On Sept. 28, California Gov. Jerry Brown (D) signed into law SB 1249, unofficially known as the “California Cruelty-Free Cosmetic Act,” which bans animal testing from all cosmetic products sold in California after Jan. 1, 2020, making it the first state in the United States to do so.
Similar legislation has been previously introduced in New York and Hawaii, as well as in the U.S. Congress with Reps. Martha McSally (R-Ariz.) and Don Beyer (D-Va.) sponsoring the Humane Cosmetics Act this session. Currently, the European Union and several countries around the world—including but not limited to Guatemala, India, Israel, New Zealand, Norway, South Korea, Switzerland, Taiwan, and Turkey—have in place similar laws banning the sale of cosmetic products tested on animals.
Summary of the New Law
Starting Jan. 1, 2020, it will be unlawful for a cosmetic manufacturer, packer, or distributor to “sell” any cosmetic in California that was developed or manufactured using an animal test that was conducted or contracted by the cosmetic manufacturer, packer, or distributor or any supplier of the manufacturer packer, or distributor.
However, the new law provides exceptions to the ban for certain tests including:
- an animal test that is required by a federal or state regulatory authority if all of the following apply:
o the ingredient is in wide use and cannot be replaced by another ingredient capable of performing a similar function;
o a specific human health problem is substantiated and the need to conduct animal tests is justified and is supported by a detailed research protocol proposed as the basis for the evaluation; and
o there is no non-animal alternative method accepted for the relevant endpoint by the relevant federal or state regulatory authority;
- an animal test that is conducted to comply with a requirement of a foreign regulatory authority, if no evidence derived from the test was relied upon to substantiate the safety of the cosmetic sold in California by the manufacturer;
- an animal test that is conducted on any product or ingredient subject to the federal requirements for drugs and devices; or
- an animal test that is conducted for non-cosmetic purposes in response to a requirement of a federal, state, or foreign regulatory authority, if no evidence derived from the test was relied upon to substantiate the safety of the cosmetic sold in California by the manufacturer.
A manufacturer is not prohibited from reviewing, assessing, or retaining evidence from an animal test conducted pursuant to one of the exceptions.
Additionally, the law will also not apply to a cosmetic in its final form or to an ingredient, if the cosmetic or ingredient was sold in California or tested on animals before Jan. 1, 2020, even if the cosmetic or ingredient is manufactured after that date.
Violators of the new law will face an initial fine of $5,000 and an additional fine of $1,000 for each day the violation continues. The law also authorizes the district attorney (DA), upon a determination that there is a reasonable likelihood of a violation, to request and review the testing information relied upon by a cosmetic manufacturer in the development or manufacturing of the cosmetic product.
The new law also states that safety information submitted to the DA in response to an inquiry under the new law would be treated as a trade secret and requires the DA requesting the information to take “appropriate measures necessary to preserve the confidentiality of information provided pursuant to [the new law].”
It is worth noting that the legislative history of the final text and exceptions recognizes the potential compliance issues for cosmetic manufacturers selling in U.S. and global markets. For instance, the final text and exceptions recognize that there are instances where U.S. federal, state, or foreign regulators may require animal testing to resolve safety issues around a certain ingredient or instances when unrelated third parties may conduct animal testing on an ingredient, which should not preclude its use as an ingredient by a cosmetic manufacturer. An earlier version of SB 1249 would have prevented manufacturers from using ingredients where animal tests were conducted on an ingredient for any purpose by any entity, including those unrelated to the cosmetic company and tests conducted for non-cosmetic purposes.
While the law does not become operative until Jan. 1, 2020, below we discuss several areas that may raise new issues for cosmetic companies and require more immediate consideration.
Potential Conflict with Federal Requirements for Safety of New Color Additives Used in Cosmetics
Interestingly, while SB 1249 contains a specific exception for animal tests that were conducted on any product or ingredient subject to the federal requirements for drugs and devices, the new law is silent on animal tests that were conducted on ingredients subject to the federal requirements for color additives, which are routinely used as ingredients in cosmetics. For example, although the Federal Food, Drug, and Cosmetic Act (FDCA) does not dictate specific tests to demonstrate that cosmetics are safe, Section 721 of the FDCA subjects color additives used in cosmetics to a strict pre-approval system to ensure their safety. See, e.g., 21 C.F.R. § 70.42(b) (“The safety for external color additives could normally be determined by tests for acute oral toxicity, primary irritation, sensitization, subacute dermal toxicity on intact and abraded skin, and carcinogenicity by skin application…”).
If the FDA continues to require the use of animal testing to approve new color additives, the new California law will present a potential conflict, assuming the additional criteria for an exemption from the ban cannot be met for the ingredients. Whether this conflict would provide a basis for a legal challenge on the basis that federal law preempts the state law is unclear; however, it will certainly make it more challenging and possibly a disincentive for cosmetic manufacturers to introduce new color additive technology to the market based on the uncertainty of use in California.
Exceptions Will Not Likely Be the Rule
Notwithstanding that a large segment of the new law is dedicated to providing a process for claiming an exemption, the requirements will be difficult to meet. Further, the exceptions to the new ban also create several unanswered questions. For instance, the first exception permits an animal test that is required by a federal or state regulatory authority if all three criteria are met.
