It is estimated Americans will spend over $60 billion on beauty products in 2015. With so much at stake, manufacturers have tried to aggressively promote their products. In many cases, this promotion has resulted in unintentional product misbranding.
The Food, Drug, and Cosmetic Act (FD&C Act) provides the Food and Drug Administriation (FDA) with regulatory authority over cosmetics to ensure they are not adulterated or misbranded. See 21 U.S.C. § 361, 362. While the market for non-essential beauty products has increased dramatically over the past couple of decades, the FD&C Act has changed very little since its enactment nearly 80 years ago.
This could be changing with the introduction of the Personal Care Products Safety Act (PCPSA), which seeks to significantly expand the FDA’s authority over cosmetic products sold in the United States and eliminate many of the regulatory differences between cosmetics and drugs. Nevertheless, the PCPSA fails to address the issue of unintentional product misbranding in the context of product marketing.
Cosmetic or a Drug
The FD&C Act defines cosmetics as “articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body…for cleansing, beautifying, promoting attractiveness, or altering the appearance.” Cosmetics include “skin moisturizers, perfumes, lipsticks, fingernail polishes, eye and facial make-up preparations, cleansing shampoos, permanent waves hair colors, and deodorants,” or any of their component parts. Cosmetics marketed in the United States, whether they are manufactured here or are imported from abroad, must comply with the labeling requirements of the FD&C Act.
By contrast, drugs are defined as products that are “intended for use in diagnosis, cure, mitigation, treatment or prevention of a disease.” FD&C Act, sec. 201(g)(1). Some products are both a cosmetic and a drug. An example of this is an SPF moisturizer, which acts as both a cosmetic in its moisturizing function and a drug in its ultraviolet protection. Products that are both cosmetics and drugs are often referred to as “cosmeceuticals,” and must comply with both the drug and cosmetic provisions of the law.
The focus in defining both cosmetics and drugs is on their intended use. Intended use can be established through marketing, consumer perception, or the ingredients used. In regulating the cosmetics industry, the FDA has spent a considerable amount of energy focusing on the product labeling, advertising, internet, or other marketing activities that may operate to establish the product as a drug based upon its intended use. When companies market anti-aging products as having a physiological impact on the body or one’s appearance, the cosmetic becomes a drug.
Regulatory Overview
If a manufacturer’s product is classified as a drug, the manufacturer is subject to a whole host of regulations it would not otherwise be subject to if the product is classified as a cosmetic. Under the FD&C Act, there is no FDA review of cosmetics prior to marketing, with the exception of color additives. Further, unlike pharmaceuticals and medical devices, there is no testing by the FDA of cosmetics prior to their sale to consumers. By contrast, if a product is categorized as a drug and is not generally recognized as safe and effective, the cosmetic manufacturer must subject their “cosmeceutical” product to a rigorous New Drug Approval (NDA) process, which includes safety and efficacy testing.
Another difference between cosmetics and drugs is that cosmetic manufacturers have no obligation to engage in adverse event reporting. While cosmetic manufacturers are encouraged to engage in adverse event reporting, there is no requirement under the FC&A Act to report adverse events, regardless of their severity. Since the creation of the FC&A Act, cosmetic manufacturers have controlled the safety testing of their products. Further, if they choose not to engage in safety testing, they only need to indicate in the product labeling the safety of the product has not been adequately substantiated prior to marketing. By contrast, if a product is categorized as a drug and is not generally recognized as safe and effective, the cosmetic manufacturer must subject their product to a rigorous New Drug Approval (NDA) process, which includes safety and efficacy testing.
Misbranding: Conversion of Cosmetics to Drugs
Along with the rise in beauty product use, the cosmetics industry has also seen a rise in FDA interest in the marketing of such products. This interest has lead to the increased issuance of FDA Warning Letters.
