Multi-Level marketing is often used in the dietary supplement and cosmetics industry. Sellers become a Multi “level” marketer because they market and distribute a certain product through a chain of individuals, such as with HerbaLife and Young Living. While the MLM model may be a useful tool for companies to market products quickly and efficiently, regulations pertaining to advertising and marketing, such as those enforced by the FDA and FTC still apply.

Prompted by recent events, like the actions taken against HerbaLife International, the FTC Guidance aims to provide a better understanding of the FTC’s expectation for the MLM businesses and the responsibilities that these companies have when it comes to marketing their products. In particular, one of the main components the Guidance addresses is how MLMs should establish compliance programs aimed at ensuring the companies maintain oversight into the sales activities of their teams. These compliance programs should include constant supervision of the distributors of the product, to confirm that they are abiding by the applicable policies and procedures, specifically those associated with claims, sales validation, and other consumer protection-oriented policies.

This new Guidance equips businesses with FTC’s current thinking on what is in conformity with the FTC Act. To ensure businesses are complying with the rules and regulation put forth by the FTC, it is important for businesses to reexamine their practices and to create compliance programs or revise existing programs for compliance with the FTC Act and FTC MLM Guidance.

Should you need assistance with developing a plan for compliance with FTC’s MLM policies or have questions about marketing laws and regulations, please contact us at contact@sglawfl.com.

Importers introducing cosmetic products into the United States must be mindful of FDA regulations, which can present a barrier to market entry if the appropriate steps are not taken to ensure compliance. The U.S. Food & Drug Administration (“FDA”) works in conjunction with the U.S. Customs and Border Protection (CBP) to monitor cosmetic products at the time of entry. Noncompliance with FDA regulations can result in a shipment being refused entry into the United States or a product being recalled from the market after entry.

However, one may mistakenly assume that cosmetic products are subjected to the same FDA scrutiny as foods or medical device products. In fact, this is not the case; instead, the FDA’s focus on the cosmetics industry differs from the regulation of other FDA-regulated products. Unlike the FDA’s regulation of many other FDA-regulated, cosmetic products and their ingredients (with the exception of color additives) do not require FDA premarket approval and registration or approval requirements are largely inapplicable.

Cosmetic Products and Import Alerts

Due to the high volume of cosmetics imported into the domestic market, as a practical matter, not all cosmetics are inspected or sampled upon entry into the country. Rather than implement blanket inspections, the FDA focuses its inspection efforts on potentially risk-laden products in addition to conducting inspections of randomly-sampled products. As part of these targeted efforts, the FDA issues Import Alerts, which provide a risk monitoring system for the FDA and a signal to importers on the agencies regulatory focus. According to the FDA, Import Alerts for cosmetic products focus on cosmetic products marketed with therapeutic claims, those that are adulterated with microbial contamination, and products which fail to meet FDA requirements for color additives. As explained below, issues surrounding color additives present one of the more complex and important regulatory issues in the cosmetics industry.

Cosmetic Products and Color Additives

Under the authority of the Federal Food, Drug and Cosmetic Act (“FFDCA”), cosmetic products containing color additives are subject to a strict system of approval prior to entering the market. Certain color additives must be batch certified by FDA if they are to be used in cosmetics. Although some colors are exempt from batch certification, these colors are considered artificial colors, and when used in cosmetics or other FDA-regulated products, they must comply with the identity, specifications, uses, restrictions, and labeling requirements stated in the regulations.

Further, all color additives must meet the requirements for identity and specifications. Color additives may be used only for the intended uses stated in the regulations that pertain to them. The regulations also specify other restrictions for certain colors, such as the maximum permissible concentration in the finished product. With the exception of coal-tar hair dyes, failure to meet U.S. color additive requirements causes a cosmetic to be adulterated which may subject the product to removal from the market or detention. Accordingly, even when marketing cosmetics, there are important considerations from a FDA regulatory perspective, and compliance with these regulations will ensure smooth importation and marketing of cosmetics.

Navigating the web of regulations governing cosmetic products can be a daunting task. If you have any questions about FDA regulations or how these regulations relate to the marketing of a cosmetics products, please contact us at contact@sglawfl.com.

The article focuses on cosmetics companies’ efforts to simultaneously promote their products effectively while abiding by all applicable laws and regulations. On this blog, we have previously discussed the challenges and pitfalls associated with marketing cosmetics with drug claims. In general, the FDA advises that, first, products intended to cleanse or beautify are generally regulated as cosmetics. Second, products intended to treat or prevent disease, or affect the structure or function of the body, are drugs. Third, that some products are both cosmetics and drugs. Examples include anti-dandruff shampoos and antiperspirant-deodorants, as well as makeup with SPF (sun protection factor) numbers. These products must meet the requirements for both cosmetics and drugs, as applicable.

