Cosmetic or OTC? Understand FDA Rules

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The main difference between OTC (Over-The-Counter) products and cosmetics for the FDA lies in the intended use of the formulation. Cosmetics are developed to cleanse, beautify, promote attractiveness, or alter the appearance of the human body, encompassing items like moisturizers, perfumes, and makeup. On the other hand, OTC products are non-prescription drugs specifically formulated to diagnose, cure, mitigate, treat, or prevent diseases, as well as affect the structure or function of the body. Products such as sunscreens, antiperspirants, and anti-dandruff shampoos fall into this category. The complexity in the international market arises because many products combine both functions, requiring exporters to meet dual regulatory compliance to enter the United States.

The internationalization of beauty and personal care brands to the North American market is a strategic step, but one that runs into Food and Drug Administration (FDA) regulations. Unlike other jurisdictions that have unique or simplified categories for personal care products, the US federal system draws a dividing line based on the intended use and chemical formulation of each item.

Understanding where your portfolio fits defines your operation's cost, time to market, and the risk of having goods detained at customs.

The Definition of a Pure Cosmetic

Under the Federal Food, Drug, and Cosmetic Act (FD&C Act), the law governing the sector in the US, the definition of a cosmetic is strictly outlined. If the product is applied to the body to cleanse, perfume, or temporarily make the skin more attractive, it is a cosmetic.

In this category, we find:

• Ordinary soaps
• Basic moisturizing lotions
• Lipsticks and nail polishes
• Traditional shampoos
• Deodorants (provided they do not inhibit sweating)

The basic premise of a pure cosmetic is the absence of any therapeutic claim. It does not treat skin conditions, does not alter cellular physiology, and does not promise to cure ailments.
The regulation for these products recently underwent its most significant update in decades with MoCRA (Modernization of Cosmetics Regulation Act). The new legislation expanded the agency's authority and implemented mandatory requirements for good manufacturing practices and traceability, putting an end to voluntary registration. Now, facilities that manufacture or process cosmetics for the US must mandatorily register with the FDA, renew their data annually, and submit a listing of every marketed product, detailing ingredients and responsible parties.

The Universe of OTC Drugs

When a product crosses the barrier of simple beautification and promises a physiological action, it enters the jurisdiction of Over-The-Counter (OTC) drugs. These are safe and effective pharmaceuticals for use by the general public without the need for a medical prescription.

For the FDA, the classification of an OTC does not depend solely on the active ingredients present in the formula, but on the promises made on the label, the brand's website, and in marketing campaigns—what the agency calls Intended Use. If a face cream claims to stimulate collagen production, reduce acne inflammation, or cure eczema, it ceases to be a cosmetic and becomes regulated as a drug.

OTC products operate under the OTC Monograph system. A monograph is essentially a regulatory "recipe book" published in the Code of Federal Regulations (CFR). It establishes:

• Which active ingredients are acceptable to treat a specific condition.
• The permitted concentrations.
• The mandatory warnings that must appear on the label panel.
• Clinical and laboratory testing guidelines.

Note: If your company wishes to export to the US and lacks clarity on the correct classification of your portfolio, relying on international compliance experts is essential. The B2B TradeCenter team conducts a detailed analysis of ingredients and labeling to ensure your operation follows the exact and safe regulatory path.

When a Product Has a Dual Classification

The biggest challenge for manufacturers and exporters occurs when the industry creates innovations that merge the two categories. In the market, these products are often dubbed "cosmeceuticals." However, it is crucial to highlight that the FDA does not legally recognize the term cosmeceutical. To the US government, a product is a cosmetic, an OTC drug, or both simultaneously.

If a product has a dual classification, it must fully comply with the requirements of both categories. This means that formulation, testing, facility registration, and packaging must satisfy OTC drug requirements as well as the new safety protocols stipulated by MoCRA for cosmetics.

"Intended Use" in Export Labeling

Many international companies suffer cargo retention at American ports due to communication failures. The FDA evaluates the Intended Use through everything the brand communicates.

