How Beauty Companies Can Mitigate Risks Associated with AI Technology Use

From L’Oreal and Olay to Procter & Gamble and Shiseido, companies across the beauty industry are embracing AI technology with open arms. But what are the risks of incorporating AI technology into business practices, and how can beauty companies protect themselves? […]

For answers to these questions and a closer look at this rapidly growing segment of the beauty industry, CosmeticsDesign spoke to attorneys Kelly Bonner and Agatha Liu of Duane Morris LLP, for their insights and experience. Kelly Bonner’s practice focuses on litigation risk and regulatory issues affecting businesses in the cosmetics and personal care industries, as well as cross-jurisdictional and complex commercial disputes involving FDA-regulated and consumer-branded products, and Agatha Liu has assisted clients with AI-related legal needs.

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Balancing Innovation and AI Regulations in the Beauty Market

Duane Morris’ Agatha Liu and Kelly Bonner were interviewed by Personal Care Insights about the challenges and opportunities beauty companies face while using AI to appeal to younger consumer demographics. Below is an excerpt of the article.

How does the competitive landscape of the beauty industry impact businesses’ use of AI technologies, especially when it comes to targeting younger consumer segments?
Bonner
: The highly competitive nature of the beauty industry, with its desire to appeal to younger consumers, is certainly a key driver in beauty brands embracing AI tools to offer enhanced customer shopping experiences.

Can you provide some context about US AI regulations that the beauty industry should know? What do you expect is coming, especially considering the AI Act in the EU?

Liu: The EU AI Act imposes specific obligations on the providers and deployers of so-called high-risk AI systems, including testing, documentation, transparency and notification duties.

To read the full interview, please visit the Personal Care Insights page.

2023 Regulatory Roundup: MoCRA

Updated deadlines, the announcement of a newly developed draft submission portal, and the release of several different draft guidance documents are just some of the developments that have occurred this year regarding MoCRA’s implementation of cosmetic safety regulations. As 2023 draws to a close, CosmeticsDesign spoke to attorney Kelly Bonner to review what’s happened so far with the Modernization of Cosmetics Regulation Act (MoCRA) and to understand what’s ahead.

To read the full text of this article, please  visit the CosmeticsDesign website.

Retailers’ Clean Beauty Claims Fuel Consumer Doubts and Lawsuits

In the beauty world, a “clean” product brings to mind one or more of the following features: sustainable, nontoxic, ethically made, cruelty-free, or even vegan.

Such broad associations speak to the appeal of “clean beauty” products: They can make consumers—especially climate-conscious Gen Z and millennials—feel like they’re making the better choice for themselves and the planet. The “clean beauty” market, which is forecast to expand to $15.3 billion by 2028, has grown from its roots in luxury and independent brands to take over shelves of products at mass-market retailers like Target.

But companies’ self-imposed definitions of what they consider to be “clean” has led to doubts about industry claims, fueling consumer-led class actions and raising the legal risk for companies trying to capitalize on product demand. While regulators are eyeing potentially misleading environmental advertising—and some beauty brands are even hoping they’ll clarify what’s “clean”—it’s the courts that will likely be the first to decide when use of the trendy term crosses into a type of greenwashing. […]

Still, the risk of regulatory enforcement for “clean” claims is fairly low, and it’s unlikely that the FTC will home in on the term for now, said Kelly Bonner, an attorney at Duane Morris who advises companies on consumer litigation and enforcement risks, including those in the beauty industry.

“I don’t think the FTC is going to focus so much on ideas of ‘clean’ or ‘natural’ given that it hasn’t defined these terms and it’s still unclear as to what these mean,” she said. “It’s more likely that it will get worked out in consumer protection suits and the courts.”

To read the full text of this article, please visit the Bloomberg Law website.

 

MoCRA Requires Federal Regulatory Overhaul

On December 23, 2022, Congress enacted the Modernization of Cosmetics Regulation Act (MoCRA)—the first major statutory change to the U.S. federal government’s ability to regulate cosmetics since 1938. Passed with bipartisan
and industry support, MoCRA expands the Food and Drug Administration’s authority over cosmetics, and creates substantial new obligations for manufacturers, packers and distributors of cosmetics intended for sale in
the United States. Here’s what beauty companies need to know.

To read the full text of this article by Duane Morris attorney Kelly Bonner, please visit the firm website,

Introducing Cosmetics Direct – FDA’s New Electronic Portal for Facility Registration and Product Listing of Cosmetic Product Facilities and Products Under MoCRA

Fashion Retail Blog

Continuing its implementation of the Modernization of Cosmetics Regulation Act’s (MoCRA), and following on the heels of FDA’s Draft Guidance on Facility Registration and Product Listing (previously discussed here), on September 15, 2023, FDA announced its newly developed draft electronic submission portal, Cosmetics Direct, to assist persons submitting cosmetic product facility registrations and product listings under newly added Section 607 of the federal Food, Drug and Cosmetic Act (FD&C Act).