Many small companies choose to invest in regulatory counsel before putting their products out on the marketplace. Giannamore described her role as a regulatory counsel as, “scal[ing] [the cosmetics companies] back, pointing out what things are definitely going to get you in trouble while keeping in mind that the product has to do something.” The marketing process is usually a risk aversion exercise, seeing how much risk the company wants to take on. She further described the role of regulatory counsel as, “finding creative ways” to convey the benefits of a product without violating the Federal Food, Drug, and Cosmetic Act.

Giannamore went on to tout the benefits of hiring regulatory counsel at an early stage of the product development process. “A lot of people come to me and they already have an FDA warning letter, or they’re importing and they’ve been stopped [due to excessive claims or other issues],” said Giannamore. Many times the companies do not hire regulatory counsel, “due to lack of resources in the beginning or it just not being something that’s high on the totem pole because they’re thinking ‘We’re a small company, [the FDA] is not going to target us.’”

Hiring regulatory counsel can prove to be a sound business decision, despite the cost, particularly because of the additional expense that would be incurred if the company receives a FDA warning letter. Recently, John Bailey, of the EAS Consulting Group and formerly a director of the FDA’s cosmetics program and the chief scientist at the Personal Care Products Council, addressed the substantial costs associated with an FDA warning letter or instituting corrective measures. The FDA may require companies to re-label their products and can have production and shipments shut down in the meantime.

The actual costs of an FDA warning letter may be even greater than just the cost to re-label products and lost sales. In addition, a FDA warning letter is a public relations nightmare, according to Giannamore. “If anybody’s ever Googling you, that’s now the first thing that comes up… They’re going to say ‘Oh my God, they have a warning letter; don’t buy their product.”

We offer assistance to companies with label reviews, reviews of their marketing content, and ensuring that products comply with FDA regulations. If you would like assistance with your cosmetics products, please contact us at contact@sglawfl.com.

FDA has recently noted that many cosmetic companies have crossed the line with claims on their advertising or packaging, causing products that would otherwise be regulated as cosmetics to be considered drugs by the Agency. Recently, the U.S. Food and Drug Administration (FDA) has been issuing warning letters to companies whose claims have gone beyond promoting the cosmetic benefits of their product and into the territory of promising outcomes typically associated with drugs, such as indicating that the product is intended to treat or prevent disease, or change the body’s structure or functions. If a company fails to comply with these rules, the FDA may take additional action beyond issuing a warning letter, which could include removal of a product from the market or other sanctions, which would likely prove costly.

Warning letters that have been issued to cosmetics manufacturers for marketing products with claims that indicate that the product is a drug can be found here. The products range from skin care creams and lotions, hair care products, and even eyelash and eyebrow treatments.

In general, the FDA advises that, first, products intended to cleanse or beautify are generally regulated as cosmetics. Second, products intended to treat or prevent disease, or affect the structure or function of the body, are drugs. Third, that some products are both cosmetics and drugs. Examples include anti-dandruff shampoos and antiperspirant-deodorants, as well as makeup with SPF (sun protection factor) numbers. These products must meet the requirements for both cosmetics and drugs, as applicable.

When promoting products in the cosmetics industry, it may be advantageous to sell the potential user on the benefits that they may experience. However, it is extremely difficult for any company to toe the line between cosmetic and drug claims. For this reason, it may be particularly helpful to have a trained professional examine the claims made regarding the product to ensure their compliance with all federal laws and FDA regulations.

We offer assistance to companies with label reviews and ensuring that products comply with FDA regulations. If you would like assistance with your cosmetics products, please contact us at contact@sglawfl.com.

FDA Imports: Food Imports

All food that is imported into the United States has to meet the same requirements as food that is domestically produced, or manufactured within the United States. This means that imported food has to comply with The Federal Food, Drug, and Cosmetic Act (FD&C Act), The Fair Packaging and Labeling Act, and The Nutrition Labeling and Education Act (NLEA), which amended the FD&C Act. These requirements include ensuring all ingredients are permitted for use in foods and that the product labels comply with federal regulations. All imported foods are inspected when offered for import or entry into the United States.

Recently, food security has become a larger national priority, which has resulted in increase regulation in the area of FDA imports. In particular, Congress enacted The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (Bioterrorism Act), which requires food manufacturers and importers to: (1) register with FDA every two years and (2) submit prior notice of the imported food, which means that the importer must alert the FDA to what they are planning on importing before the shipment is offered for import. The prior notice requirement is waived a few distinct circumstances:

1. The food is brought into the United States by an individual for personal consumption;

2. Food that is imported and then exported without leaving the port of arrival;

3. Personal gifts sent from an individual in a foreign country to an individual in the United States;

4. Diplomatic gifts to an embassy in the United States, and

5. Food products that are the subject of exclusive jurisdiction of the U.S Department of Agriculture, such as meat, poultry, and eggs.

