By Tim Cahill:

On February 20, 2007, the Investor Environmental Health Network ("IEHN") issued a report entitled "Beneath the Skin: Hidden Liabilities, Market Risk and Drivers of Change in the Cosmetics and Personal Care Products Industry." IEHN represents 20 investment organizations with $22 billion under management that are seeking to ensure that the companies they invest in are taking appropriate steps to reduce risks associated with the toxic chemicals used in their products. The IEHN’s report warns that nanotechnologies represent one of the significant health risks in the cosmetics industry and that investors in this industry must be aware that sweeping changes are likely to occur in this market. The report describes the Food and Drug Administration’s ("FDA") current oversight of cosmetics as a "a porous and ill-defined regulatory framework" and cites to the fact that "cosmetics are generally exempt from pre-market review" as a major limitation in the FDA’s ability to regulate cosmetics. As a result, the report recommends that cosmetics manufacturers take independent steps to monitor the safety of their products in order to avoid potential liability and gain a competitive advantage by increasing their brand trust.

The IEHN’s report is certainly not the first to blast the FDA’s ability to regulate the use of nanotechnologies in cosmetics. In an October 2006 report by former FDA Deputy Commissioner for Policy, Michael R. Taylor, entitled "Regulating the Products of Nanotechnology: Does FDA Have the Tools It Needs?," the FDA’s lack of oversight of cosmetics was identified as an area that must be addressed in order for the FDA to adequately monitor the safety of cosmetics containing nanotechnologies, particularly since cosmetic products with nanomaterials are reaching the marketplace faster than many other products regulated by the FDA. The IEHN’s report recommends greater self-regulation by cosmetics manufacturers, but the FDA could impose stricter regulations in this area in the near future. The FDA is in the process of evaluating its ability to effectively regulate the use of nanomaterials in FDA-regulated products, and it has been reported that the agency will issue its findings in July 2007. How the FDA addresses cosmetics with nanomaterials will be one area to watch closely.