A poorly translated word on the label can trigger an alert in the customs system. For example, using the term "cures" or "treats" on a moisturizing cream automatically turns it into an unapproved drug during inspection, resulting in immediate cargo seizure.

To mitigate these risks, packaging adaptation is a non-negotiable step. Some of the most common labeling errors include:

• Cellular alteration claims: Promising "cell regeneration" or "stimulation of collagen and elastin production."
• Treatment terminology: Using words like "antifungal," "anti-inflammatory," or "healing" on products not registered under an OTC Monograph.
• Incorrect ingredient order: Failing to list ingredients in descending order of predominance or failing to use the standardized INCI (International Nomenclature of Cosmetic Ingredients) nomenclature required by the US.
• Lack of mandatory warnings: Omitting safety warnings required by the CFR for specific ingredients, such as alpha-hydroxy acids (AHAs).

Label adaptation requires deep technical knowledge of American legislation. B2B TradeCenter offers complete support to review, adapt, and translate your product labels according to federal norms, guaranteeing commercial approval and avoiding losses from rejected batches.

The US Agent

For companies outside the United States, both OTC rules and MoCRA legislation for cosmetics bring a mandatory requirement: the designation of a US Agent.

The Agent acts as the primary point of communication between the FDA and the foreign facility. This is not just a simple mailing address or a customs broker. This representative must be physically located in the United States, be available during business hours to respond to inspections or emergency calls from the regulatory agency, and is considered legally responsible for receiving compliance and inspection notices on behalf of your company.

Attempting to export without a qualified agent or using informal contacts is a risky practice that frequently results in facility registration cancellation and import blocks.

At B2B TradeCenter, we simplify this requirement by directly providing solutions for foreign companies, guiding the appointment of agents, and providing continuous advisory services so that your company maintains an uninterrupted logistical and commercial flow in US territory.

Frequently Asked Questions (FAQ)

My company grossed less than US$1 million last year. Am I exempt from FDA registration?

Under MoCRA law, cosmetics companies with an average annual gross revenue of less than US$1 million in the US over the last three years can be considered small businesses and obtain an exemption from facility registration and product listing. However, this exemption is immediately voided if the manufactured products pose a higher health risk, such as injectable cosmetics, products for internal use, those that alter appearance for more than 24 hours (like long-lasting dyes), or products applied to the eyes. For OTC drugs, there is no revenue exemption; registration is mandatory for everyone.

Can I freely use Anvisa-approved ingredients in the United States?

No. Prior approval of an ingredient by the Brazilian Health Regulatory Agency (Anvisa) or even in the European Union does not guarantee its automatic acceptance in the United States. You must cross-reference your formulation with the FDA's restricted and prohibited ingredients database and verify if the active ingredient, should it have a therapeutic function, strictly obeys the dosages established in the respective American OTC Monograph.

What happens if the FDA inspects my cargo and considers it an "unapproved drug"?

If an exporter classifies a product as a cosmetic but the FDA determines—based on label or website analysis—that it makes drug (OTC) claims, the cargo will face "Detention without Physical Examination" (DWPE). The importer will receive a Notice of Action, and the merchandise may be refused and destroyed at the manufacturer's expense, or returned to the country of origin, generating immense logistical and commercial losses for the brand.

Conclusion

Exporting to the world's largest economy requires planning and respect for federal health and safety standards. The dividing line between a cosmetic and an OTC product can be thin in formulation, but it is an abyss from a legal and bureaucratic standpoint.

Anticipating the correct classification of your product, aligning the Intended Use in marketing strategies, and adapting labels to CFR standards are steps that separate successful global brands from those that face losses at customs barriers. To safely navigate MoCRA legislation, OTC Monographs, and execute a flawless adaptation process, trust the expertise of those who breathe international trade daily. Contact the specialists at B2B TradeCenter and prepare your portfolio to conquer the North American market with total compliance.