Additionally, Under the Food Safety and Modernization Act (FSMA) of 2010, if the imported food was refused entry in another country, the prior notice must also identify the other countries where the food was refused entry.

FDA Imports: Cosmetic Imports

Cosmetics imported into the United States must also comply with the same laws and regulations as those produced in the United States. Cosmetic products cannot have any prohibited ingredients and must be safe for their intended uses. Similar to foods, ingredients and labeling must be compliant with FDA regulations. Companies importing cosmetics are not required to register with the FDA but are encouraged to do so through the Voluntary Cosmetic Registration Program.

In addition to the above concerns, importers of cosmetics must be aware of other laws that could possibly govern their products. Many times, other countries have different definitions of drugs and cosmetics than the United States uses. For example, in the United States, sunscreen is regulated as a drug, while in other countries; it is regulated as a cosmetic product. Also, a product can be both a cosmetic and a drug. Importers should be aware of the different classifications and requirements for their products.

Navigating the maze of requirements for importing food products and cosmetics can be a complex task and there are several points to consider when dealing with FDA imports. If you are importing food products or cosmetics into the United States, compliance with the FDA regulations applicable to FDA imports is important. If you have any questions about compliance with the FDA import regulations and programs, please contact us at contact@sglawfl.com.

The proposed rule is part of the FDA’s ongoing review of the safety and effectiveness of the active ingredients in antibacterial soaps and related products, which are not found in non-antibacterial, or plain, soap. Further, as noted above, these products are regulated as OTC drugs, etc., as opposed to soaps generally, which are typically regulated as cosmetics by the FDA. As far as the ingredients found in these antibacterial products, the FDA notes that new data suggests that long-term exposure to certain active ingredients—primarily triclosan and triclocarban–in antibacterial products poses health risks such as hormonal effects and resistance to antibiotics. Also, according to the FDA, there is no evidence that antibacterial soaps and hand washes are more effective at preventing illness and reducing infection than plain soap and water.

If finalized, the rule would require manufacturers to submit additional evidence that the active ingredients in antibacterial soap and other products are safe for repeated daily use and provide a clinical benefit as compared to non-antibacterial soap and water. Specifically, the risk must be balanced by the clinical benefit to establish that the OTC antibacterial active ingredients are generally recognized as safe and effective (GRASE) for their intended use. Otherwise, to continue marketing the products, manufacturers would need to remove the antibacterial active ingredients from the product and the antibacterial claims from the product’s labeling. Accordingly, if finalized, the rule would require both formulation and labeling changes for those companies marketing these products.

In sum, the proposed rule will be available for comment for 180 days, until June 16, 2014, with a concurrent one-year period for companies to submit new data and information. If you have any questions about this announcement, GRASE status, or compliance with any FDA regulations pertaining to cosmetics or OTC drugs and need a food and drug (FDA) lawyer, please contact us at:  contact@sglawfl.com.

More specifically, the plan lists six goals: (1) reduce foodborne illness rates and cosmetic injury rates each year; (2) establish regulations, policies, guidance, and inspection and compliance strategies based on best science, prevention, and public health risk; (3) increase compliance with newly created preventive control standards across the farm-to-table continuum; (4) improve public health indicators through better nutrition and dietary choices; (5) develop and swiftly deploy the fastest and most effective methods for identifying, containing, and eliminating food and cosmetic hazards.

Each of the six goals corresponds to specific objectives. For example, the Center intends to continue to implement the provisions of the Food Safety and Modernization Act (FSMA). Particularly, in 2014 and 2015, it plans to publish preventive controls—as required by FSMA—for produce, food processing facilities, and food transportation. CFSAN will also publish a final rule for intentional contamination, address an approach to determine high-risk foods and the most significant foodborne contaminants, and draft recordkeeping requirements for high-risk foods.

Additionally, the Center plans to improve the safety and labeling of dietary supplements. This includes developing regulations for “energy drinks” and publishing final guidance to help dietary supplement and beverage manufacturers determine whether a liquid food product, such as an energy drink, may be labeled and marketed as a dietary supplement. By the end of 2013, it will publish draft guidance for new dietary ingredients.

Next, CFSAN has been working to develop new food labeling regulations. Specifically, CFSAN will update the nutrition facts labeling and serving size information on food labels. The Center had also planned to publish a final rule defining gluten-free and on using the term on food labels in 2013, which the Center accomplished on August 5, 2013. In 2014, the Center plans to finalize rules required by the Affordable Care Act of 2010, specifically to require nutrition information on menus and vending machines.

Finally, CFSAN plans to reduce risks related to cosmetics. For example, it will publish guidance on current good manufacturing requirements for cosmetics and finalize guidance regarding the effects of manufacturing process changes, such as nanotechnology, on the safety of cosmetics. In 2014, it intends to develop draft guidance on the use of lead in lipstick.

If you have any questions about this new plan or compliance with FDA regulations, please contact us at: contact@sglawfl.com.