Draft screenshots of the electronic system, including example submissions, are available for review and comments, along with an interim Federal Register Notice, announcing the new system.

What’s New

Cosmetics Direct includes the required registration and listing submission information in a standard electronic format to help users organize their registration and listing submissions to include the information needed for FDA. Cosmetics Direct also is intended to give users access to prior Cosmetic Direct registrations and listing submissions.

Cosmetics Direct can be accessed through the Welcome to FDA Direct webpage, which will provide short background information about Cosmetics Direct. New users will need to create an account.

Users who intend to submit information about cosmetics and drugs may create a functional joint account with Cosmetics Direct and CDER Direct, FDA’s portal for drug submissions, which is intended to streamline the submission process.

Notable system features include:

  • Users will be able to create initial submissions using blank forms, or importing an FDA-accepted SPL stored in a valid XML zip file. SPL (Structured Product Labeling) is a document markup standard approved by Health Level Seven (HL7) and adopted by FDA as a mechanism for exchanging product and facility information. Importing an existing Facility Registration or Cosmetic Product Listing SPL will be beneficial for bulk submission.
  • By selecting a country outside the U.S. as a facility location, users will be prompted to identify U.S. Agent contact information.
  • Users will be prompted to sign a confirmation statement, attesting to the veracity of the information submitted, as well as additional contact information for any authorized agents submitting the information.
  • Users will be promoted to save and validate any new submissions, be able to view the status of registrations and listings, and be notified if system detects any errors through a Validation Failure message. The system will provide a list of errors that require fixing before resubmitting.
  • Users may also upload and submit existing Facility Registration or Cosmetic Product Listing SPL, and have the option to clone successfully submitted SPLs as starting points.
  • Users will be able to view the status and details of all submissions on the Cosmetics Direct homepage.

FDA strongly encourages electronic submissions to facilitate efficiency and timeliness of data submission and management for the agency; however, those who wish to submit paper forms still have the option to do so via FDA Forms 5066 and 5067.

As of March 2023, FDA discontinued use of Forms FDA 2511, 2512, and 2512a, previously used for voluntary registration activities, and stopped accepting new submissions to the Voluntary Cosmetic Registration Program (VCRP).

Takeaways

FDA’s announcement of Cosmetics Direct comes on the heels of its recent draft guidance for facility registration and product listing, clarifying, among other things, who must register and list, when, and what must be submitted.

FDA has stated that it expects its new portal to begin accepting submissions sometime in October 2023, in advance of the December 29, 2023 statutory deadline for facility registration and product listing.

 

FDA Issues Long-Awaited Draft Guidance for Industry on Registration and Listing of Cosmetic Product Facilities and Products Under MoCRA

MoCRA’s long-awaited rollout continues as today FDA released draft guidance to assist persons submitting cosmetic product facility registrations and product listings under newly-added Section 607 of the federal Food, Drug, and Cosmetic Act (FD&C Act).

Background

Section 607(a) of the FD&C Act requires every person that owns or operates a facility that “engages in the manufacturing or processing of a cosmetic product for distribution in the United States” to register each facility with FDA, update content within 60 days of any changes, and renew their registration every two years.

As of March 27, 2023, FDA ended its voluntary cosmetics registration program (VCRP), and advised that information submitted to VCRP would not be transferred over to any new system.

Section 607(c) of the FD&C Act further requires that for each cosmetic product, the responsible person must submit to FDA annually “a cosmetic product listing,” including ingredients. 

MoCRA defines a “responsible person” as the manufacturer, packer, or distributor of a cosmetic product whose name appears on the label of such cosmetic product in accordance with section 609(a) of the FD&C Act or section 4(a) of the Fair Packaging and Labeling Act (FPLA).

Key takeaways from Today’s FDA Draft Guidance:

Small Business Exemption: Small businesses, as defined by Section 612 of the FD&C Act (average gross annual sales in the U.S. of cosmetic products for the previous 3-year period is less than $1 million, adjusted for inflation, and who do not manufacture or process certain cosmetic products described in Section 612(b)), are not required to register facilities and list cosmetic product(s).

Electronic Submission Portal: FDA’s new electronic submission portal is expected to be available in October 2023, with FDA strongly encouraging electronic submissions. FDA is developing a paper form as an alternative submission tool.

Definitions: The Draft Guidance defines “contract manufacturer,” “cosmetic products,” “facility,” “manufacturing or processing,” “operator,” “owner,” “responsible person,” and “small business.”

Who Makes the Submissions: Every person that owns or operates a facility that engages in the manufacturing or processing of a cosmetic product for distribution in the United States to register each facility and submit a cosmetic product listing unless:

    • it is exempt as a “small business”; or
    • the cosmetic product is also a drug or device subject to the requirements of Chapter V of the FD&C Act.

