100,000 of product development costs
if a lead candidate drops out of the product
development cycle in each of the six stages.
Though these costs are rough estimates
and variable, candidates historically have been
screened out at all these stages for
environmental or human health concerns.
However, it is more common for a candidate to
get screened on health or environmental grounds
immediately after stage one or at the very end of
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The Business Benefits of the EPA P2 Framework
August 2000
the process in stage six. Thus, the avoided costs
from using the EPA P2 Framework lies
somewhere between $13,500 and $100,000 for
each $100,000 spent in total development costs.
As the overall costs to bring a chemical through
the product development process increases, so
do the potential savings from the P2 Framework.
For example, if it costs $200,000 to bring a
single candidate through all six stages of the
process, than the avoided additional costs in the
table below would double. Similarly, the
magnitude of savings from the P2 Framework
increases if, over the course of the project, more
than one candidate gets screened before
resources are expended on photographic
performance testing.
The P2 Framework doesn't eliminate
product development costs but it does strengthen
the team's ability to minimize them. From a
business perspective, an organization wants to
do everything possible to increase the
probability that only one candidate needs to go
through all six stages of the product
development cycle. In such a scenario, product
development costs are kept at a minimum.
Kodak's entire evaluation process is set
up with the goal of investigating only one lead
candidate at a time during more resource
intensive and time consuming stages of product
development. The remaining lead candidates are
generally preserved should the current lead
candidate drop out for technical, human health
or ecological reasons. When a lead candidate is
excluded in a later stage of product development
for technical or unforeseen environmental or
human health impacts, the team must start anew
with the next best candidate. In such an instance
the lost resources both in labor and in wasted
time is considerable as all the resources
expended up to that point are irrecoverable.
Thus, the better the preliminary information on
human health and ecological impacts of all
candidates, the less likely a lead candidate will
be excluded on these grounds in later phases of
product development.
In Kodak's experience without the EPA
P2 framework, it was extremely rare for the first
lead candidate to make it through all six stages
without dropping out for one reason or another.
For the number of times chemicals are screened
in a given year, it is estimated that on average at
least one candidate will fall out in the first phase
for each new chemical technology developed.
This is not surprising given the high uncertainty
and lack of data surrounding product
development for new chemicals.
Given this past history of chemicals
being eliminated in different stages of product
development coupled with the success of
ecological screening in this case, Kodak's team
felt very confident in attributing savings of at
least $13,500 per $100,000 spent in product
development.
Additional Benefits
This case study exemplifies the business
benefits the EPA P2 Framework has outside of
the health, safety and environment function. The
Table^-l^otenti^Costs^voided^^Jsin^he^^^rameworli
Scenario in which...
Avoided Additional cost per
$100,000 in
Product Development Costs
• The first candidate drops out in stage 1
$13,500
• The first candidate drops out in stage 2
$26,000
• The first candidate drops out in stage 3
$38,500
• The first candidate drops out in stage 4
$51,000
• The first candidate drops out in stage 5
$76,000
• The first candidate drops out in stage 6
$100,000
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main monetary benefits lie in reduced resources
spent by the product development team through
the technical research stages of the product
development cycle. While reduced costs for
early ecological evaluation is evident, the
magnitude of the benefits are small in
comparison to avoided increases in product
development research costs. On a less
quantitative level, the ability to make more
informed decisions and evaluate a larger pool of
candidates is also shown. Being able to consider
a larger number of candidates and make more
informed decisions early in the process also
increases the probability that the best technical
and environmental candidate emerges.
Taking a broader view, this case study
exhibits benefits that are realized any time the
EPA P2 Framework provides better or more
quantitative information in the product
development process. Although this case
represents the use of two methods within the P2
Framework, it contributes to more strategic
business and environmental objectives of any
new product development case. These objectives
can be stated simply as: find the best candidate
in the fastest amount of time so the product can
be brought to market. In this broader sense, this
case study has the following additional benefits:
• A more streamlined product development
process.
The use of the P2 Framework has
greatly supplemented the way in which Kodak
now performs chemical screening. In particular,
they were able to use the ecological screen as a
preliminary screen followed by human health
and technical screening occurring in parallel.
