Historically, the U.S. cosmetics industry
has enjoyed a fairly favorable regulatory en-
vironment. However, recent trends seem to
suggest the FDA is taking a more active ap-
proach in regulating (and enforcing) against
cosmetic products. Additionally, Congress
has proposed legislation with the goal of in-
creased oversight of the cosmetic industry.
Another challenge facing cosmetic
importers, distributors and retailers is li-
ability insurance—in particular, product
liability insurance. With the lines blurring
between topical cosmetics and new prod-
ucts such as ingestible“beauty from with-
in” products, it’s important to understand
and manage the insurance procurement
process for your company so that coverage
is optimized at a competitive premium.
This article will examine the current
trends and issues in these key areas.
Cosmetics are regulated by the Federal
Food, Drug and Cosmetic Act (FFDCA)
and the Fair Packaging and Labeling Act
(FPLA). A cosmetic is defined by the FFDCA as an article “intended to be rubbed,
poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body or any part thereof, for cleansing,
beautifying, promoting attractiveness, or altering the appearance,” ( 21 U.S.C. § 321(i)).
In this regard, cosmetics are not required
to obtain FDA approval of labeling prior to
distribution, nor are they required to provide any level of substantiation regarding
safety. Thus, the FDA’s regulatory authority
is limited to post-distribution findings of
misbranding or adulteration in cosmetics.
A cosmetic is misbranded if its labeling
is false or misleading ( 21 U.S.C. § 362(a)).
In this regard, FDA has recently issued
warning letters to numerous cosmetics
companies alleging that their respective
products’ labeling, including websites and
promotional materials, contained drug
claims. Examples of the claims cited by
the FDA, included, but were not limited to
the following: “Assists in skin regenera-
tion”; “Anti-inflammatory”; “Offers relief
for rashes, eczema, psoriasis, and burns”;
“Treats acne”; “Reduces visible redness”;
“Treats dark spots and discolorations”;
“Stimulates collagen production.”
According to FDA, these types of claims
are drug claims in that they indicate the
product affects a structure or function in the
human body or treats, prevents or mitigates
a disease (or the symptoms thereof). Under
such circumstances, FDA determined the
products were new and unapproved new
drugs and therefore misbranded.
FDA also appears to be taking an ag-
gressive approach toward finding adultera-
tion with regard to cosmetics. In addition
to sending warning letters, FDA has seized
custody of products and ingredients in-
tended for import into the U.S. on the basis
of adulteration, as well as for misbranding.
The agency’s efforts to take a more ac-
tive role in enforcement are coupled with
recent Congressional efforts to give FDA
more regulatory power over the cosmetics
industry. Proposed legislation before Con-
gress has sought to amend the FFDCA to
require cosmetics companies to register
their facilities with FDA prior to product
distribution, as well as to require submis-
sion of ingredient statements to the FDA
for pre-approval, among other things.
Taken together, the foregoing govern-
in the Cosmetics Market
As in the dietary supplement industry, companies need to understand regulatory and liability insurance
By Joseph P. Schilleci, Jr.
Bolton & Company
Greg Doherty is a commercial in-
surance broker with Bolton & Company Insur-
ance Brokers and Employee Benefits Consul-
tants, Pasadena, CA. He is the executive vice
president and managing director of the Dietary
Supplement Practice Group for the firm, which
specializes in the nutritional product and di-
etary supplement industries, including but not
limited to contract manufacturers, raw materi-
als suppliers, distributors/retailers. Mr. Doherty
has four decades of experience as a broker,
focusing solely on the dietary supplement in-
dustry for the last 14 years. He can be reached
at firstname.lastname@example.org; Phone: 626-535-
1409; Website: www.gregdoherty.net.
Joseph P. Schilleci, Jr.
Schilleci & Tortorici, P.C
Joseph P. Schilleci, Jr. is the man-
aging partner of the Birmingham, AL, office of
Schilleci & Tortorici, P.C. His practice focuses
on representing dietary supplement manufac-
turers and distributors, as well as other regu-
lated industries, in contractual issues and in
regulatory matters involving advertising and
labeling issues with the FDA and the FTC.
He can be reached at 205-978-4211 or jps@