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50 October 2017 | beautystorebusiness.com PERSONAL CARE PRODUCTS SAFETY ACT Scott Faber, vice president of govern- ment affairs for the Environmental Working Group (EWG), based in Wash- ington, D.C., describes the Personal Care Products Safety Act as compromise legislation, supported by cosmetics com- panies large and small, as well as groups like EWG. "It assures that the FDA has the power to review ingredients of con- cern; to know where companies are located and what's in their products; to know when consumers are being harmed by contaminated products; and to respond if companies aren't doing their part to protect consumers," Faber explains. "Specifically, the FDA will have the power to review five ingredients of concern each year, require companies to register with and share ingredient info with the FDA, require companies to report serious adverse events and have the power to respond if the company doesn't take steps to protect consumers from contaminated products." While opponents think the government should have no role in regulating personal care, companies including Johnson & John- son, L'Oréal, Esteé Lauder and Unilever, alongside organizations that represent small brands (including the Coalition of Handcrafted Entrepreneurs and the Hand- made Cosmetic Alliance), support the leg- islation. Faber maintains that the average woman uses 12 personal care products per day (men use six), and while the vast majority of personal care products are safe, there have been examples of contaminated products reaching the market that threaten the health of consumers. "Unlike most countries in the devel- oped world, our government doesn't have the power to set limits on cosmetic chemicals that may cause cancer or reproductive harm. The United States is woefully behind the rest of the world when it comes to regulating personal care products," Faber says. "We've given the government the power to set limits on chemicals in food and cleaning products, but not in personal care." As with any FDA program, there are fees associated with ingredient reviews as outlined in the legislation. Faber explains that the industry will provide revenue to fund the work of the FDA, to the tune of $20 million per year. John Hurson, executive vice president for government affairs at The Personal Care Products Council, based in Wash- ington, D.C. (which represents small, medium and large companies), adds that the Feinstein bill's set of user fees are not onerous and are based on a slid- ing scale—with large companies paying more than smaller companies (and some very small companies not paying at all). "Every FDA process ends up with some level of fees, but how much, who has to pay them and the cutoff level for small companies is part of the debate," Hurson explains. "In the current bill, there's a cutoff of $100,000 in a company's gross receipts; and for those making between $100,000 and $500,000, the bill applies, but there are no fees involved. A lot of work has been done (in both the Feinstein and Sessions bills) to make sure small companies are not negatively impacted, like this cutoff and extended periods of compliance on good manufac- turing processes (GMPs)." But Sharon Blinkoff, New York City- based counsel for Locke Lord and outside general counsel for Independent Cosmetic Manufacturers and Distributors (ICMAD), counters that the bill's fee program is more burdensome to small companies, on the basis of dollars earned versus the percentage given to fees. "A company that has gross annual sales of $5 million pays the same as a company that makes $10 million, and a company that makes $10 million pays just $100 more per year than a company that makes $2 million," Blinkoff explains. Furthermore, she adds, "The biggest cost for small companies will be a significant increase in the cost of regulatory compliance, while smaller companies have far fewer products over which to allocate these increased costs than larger competitors. The small busi- ness provisions of the bill are not significant enough to counterbalance these problems." As a result, she worries that over- regulation within the industry will pre- vent smaller companies from forming in the first place. "Smaller companies are nimble and have made tremendous advances in innovation, and wouldn't it be a shame to not have those entering the industry?" she asks. "If you create too many barriers to entry through regu- latory overload, you discourage people from entering the business. And the proponents of the Feinstein bill want to review ingredients and constituents of ingredients, which may be in products in parts per billion. Think about the cost of that, for the analysis alone. I call it chasing dust bunnies." In addition, Blinkoff believes those fees paid to the FDA by manufacturers will likely be passed on in the form of pricing, which may impact beauty store owners and consumers alike. "I've asked manufacturers about the Feinstein bill and how it would affect their prices, and they say costs would quadruple; the fee impact and regulatory require- ments all add to cost," Blinkoff says. "The Feinstein bill calls for fairly rigorous oversight of cosmetics, more even than OTC drugs, which doesn't make much sense—and it gives the government the right to close down a manufacturer's facility without the normal due process." There is also concern that the FDA will not be able to keep up with the task at hand. "The Feinstein-Collins bill sets up a robust process of FDA review of five ingredients per year, with the first five listed on the bill," Hurson notes. "The FDA would have an advisory committee pick the next five. While the FDA is reviewing ingredients, there's a state block—states can't take action on them for one year; but one of our concerns is, we think the FDA will take more than one year to complete some of these reviews." COSMETIC MODERNIZATION AMENDMENTS OF 2017 H.R. 575, the Cosmetic Modernization Amendments of 2017, is also called the Sessions bill, after its congressman supporter. It's backed by the Profes- sional Beauty Association (PBA) and by ICMAD and its 700-plus members, from multimillion-dollar companies with worldwide distribution to small, emerg- ing businesses. One major tenet of the bill is a strong national preemption, taking state and local regulations like Prop 65 out of the picture, Blinkoff says. "There should be only one regulator in cosmetics: a well-informed FDA," she stresses. "The Sessions bill preserves a court regulatory scheme and takes a now-voluntary action—registration of ingredients and manufacturing facilities— and makes it mandatory, because the greatest risk to consumers is in the manufacturing process." Currently, the Cosmetic Independent Review (CIR), funded by the industry but staffed by independent reviewers, works to determine the safety of ingredients with FDA participation, according to Hur- son. Unlike the Personal Care Products Safety Act, the Sessions bill validates those findings, making it unnecessary to review ingredients unless they cause adverse effects among consumers. "The Sessions bill takes all of CIR's findings, on more than 4,000 ingredients, and preempts states from recognizing anything different than those findings," Hurson notes. "We don't have a problem with those findings, but the FDA doesn't usually like to recognize third parties on issues of safety, so politically that might not fly. But the Sessions bill doesn't have user fees, so smaller companies might gravitate toward that." Blinkoff maintains that protecting consumers requires the FDA to have complete, transparent access to every- one who makes cosmetic products in the U.S. and internationally. "Forcing peo- ple to register their factories will hold people accountable and stops unsafe products from entering the States; I think the Sessions bill is a good balance of "The United States is woefully behind the rest of the world when it comes to regulating personal care products." —Scott Faber, vice president of government affairs, Environmental Working Group