Prior to the use of the P2 Framework, all three
screens happened simultaneously with any
preliminary screening restricted by existing data
(if any). Having more accurate information
much earlier in the process benefits the entire
product development team. Collectively, more
informed decisions early in the product
development cycle helps the team focus its
resources on the technical research and testing
aspects. Similarly, in using the EPA P2
Framework, the health, safety and environment
function is able to give a higher level of service
to their internal customers in the form of more
The objectives of the P2
Framework can be stated simply:
find the best candidate in the least
amount of time so the product can
be brought to market.
complete and timely information. Overall,
earlier screening with data provided by the EPA
P2 Framework reduces the probability of
numerous candidates going through later phases
of product development.
• Faster time to market.
Any time a lead candidate is ruled out in
one of the six phases of product development,
the team must start with a new candidate back in
the initial phase of product development. In
addition to the money spent, the process also
takes time as the team starts the process over
from the beginning. Depending on the product
line and the project schedule, the financial
impacts of pushing back the time to market date
can be enormous, especially for new products
where being the first to market means increased
market share. A product also can be delayed if it
does not meet approval by EPA in their review
process.
• A more informed application sent to EPA
under the Toxic Substances Control Act.
In using the P2 framework P2
Framework, EPA's process for review becomes
more transparent to the applicant. An applicant
also becomes more aware of when a chemical
may require additional information. In such
cases, they can perform the tests and submit the
information as part of the TSCA application. A
more informed application greatly reduces the
chance of an action by the EPA. Actions can
take the form of an outright ban or more
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The Business Benefits of the EPA P2 Framework
August 2000
commonly a consent order. Consent orders
generally stipulate additional data, protective
clothing or additional controls before a chemical
is approved for manufacture. Any action by EPA
on a submitted chemical increases the cost a
manufacturer will face should they move
forward with developing a product with the
chemical in question. As discussed in the
generic analysis, these costs can be quite
significant depending on the course of action
taken. In addition to costs to comply with a
consent order, there is also a delay in getting the
chemical manufactured. This in turn affects the
products time to market.
• Reduced ecological and human health
testing.
Though this case study clearly exhibits
reduced chemical evaluation costs early in the
screening process there is also the potential for
reduced laboratory testing. Typically, Kodak
will include 'standard' laboratory testing ranging
from $15,000 to $60,000 as supporting data in
their chemical notification application to EPA. If
a chemical candidate gets ruled out at this final
phase based on quantitative empirical data,
Kodak will have to perform the same tests on the
next candidate.
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The Business Benefits of the EPA P2 Framework
August 2000
Appendix B: Using the P2 Framework for Evaluation of a Chemical
Intermediate A Case Study from Eastman Kodak
B-l
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The Business Benefits of the EPA P2 Framework
August 2000
Using the P2 Framework for Evaluation of a
Chemical Intermediate
Application of the P2 Framework
The EPA P2 Framework methods were used
in the evaluation of a chemical intermediate at
Eastman Kodak. The chemical is an intermediate
generated during the synthesis of a new
chemical complex-a new coupler for use in
photographic film. Couplers are generally a class
of complex organic chemicals that are integrated
into the film and ultimately react with
developers to form color images on film and
paper.
As with any new chemical, Kodak was
concerned about potential health or
environmental risks associated with the
manufacture and use of the chemical. In this
circumstance, chemical screening was not
required—the intermediate was known and there
were no alternatives being considered. Thus the
P2 Framework was tested as a potentially
valuable tool to remove uncertainty surrounding
potential health and environmental impacts
during manufacturing operations and to ensure
pre-manufacture notification (PMN) approval of
the chemical intermediate under TSCA. The
EPA P2 Framework was used by Kodak with the
following goals in mind:
~ To better understand and manage risk and
associated costs from the manufacture of the
new intermediate,
~ To minimize any potential occupational risk
to their workers,
~ To improve the design of the new chemical
product or process by minimizing the
generation of hazardous waste and
associated cost,
~ To establish guidelines for safe handling and
disposal or treatment of the waste streams,
and
~ To support the TSCA application process
and gain regulatory approval for
manufacture.