What Information to Include (Registration):

    • the name of the owner and/or operator of the facility;
    • the facility’s name, physical address, email address, and telephone number;
    •  with respect to any foreign facility, the contact for the United States agent of the facility (name and phone number), and, if available, the electronic contact
      information (email);
    • the facility registration number, if any, previously assigned;
    • all brand names under which cosmetic products manufactured or processed in the facility are sold;
    • the product category or categories (listed in Appendix A of the Draft Guidance) and responsible person for each cosmetic product manufactured or processed at the facility; and
    • type of submission (initial, amended, biennial renewal, or abbreviated renewal)

FDA intends to use the FDA Establishment Identifier (FEI) as the required facility registration number. The e owner or operator of a facility will need to obtain an FEI number before submitting the facility registration.

FDA also requests that the following additional optional information be submitted:
• parent company name (if applicable);
• facility DUNS Number; and
• additional contact information for individuals associated with the registration.

What Information to Include (Product Listing):

    • the facility registration number of each facility where the cosmetic product is manufactured or processed;
    • the name and contact number of the responsible person and the name for the cosmetic product, as such name appears on the label;
    • the applicable cosmetic category or categories for the cosmetic product (listed in Appendix A of the Draft Guidance)
    • a list of ingredients in the cosmetic product, including any fragrances, flavors, or colors, with each ingredient identified by the name, as required under section 701.3 of title 21, Code of Federal Regulations (or any successor regulations), or by the common or usual name of the ingredient;
    • the product listing number, if any previously assigned; and type of submission (initial, update to content (annual), abbreviated renewal)

FDA also requests that the following additional optional information be submitted:

    • parent company name (if applicable);
    • type of business (as listed on the label), i.e., manufacturer, packer, or distributor;
    • image of the label;
    • product webpage link;
    • whether the cosmetic product is for professional use only;
    • Responsible person DUNS Number (Dun & Bradstreet number) for address listed on product label;
    • Unique Ingredient Identifiers (UNIIs); and
    • additional contact information for individuals associated with the listing.

Multiple Listings: Under Section 607(c)4()B), a single listing for a cosmetic product may include multiple cosmetic products with identical formulations, or formulations that differ only with respect to colors, fragrances or flavors, or quantity of contents

Attestation: FDA requests that individuals submitting registration and listing information to attest to the accuracy and veracity of the information submitted.

How/When to Submit: Stakeholders should plan to register and list in advance of the December 29, 2023 statutory deadline.

Fees: There is no fee to submit a registration or product listing to FDA under section 607 of the FD&C Act.

Public Disclosure: Under section 607 of the FD&C Act, FDA will not disclose information from a facility registration on the brand names under which cosmetic products manufactured or processed in the facility are sold, or from a product listing on the facility registration number of the facility where the cosmetic product is manufactured or processed, in response to a request under the Freedom of Information Act (FOIA) (5 U.S.C. 552).

All other information from cosmetic product facility registration and listing would be available for public disclosure consistent with the FOIA, FDA’s disclosure regulations under 21 CFR Part 20, and other applicable federal law.

Drugs AND Cosmetics?: Cosmetic products that are also drugs under Chapter V of the FD&C Act are not subject to listing requirements. Likewise, a facility that manufactures or processes cosmetic products that are also drugs is not subject to registration requirement  unless it also manufactures or processes cosmetic products that are not also drugs.

Enforceability: As a reminder,  FDA’s guidance documents do not establish legally enforceable responsibilities, but are intended to describe FDA’s current thinking and should be viewed as recommendations.

Conclusion

Today’s Draft Guidance provides much-needed clarity regarding MoCRA’s requirements and upcoming registration and listing deadlines. However, we expect further guidance in the upcoming months as to MoCRA’s additional December 2023 deadlines, and feedback with FDA regarding any flexibility in meeting these deadlines.

 

Post-MoCRA Regulatory Compliance Checklist for Beauty and Personal Care Products

MoCRA, Pub. L. No. 117-328, represents the first major statutory change to the authority of the Food and Drug Administration (FDA) to regulate cosmetics since the Food, Drug, and Cosmetics Act (FDCA), 21 U.S.C. § 361 et seq.,
in 1938 and the Fair Packaging and Labeling Act (FPLA), 21 C.F.R. § 701.3, in 1966.

This checklist outlines key regulatory compliance considerations that are specific to personal care products marketed in the United States following the enactment of the federal Modernization of Cosmetics Regulation Act (MoCRA) on December 23, 2022.

To read the full text of this Lexis Nexis Practical Guidance Checklist by Duane Morris attorneys Driscoll UgarteRick BallAlyson LotmanKelly Bonner and Coleen Hill, please visit the firm website.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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