In the Fall of 2012, the FDA issued a Warning Letter to Lancôme, a subsidiary of L’Oreal, addressing claims made by the manufacturer on its website regarding some of its anti-aging creams. Claims that “[U]nique R.A.R.E oligopeptide helps re-bundle collagen,” “[B]oosts the activity of genes and stimulates the production of youth proteins,” and “[I]nspired by eye-lifting surgical techniques . . . helps recreate a younger, lifted look in the delicate eye area” were deemed “intended to affect the structure or any function of the body,” rendering the products drugs under Sec. 201(g)(1)(C) of the FDCA. The FDA went on to state that because certain of Lancôme’s anti-aging creams are not generally recognized by experts as safe and effective for their intended use, the products are new drugs that could not be legally marketed without prior approval from the FDA through the NDA process. In the alternative, the FDA gave Lancôme fifteen days to take corrective action with regard to existing claims and to discontinue making such claims in the future. Lancôme chose to take corrective action and discontinue future claims. Only two weeks after the issuance of this warning letter, a putative class action was filed against L’Oreal and Lancôme asserting consumer fraud claims, based upon the same marketing representations identified in the FDA Warning Letter.
The FDA also issued a Warning Letter to Cell Vitals on November 24, 2014. In the letter, the FDA informed Cell Vitals it had reviewed the cosmetic company’s website with regard to its “ReLuma Advanced Stem Cell Facial Moisturizer,” “ReLuma Skin Illuminating Stem Cell Anti-Aging Cleanser,” and “Reluma Stem Cell Eye Cream,” and determined that the products “appear to be promoted for uses that cause these products to be drugs.” Some of the advertising examples cited by the FDA include: “Tetrahexyldecyl Ascorbate: [an ingredient in your product] … protects cells from …inflammation” and “Camellia Sinesis Extract [an ingredient in your product] is anti-bacterial and … anti-cancer.” Ultimately, the products were deemed misbranded, requiring an FDA approved NDA.
Similarly, the FDA issued a Warning Letter to Golden Caviar Skin Care on July 13, 2015 stating Golden Caviar Skin Care promoted a number of dietary supplements in a manner that caused the products to be drugs under the FD&C Act. An example of this misbranding included online marketing with regard to the company’s Caviar Lifting & Firming Serum with Zinc, where the company claimed “[i]t helps repair damaged tissues and heal wounds. Great for anyone wanting to do away with old acne scars or suffering from Rosacea…..We have found the solution.” The FDA reasoned the labeling for the product failed to bear adequate directions for use, and such “products are offered for a condition that is not amendable to self-diagnosis and treatment by individuals who are not medical practitioners; therefore, adequate directions for use cannot be written so that a layperson can use this drug safely” for its intended purpose.
The increase in FDA issued Warning Letters in the cosmetic industry has lead to a rise in consumer class actions based upon allegedly deceptive cosmetic labeling. Cosmetic companies must continue to be cautious in creating product labeling and other advertisements, electronic or otherwise, to ensure the representations do not open the door to an FDA Warning Letter or potential consumer fraud class action.
Reform: The Personal Care Products Safety Act
On April 20, 2015, Senators Dianne Feinstein, a Democrat from California and Susan Collins, a Republican from Maine introduced the Personal Care Products Safety Act. The Personal Care Products Safety Act aims to modernize what is now mostly a self-regulating industry, and brings cosmetic regulation closer to that of drugs. The bill, which has broad support from industry and consumer groups, proposes a number of significant changes to the FD&C Act, including but not limited to: the registration of cosmetic facilities and ingredient statements, ingredient review and approval, reporting of serious adverse events, record inspection and FDA recall authority, FDA review of cosmetic ingredients and non-functional constituents, the development and implementation of good manufacturing practices (GMPs), and animal testing alternatives. For those larger companies who already engage in extensive safety testing, the impact may not be as great. In fact, many companies are behind the legislation.
Despite the issuance of numerous FDA Warning Letters to cosmetic corporations, the Personal Care Products Safety Act, as currently proposed, does little to provide guidance to beauty care companies with regard to the marketing and promotion of personal care products. In the past several years, the issuance of FDA Warning letters has lead to an increase in consumer class action lawsuits against cosmetic companies. Without a product labeling approval process or an avenue by which cosmetic companies can seek pre-marketing opinions regarding product advertising, it is likely consumer class action suits will continue.
Despite the existence of long-standing U.S. laws strongly favoring the purchase of domestic products for use by governmental entities, in governmental programs and particularly the fulfillment of 
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