Cosmetics Industry Faces Major Compliance Makeover Under New FDA Rules

Photo by Rhett Wesley

The beauty industry is undergoing major changes with the passage of the Modernization of Cosmetics Regulation Act (MoCRA) in December 2022. This new law gives the Food and Drug Administration (FDA) expanded oversight and authority to regulate cosmetics and personal care products in the United States. For the first time in over 80 years, beauty brands will be subject to major new federal requirements around registration, product safety, manufacturing, and labeling. The initial phase of changes, primarily concerning the registration of brands, products, and facilities, has experienced a six-month delay under the MoCRA rollout, casting uncertainty about its future progress.

Overview of the New Regulations

MoCRA introduces several landmark shifts in how the $500 billion global beauty industry will be regulated:

Mandatory registration of facilities and product listings: All domestic and foreign cosmetic manufacturers must register their facilities with the FDA by December 2023. Beauty brands within annual revenue in excess of $1 million must also file a list of their products and ingredients. This will provide greater visibility into the industry for regulators.

Expanded recall authority: The FDA can now order mandatory recalls of unsafe cosmetic products that could cause serious adverse health effects. Previously, recalls were voluntary.

Adverse event reporting: Beauty brands are required to report any adverse health events associated with their products to the FDA so they can be investigated.

Fragrance labeling: Fragrances often contain sensitizing ingredients not listed on labels. Brands must now disclose fragrance allergens to the FDA.

Good Manufacturing Practices (GMPs): The FDA is establishing binding GMP regulations for cosmetics, including requirements around quality control, testing, facilities, and training.

Impact on Large Beauty Brands

Major multinational beauty corporations like L’Oreal, Estée Lauder, and Shiseido are ramping up efforts to comply with the new regulations, though most were already compliant due to their adherence to EU regulations. With huge portfolios of brands and complex global supply chains, these changes could require significant investments of resources and personnel.

Large manufacturers with over 500 employees must pay a facility registration fee of up to $18,000 per year. Every manufacturer with revenue greater than $1 million annually will need to carefully track ingredients and sources for thousands of product stock-keeping units to provide detailed listings to the FDA. IT infrastructure and software will likely need upgrades to efficiently manage registration and reporting.

Establishing consistent GMPs across a vast manufacturing network with hundreds of facilities worldwide will also be a monumental task. Companies must document quality control procedures, equipment maintenance, testing protocols, and staff training. Some may opt to acquire or maintain ISO 22716 certification for their sites. The FDA has not yet announced what they will require in terms of GMP or auditing requirements.

Challenges for Small and Mid-Sized Beauty Brands

While MoCRA’s exemptions for businesses under $1 million in sales help protect smaller indie brands, those above that threshold – especially small contract manufacturers – face hurdles to comply.

Many may lack regulatory expertise and will need to hire consultants or staff to handle reporting. Registration fees of up to $5,000 per facility are also a financial burden. Brands using co-packers and contract manufacturers will need to coordinate data sharing for product listings, creating an administrative burden on both sides.

Registration of the brand will become a mandatory requirement for the manufacturing of certain products, irrespective of the brand or product’s revenue. This includes a wide range of eye makeup products such as eyeshadow, eyeliner, and mascara. As a result, numerous small-scale indie brands in this sector may be forced out of the market. However, this change could potentially increase the market share of larger companies that choose to adhere to these compliance standards.

Updating manufacturing with new SOPs, equipment, and staff training for GMPs will be a significant investment. Failure to comply could result in FDA enforcement action. Some small brands and contract manufacturers may have a tough decision to make: proceed or close?

However, these changes will help remove unsafe products and bad actors from the market. Savvy brands can also leverage GMPs for marketing to reassure consumers about quality and safety.

Outlook for the Clean Beauty Segment

Natural and clean beauty brands have been at the forefront of advocating for cosmetics reform. With a focus on non-toxic ingredients and transparency, many leaders in this space have pushed for modernized regulations and are pleased to see progress.

However, some ingredient restrictions proposed in early drafts were left out of the final MoCRA legislation, disappointing consumer safety groups. There are also concerns that fragrance disclosure to the FDA still leaves consumers in the dark.

A positive development for clean beauty enthusiasts: Starting in 2024, the FDA will intensify its regulatory efforts, focusing primarily on product categories deemed highest risk. This means that eye makeup, injectables, products for internal use, and any items designed to be worn for over 24 hours will be subject to mandatory FDA registration.

While not as sweeping as some hoped, MoCRA represents a major step forward in bringing more oversight to the beauty industry. Clean brands must continue to innovate on safety and educate consumers as the new era of FDA regulation unfolds.

Perspective from Genie Supply CEO Megan Cox

Genie Supply is a Indiana-based contract manufacturer that develops and produces cosmetics, skincare, haircare, and fragrance products for indie beauty brands. CEO Megan Cox shared her thoughts on how MoCRA will impact their business:

“We’re in favor of refining regulations for enhancing the safety of beauty products. It’s a source of pride for us at Genie Supply that we consistently maintain high standards and ethical practices in our business. However, as a smaller operation, the introduction of MoCRA presents us with significant new challenges in terms of administration and compliance. As a third-party manufacturer, this means we’ll need to engage in more intensive coordination with our clients, many of whom are small businesses themselves. It’s a demanding task, but we are resolutely committed to adhering to all FDA regulations to ensure the continued delivery of safe and effective products.”

Looking Ahead

While adapting to the new regulatory environment under MoCRA will require time and investment, these measures to protect consumer safety are long overdue for the beauty industry. Brands that embrace transparency and demonstrate their commitment to quality will ultimately strengthen trust and loyalty among consumers. With the FDA’s expanded oversight, the future looks brighter for innovation and growth in the beauty space.

 

 

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Prolific News
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