The draft version of the FDA Globalization Act of 2008 may be amended to include exemptions for small cosmetics firms that otherwise would be "decimated" under the legislation in its current form, according to a group of small business owners and representatives that has been active on Capitol Hill.

The House Committee on Energy and Commerce's Subcommittee on Health may add language exempting or providing a "ramp-up period" for small cosmetics businesses, the group says.

The amendment would address concerns expressed by small business reps in an Aug. 5 meeting with committee staffer Virgil Miller in which they discussed the impact the legislation would have on thousands of small businesses.

The group - which included Anne-Marie Faiola, president and CEO of soap ingredient supplier Bramble Berry, and Donna Maria Coles Johnson, president and CEO of the Indie Beauty Network, a 700-member association in support of small business ownership - also met with Linda Katz, director of FDA's Office of Cosmetics and Colors.

Faiola told "The Rose Sheet" Aug. 20 that Miller responded positively to the group's concerns and suggested the group could be called upon to help draft language similar to that used to exempt small businesses under the drug section of the proposed legislation.

The Globalization Act of 2008, announced in May, aims to strengthen food, drug and cosmetic safety, requiring the establishment of an adverse event registry and good manufacturing practices for the cosmetics industry within 18 months of enactment (¹ Also see "Beauty Firms Face Adverse Event Reporting, GMP Requirements Under Bill" - HBW Insight, 21 April, 2008., p. 4).

Spearheaded by Energy & Commerce Committee member John Dingell, D-Mich., the legislation would also require all cosmetic manufacturers to pay a registration fee of $2,000 per facility initially and with each re-registration. Additionally, companies that import cosmetic ingredients from abroad would pay an additional $10,000 per year.

That fee, said Faiola, is enough to break thousands of small businesses, as many are one-person operations making less than $12,000 a year.

Currently, FDA considers small cosmetic businesses those generating less than $5 million a year. However, Faiola said, there is a sub-category of small businesses that are family-owned operations and microformulators, many of whom create products in their own homes.

"These are women you see at farmer's markets in your community," she said.

She noted that only 40 percent of the 33,000 customers that source ingredients from Bramble Berry gross over $250 in sales per month.

In addition to paying exorbitant registration fees, many small crafters would be forced to hire outside help to assist them in complying with the law, according to Faiola.

The exec said she hopes the lack of an exemption for small businesses in the draft version of the legislation was simply an "oversight" and that small manufacturers ultimately will be protected.

Though no specific timetable for a final version of the bill has been provided, Faiola says the committee claims to be on a "fast track" with the legislation, aiming to complete a draft discussion on the issue in September and formally introduce the bill by the end of 2008.

Registration Would Stifle Innovation, Exec Says

In a position paper she wrote to rally other small business owners prior to her meeting with Miller, Faiola questions the need for cosmetics marketers to register formulas with FDA.

"Who exactly of the 18 people currently employed by the FDA to oversee cosmetics is going to look at the formulations?" she says.

Calling the stipulation "another unnecessary burdensome reporting requirement" imposed on small businesses, she asks companies to consider the "stifling" effect it would have on new product innovation and/or minor improvements to existing products.

Secondly, she says mandatory reporting of potential adverse reactions to FDA is unnecessary, as there is "no evidence" that current voluntary reporting methods are not working.

"Who is to say what a 'potential adverse reaction' might be?" Faiola says. "I might have an adverse reaction to the foundation I just made if I put it directly on my eye. No one can legislate or know what consumers do with our end products."

The reporting requirements would ultimately force thousands of small businesses out of the market or discourage others from entering, Faiola concludes.

Bill Creates Uneven Playing Field

Coles Johnson, an attorney and founder of the Indie Beauty Network, claims that requiring small businesses to conform to Good Manufacturing Processes is good-intentioned but creates an uneven playing field between large and small businesses.

During an Aug. 30 interview with "The Rose Sheet," she explained that the current draft of the legislation presumes that every company has more than one employee and large manufacturing capability, when in reality small and new businesses "just don't have that."

At the least, Johnson suggested, small companies should be allowed a "ramp-up" period of months or years from their inception before the registration requirements kick in.

However, "our overall position is that cosmetics should not be considered part of this bill," she said. "If they are, they should be exempted" from many of the requirements.

The Personal Care Products Council President Pamela Bailey spoke out against the draft legislation during a committee meeting in May (² Also see "House Subcommittee Hearing Explores Alleged Gaps In Cosmetic Safety" - HBW Insight, 19 May, 2008., p. 3).

Bailey told the panel that adverse events are very rare with personal-care products because they are "inherently safe" and that only about 200 adverse event reports are received annually through the industry's voluntary reporting system.

The Environmental Working Group, which also testified at the May meeting, represented a different view and encouraged the committee to move ahead with the legislation.

- Eileen Francis (e.francis@elsevier.com)

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