Nick Diamond on Increased Transparency for Cosmetics Industry

August 9, 2023 | Podcasts

Congress in late 2022 largely expanded the U.S. Food and Drug Administration’s authority to regulate cosmetics companies. In this episode, Houston healthcare attorney Nick Diamond discusses key provisions of the Modernization of Cosmetics Regulation Act and what the new law means for the cosmetics industry and consumers.

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Our Host:

Courtney WhiteCourtney White
Research Attorney, Dallas & Houston
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Instagram: @courthousecouture

Episode Guest:

Nick DiamondNick Diamond
Partner, Houston
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Episode Transcription

Courtney White: Hi, everyone. I am Courtney White, and this is Jackson Walker Fast Takes. The cosmetics segment of the beauty and personal care market has been forecasted to grow between 2023 and 2027 by over 20%, reaching total projected revenue of $125 billion in 2027. Different markets have varying legal requirements for cosmetics companies, and in the U.S., those requirements materially changed in late 2022 with Congress’s passage of the Modernization of Cosmetics Regulation Act. This new law largely rewrites how the U.S. Food and Drug Administration regulates cosmetics companies of all sizes in the U.S. and presents several key issues for those companies to consider and act on now. Today, my colleague Nick Diamond, a partner in the Healthcare section of our Houston office, will discuss these updates.

Nick, I am excited about our discussion today.

Nick Diamond: Thanks, Courtney. Looking forward to it.

Courtney White: So, my first question is simply this: Can you just explain a couple of key provisions in the Modernization of Cosmetics Regulation Act?

Nick Diamond: Sure, and maybe helps to start with big picture as well. FDA, among many things, regulates cosmetic products here in the U.S. In the past, they really had, I would say, lightly regulated cosmetics. I say lightly because they’re authority under federal law was more limited compared to, say, a drug or a device. With that passage of the new law late last year, we do see things changing pretty significantly over the next couple of years as FDA starts to actually implement parts of that law.

A couple of things that I would say that stick out to me: There are some additional procedural requirements for companies operating in this space. That’s things like having to register their facilities if they manufacture or process a cosmetic that’s offered for sale in the U.S. So, even if you’re a manufacturer based outside of the U.S., if you’re selling that product in the U.S., that still applies to you. You also now have to, or will have to, list your cosmetic products with FDA, something that we didn’t have before; product listing is a new addition. And then there are additionally these more procedural requirements that really speak to the manufacturing of the products themselves.

So, we will have over the next couple of years development by FDA of what are called Current Good Manufacturing Practices that will be a requirement in federal law. In the past, FDA had put out Current Good Manufacturing Practices that were voluntary for cosmetics manufacturers. Many in practice followed it, but some not necessarily. With these new Current Good Manufacturing Practices developed over the next couple of years, that will really change things on the manufacturing side for companies. Then, there are a couple other additional requirements around safety substantiation and reporting adverse events, which are also new and again speak to meaningful changes for manufacturers in particular.

Courtney White: Thank you, Nick, for painting that landscape for us. I think what would be very helpful now is to let us know what are some things that companies need to consider with this new act?

Nick Diamond: Well, it really starts with where you are involved in the supply chain for cosmetics. There’ll be a little bit of variability based on where you sit. So, if you’re a manufacturer of cosmetics, you have many things to consider over the next couple of years. Indeed, right now, that’s where you see some of those facility registration and product listing requirements that I mentioned earlier really having a bit more urgency because the compliance date for those is December 29 of this year, so fairly soon. And then, obviously, if you’re a manufacturer, you also want to be thinking ahead about the Current Good Manufacturing Practice changes that FDA will be developing over the next couple of years.

It’s probably a little bit different if you’re not a manufacturer, but a distributor or a packer. Those requirements are less likely to impact you, really just important to think about the role that you play in the supply chain in order to understand which of the new requirements will apply to you, but also if you are – as is very common in this industry – if you’re a “brand company.” So, let’s say you’re a newer startup company in the cosmetic space, chances are as the brand company—the forward-facing marketing arm, let’s say—for a cosmetics business, you’re probably going to contract out all of the different manufacturing distribution, even in some cases formulation development, to other third-party vendors. If you’re doing that, it really puts a premium on doing diligence on all of those vendors to make sure that they understand the requirements that apply to them as a result of the law and making sure you, as the brand company, have the appropriate contractual protections in place to make sure that your vendors are appropriately complying with these changes and minimizing risk for you as a result.

Courtney White: Thank you for sharing that. Now, we’ve talked a lot about companies and how this will affect the cosmetics industry, but I think it would also be really interesting to discuss how these new provisions will impact cosmetic consumers.

Nick Diamond: Now, this is an interesting issue. As I mentioned before, since we had “lighter regulation” in the cosmetic space, really where consumers will see a benefit over the next couple of years is the amount of transparency into the products they buy, those ingredients, and also just on narrow issues like fragrance allergens. Fragrance allergens, for example, will now have to be appropriately noted on the label of cosmetic products. So, we have these little examples of additional transparency that ultimately will benefit consumers, and of course indirectly, consumers will benefit from the additional manufacturing and safety substantiation requirements that will be implemented over the coming years. Obviously, that speaks to the quality of the products that they’ll be able to buy and the assurances that come from that as a result of FDA’s expanded authority. So, really, an overall benefit in terms of transparency and product quality in the assurances that come with.

Courtney White: This has been a really interesting discussion, Nick. I want to thank you for joining me on the podcast today.

Nick Diamond: Absolutely. Well, thank you for the time, Courtney.

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The music is by Eve Searls.

The opinions expressed do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice.

Meet Nick

Nicholas “Nick” Diamond is a regulatory lawyer with extensive, international experience counseling clients across the food, healthcare, life sciences, medical device, and technology sectors. He counsels clients in the U.S. on matters falling under the Food and Drug Administration’s jurisdiction, such as: animal and veterinary products; cosmetics; food, beverage, and dietary supplements; human pharmaceuticals and biotechnology products; medical devices and diagnostics; and vaccines.
Related: “Preparing for Compliance With the Modernization of Cosmetics Regulation Act” – Bloomberg Law