The P2 Framework methodologies provided
information through the use of removal
estimation models, stream flow dilution models,
and biodegradation potential models. Used
together, several EPA methodologies greatly
enhanced understanding of the predicted
chemical loading to the environment by
estimating the in-stream concentrations that
would result when the reactors used for chemical
synthesis are cleaned. The following
methodologies were applied for this case study:
1. PDM - estimates how many days per year a
chemical discharged in a plants effluent will
exceed a concentration of concern in the
receiving water
2. ECOSAR - estimates the aquatic toxicity of a
compound
3. BIODEG - estimates aqueous bio-
degradation rates
4. Kow - estimates a chemicals octanol-water
partitioning coefficient
5. Henry - estimates Henry's law constant, a
relative measure of a compounds volatility
from water
6. STP - estimates the percent removal of a
compound from a waste water treatment
plant
7. SEAS - estimates in-stream concentration of
chemicals based on river flow information
Summary of key findings
Note that this case study compares the
benefits of applying the EPA P2 Framework to a
hypothetical "business as usual" (BAU) scenario
where chemical evaluation is made without
using the P2 Framework. When the EPA P2
Framework was actually applied, Kodak did not
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The Business Benefits of the EPA P2 Framework
August 2000
simultaneously perform a control study to try to
make the exact same decision without the EPA
P2 Framework. Consequently, the BAU scenario
is based on the best estimates from those
individuals directly involved in the project on
what would have happened if the EPA P2
Framework were not used.
The major benefits for this case are
outlined below. Further discussion of each
benefit can be found in the discussion following
the summary.
• $40,000 of hard savings in reduced
ecological testing
• Reduced generation of hazardous waste;
information from the methods lead Kodak to
choose solvent recovery instead of
discharging solvents to the sewer
• Reduced EPA application cycle time;
information from the methods helped Kodak
to decide to apply under the Low
Environmental Release and Low
Occupational Exposure (LOREX)
exemption, requiring a maximum 30 day
review by EPA compared to the typical 90
day review.
• Reduced probability of regulatory action;
Kodak's use of the P2 Framework greatly
informed their decision making process and
reduced the chance of this intermediate
receiving a consent order by EPA during the
TSCA Premanufacturing Notification
application. The probabilistic benefits from
avoiding a consent order in this case can be
summarized as:
> An additional potential savings of
$750,000 to $1,000,000 in long-
term health studies on chronic
effects if Kodak was forced into a
consent order with EPA
> Avoidance of a potential 1.5 to 2
year delay in manufacturing the
chemical
Discussion
The benefits center around the role of
the Health, Safety and Environment (HSE)
function at Kodak — to provide guidance on
human health and ecological risks as well as
prepare documentation for the PMN application
approval process. As is generally true for
application of the methods, much of the benefits
stem from obtaining quantitative ecological and
human health information at the earliest phase
possible.
The benefits for this case can be divided
into two categories: 1) immediate and more
quantifiable benefits, and 2) strategic but
probabilistic benefits gained from having
quantitative data much earlier in the process. For
this case, the immediate bottom-line benefit of
$40,000 from avoided testing is straightforward.
The tests avoided were toxicity to fish, Daphinia
(acute) and biodegradation.
The more strategic but difficult to
quantify benefits are best understood by
considering how the P2 Framework enhanced
HSE's performance in the clearance of a new
chemical, a primary support function in the
overall product development process. The
common thread with all the methods used was
that they provided quantitative information
where none previously existed. This allows the
product development team to evaluate all
options based on best available information.
More complete information in turn allows the
team to take action early and decisively on
design issues relating to the intermediate's use
and manufacture.
The benefits of the P2 Framework are
clearly shown in the decisions Kodak made. For
ecological risk, the methods allowed Kodak to
estimate the predicted chemical loading to the
environment by estimating the in-stream
concentrations that would result when the
reactors used for chemical synthesis are cleaned.
Using this information, Kodak could then run a
variety of simulations to investigate the full
range of potential wastewater conditions and the
impact on the receiving water. Having
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August 2000
quantitative data of the chemical's ecological
impacts led Kodak to investigate the possibility
of submitting their PMN application under the
Low Environmental Release and Low
Occupational Exposure exemption (LOREX)15.
To qualify for the LOREX exemption, the
manufacturer must certify 1) that exposure to
consumers, workers, and the general public meet
certain restrictions and 2) that environmental
exposure is kept below certain maximum levels
in surface waters.
Kodak first investigated the feasibility
of a more environmentally sound waste
management technique — solvent recycling
instead of sending waste to the sewer, and
ultimately to a river. Solvent recycling would
meet one of the LOREX criteria and it was
found to be a more cost effective waste
management option. Though the financial
analysis for the two options was done apart from
any work with the P2 Framework, the
information from the methodologies was the
impetus for Kodak to consider solvent recycling
as an alternative16. This reinforces the adage that
better information leads to smarter decisions.