However, the criteria will require further explanation:
- How widely used must the ingredient be to fall under the exception? How do you show an ingredient is irreplaceable? Would scientific chemical expert affidavits be adequate?
- What are examples of “specific health problem[s]” that fall under the exception and what is required to substantiate the problem? What level of “detailed protocol” is necessary for the animal test? Is this a protocol that is different in terms of scope or type of animal? Is it expected to be substantially different from normal acute toxicity testing protocols?
- Will the State of California have to approve the proposed “detailed research protocol” as the basis for conducting the animal test?
- Who decides whether non-animal, alternative test methods are adequate? Will a state’s acceptance of such methods provide any type of product liability defense?
Additionally, in the event that a manufacturer must conduct animal testing abroad for market access, how will manufacturers be able to show that “no evidence derived from the [animal] test was relied upon to substantiate the safety of the cosmetic sold in California”? Does the mere existence of non-animal safety tests satisfy the requirement? These are some of the many issues on which the industry will require guidance. There has been no indication when or in what form guidance may be issued.
Practical Considerations for Compliance
Given the relatively short time line for the effective date of the new law, cosmetic manufacturers will need to begin constructing a strategy for compliance and develop record keeping mechanisms, prior to the law taking effect, in order to substantiate compliance in the event any claim is asserted against the manufacturers. Proposed product formulations intended to be sold after January 1, 2020 will need to be reviewed to ensure that they do not contain ingredients that have been tested on animals. This will require a review of the entire supply chain for these ingredients to ensure that suppliers also did not test the product on animals. Although certifications from suppliers attesting to the source and testing history of ingredients would be a useful first step, in view of the possible penalties for non-compliance and potential class actions, certifications alone may not be adequate.
Like the food industry which in the last several years has been required to become more knowledgeable about the entire food supply chain under the Food Safety Modernization Act, the cosmetics industry will also be expected to look upstream for answers about the source of ingredients and how they were established as safe. Independent inspections and certifications by third parties of the supply chain may become common under this new law.
As with any new requirement, there will likely be an initial surge of requests for certification activities, and a corresponding backlog. Those manufacturers that act quickly will be at the head of the queue.
Similarly, contracts with suppliers will need to be reviewed and amended to ensure that appropriate certifications, representations, and warranties concerning compliance with the new law are included, along with indemnification for challenges by state or local regulators under the enforcement provisions of the new law.
With regard to responding to DA inquiries about cosmetic testing, to the extent that formulations need to be modified to delete certain ingredients, labels and potentially promotion and marketing materials will also likely need review and revision.
It is unclear how companies should prepare for a DA inquiry about safety testing and the scope of the afforded protections for this information. For instance, should companies claim safety testing protocols and data information as trade secrets in view of the legal and competitive impact they may have? Will the state create a process for arbitrating trade secret issues?
With regard to the development of new alternative testing methodologies to ensure the safety of cosmetic ingredients, the cosmetics and fine chemicals industry should be encouraged by new development tools that are being used in the drug and medical device industries to predict chemical behavior based on structural similarities and risk assessments. In vitro assays and artificial intelligence or machine learning may also enable companies to evaluate the safety of new ingredients.
Product Liability Risks
SB 1249 expressly authorizes county DAs and city attorneys to investigate and enforce the law. We anticipate, however, that the aggressive products liability and consumer products plaintiffs’ bar will also pursue claims soon after the law takes effect in 2020. Utilizing California’s expansive unfair competition, false advertising, and consumer protection laws that allow for statewide injunctive relief, restitution, and potentially extensive civil penalties, plaintiffs will seek to challenge compliance by all cosmetics manufacturers and distributers from the outset. In many cases, these plaintiffs will likely send pre-filing notices of violations and seek to reach a quick resolution, using the threat of litigation to force a lucrative settlement.
Defending these claims will prove challenging, particularly to the extent a company seeks to rely on one of the exceptions to the ban noted above. Accordingly, it will be incumbent on cosmetic companies to closely document their compliance efforts and the background of every ingredient. As noted above, for manufacturers this will require close examination of the entire supply chain and scrupulous recordkeeping regarding ingredient use and manufacturing dates. For distributers, this will require, at minimum, closely documenting their interactions with suppliers and manufacturers. Finally, companies will need to carefully consider ingredient changes to any cosmetic that was in its final form prior to Jan. 1, 2020, given the potential loss of the carve-out exemption for such a product.
In many ways, the new law will be disruptive to the cosmetics industry. Companies should begin their response strategies immediately to be ready for 2020.
Kathleen Sanzo is a partner at Morgan Lewis in Washington and the firm’s FDA practice leader. She represents clients in the pharmaceuticals and biotechnology, food and dietary supplements, consumer products, consumer protection safety, advertising, cosmetics, drugs, and medical industries.
Collie James is a partner at Morgan Lewis in the firm’s Orange County office in Costa Mesa, Calif. He counsels clients on complex business litigation matters, including mass tort, product liability, environmental litigation, unfair business practices claims, and consumer class actions.
Amaru Sanchez is an associate at Morgan Lewis in Washington. He provides substantive legal and strategic advice to FDA clients in matters concerning regulatory compliance, enforcement issues, and public policy.