Kodak then turned its attention to
minimizing occupational exposure. Relying
predominantly on their internal team of experts,
Kodak was able to specify appropriate use
guidelines and personal protective clothing to its
workers. The personal protective clothing
consisted of full hoods, supplied air and Tyvex
suits, virtually eliminating occupational
exposure. Thus, the early information
concerning ecological impacts caused Kodak to
consider the LOREX exemption which in turn
15 Chemicals approved under LOREX do not go onto the
TSCA list and are only approved for site specific
manufacture.
16 These savings are not included in this case study.
However, according to Kodak, it was entirely possible
that the team would have chosen the more expensive
option of discharge to the sewer by virtue of not seeing
the need or doing the cost analysis for comparing it to
solvent recycling. Thus, a case could be made that
information from the P2 Framework is responsible for
these secondary benefits.
B-4
guided the decision to investigate further
reducing potential occupational exposure.
The benefit to Kodak by taking steps to
reduce exposure is two-fold. First, they reduce
the typical TSCA review process by 60 days (the
LOREX exemption takes 30 days compared to
the typical 90 days for a regular TSCA
application). Second, Kodak was able to avoid a
potential EPA action. As discussed in the
generic analysis, EPA actions can take numerous
forms, ranging from an outright ban of the
chemical to consent orders requiring long-term
studies on toxicity or additional protective
clothing and controls. Additional documentation
and paperwork accompany most consent orders
and their binding legal nature offers an
additional incentive for manufacturers to do
their best to avoid them. Once a consent order is
issued, the manufacturer is at an undesirable
fork in the road - they can choose not to make
the product in question or they comply with the
consent order. Either path is a costly one.
For this case study, The P2 Framework
allowed Kodak to determine early on that they
were likely dealing with a consent order
intermediate. Thus they were able to choose
whether to abandon the intermediate or try to
design ways to minimize exposure. Kodak chose
the latter and successfully applied for a LOREX
exemption. The benefits of the methods in
allowing Kodak to making this informed
decision early in the process can not be
understated. Consider a scenario in which they
submitted their application without taking
additional actions to minimize exposure. In
Kodak's opinion, they probably would have
been hit with a consent order mandating
expensive long-term toxicity tests ranging in
cost from $750,000 to $1,000,00017. In addition,
Kodak would surely be delayed in bringing the
product to the market as these tests typically
take 1.5 to 2 years. Even if Kodak chose not to
make the intermediate because the consent order
was too onerous, they would have expended
significant resources in developing this product
17 The expected tests include a 90-day bioassay as well as a
possible 2-year cancer study.
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The Business Benefits of the EPA P2 Framework
August 2000
only to abandon it in the very last phase of
product development. The generic analysis and a
second case study show such irrecoverable
development costs in the hundreds of thousands
of dollars. To reiterate, having quantitative
information early can help companies steer clear
of the undesirable "fork in the road" and avoid
being stuck with two financially unattractive
courses of action.
In all probability, Kodak believes they
eventually would have come to the conclusion
that the product was likely to incur a consent
order even without the tools. However, it
probably would have happened at the latter
phases of product development and, as
mentioned above, would have resulted in the
potential loss of hundreds of thousands of
dollars in product development costs. Having
quantitative data on ecological impacts allowed
them to act decisively and proactively on a
course of action at the earliest possible point. In
running numerous simulations with the methods,
Kodak was confident that the steps they were
taking would meet LOREX criteria. They were
thus able to avoid the "fork in the road" and
ultimately received approval under the LOREX
exemption.
In summary, information from the P2
Framework greatly enhanced Kodak's existing
HSE capabilities and provided significant
financial benefits. Specifically, the
methodologies allowed Kodak to completely
avoid $40,000 in laboratory tests. The upside of
the P2 Framework is enormous in that it helped
Kodak make more environmentally sound
decisions by minimizing exposure. By being
able to predict surface water impacts at the
earliest phases of process design, Kodak was
able to understand and manage environmental
risk (and associated costs) through solvent
recycling. A more long term and recurring
benefit shown in this case study is how the P2
Framework helps streamline Kodak's internal
processes. More quantitative information from
the P2 Framework allows the entire product
development team to make smarter choices
about chemical design and the impacts of new
products on human health and the environment.
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