I am pleased to announce that, on December 3 and 4, I'm leading another delegation to the US Food & Drug Administration (FDA). The purpose of my visits is to share small business perspectives on pending cosmetics legislation, and also on current rules, regulations and current events affecting the cosmetics industry.
This is my second trip, and it comes after months of new developments where legal issues affecting small and independent business owners are concerned. This time, I will be accompanied by longtime IBN member Lela Barker of Bella Lucce (who came on my last trip) and Leigh O'Donnell, president of the Handcrafted Soapmakers Guild.
Why This Trip Is Crucial
More and more people see the wisdom of owning a small business of their own, and technology makes it easier and more practical for small businesses to get underway. As a result, there are thousands more competitors in every industry than there were just a few years ago, and many of the new entrants are very tiny, often home-based, businesses.
As these new participants come into the market, lawmakers and policymakers are not equipped to keep up with changing industry landscapes on their own. Instead, they do what they've always done — meet with the same lobbying firms and large business representatives to discuss legal and policy issues. While small businesses compete in the same industries as those large companies, and they are regulated in the same ways, small companies operate very differently from big companies.
Large companies and lobbying firms cannot speak for small companies. In addition to being their direct competitors, they also have no idea how small companies operate. Congress is therefore at a huge disadvantage when it comes to passing new laws. After all, if they don't have any information about small companies in a particular industry, how can they be expected to pass laws that take their unique interests into account? They can't.
And yet, the same “one-size-fits-all” laws and regulations do not work for an entire industry the way they used to. As a result, it is urgent that small companies participate in the process. We can't wait around on the sidelines for a hammer to drop. History has shown that the stakes are too high for that.
History Need Not Repeat Itself
Consider what happened with the Consumer Product Safety Improvement Act of 2008 (CPSIA) (PDF), which requires that the Consumer Product Safety Commission require that all products designed for children ages 12 and under be tested for lead before they can be marketed in the United States. (You can listen to an Indie Business Radio Show episode devoted entirely to CPSIA at this link.)
CPSIA, which originated in Energy & Commerce, was signed into law by President Bush in August 2008 in order to curb the behavior of very large companies that were importing toys made in countries with unacceptable levels of lead content. The safety testing requirement is designed to force companies to produce safer products, which in turn benefits consumers.
While everyone agrees that the law has noble goals, since the same law applies with equal force to all market participants, even the tiny companies that were not contributing to the problem, the law ended up forcing small companies out of business because they could not afford the expensive testing. These little companies did not import toys or toy components. In fact, many of them made children's products for years in small manufacturing facilities in small towns throughout the nation. Many of them were women-owned companies that made things like baby blankets, children's hair accessories, and dolls. They did not use lead or lead by-products at all. And they made products in very small quantities.
Even though the law was passed in 2008, most people didn't know about CPSIA until January 2009 when the CPSC began proceedings to create the rules that would be used to enforce the law. At that time, the small manufacturers rose up in protest, but by then, it was too late. The law had passed and the CPSC had no choice but to do what Congress told it to do.
An after-the-fact rally, threatened class action suit and several Internet petitions could not change what Congress had enacted. This terrible consequence points out how vitally important it is for small businesses to remain active in the legislative process so they can educate lawmakers about their businesses before new laws pass.
And this is what our trips to Energy/Commerce and the FDA are all about. For those just joining in, here's a short historical summary of the events leading up to our trip.
- April 2008. Word began circulating that the Energy/Commerce was circulating a draft of the FDA Globalization Act of 2008. I immediately got my hands on a copy and identified several items of concern. This video summarizes my very first impressions.In brief, I was concerned about 5 things: (1) a requirement that the current “Good Manufacturing Practices” (GMP), which are now guidelines, be made to apply as law, across the board, to all cosmetics manufacturers regardless of size or annual gross sales; (2) a requirement that all companies pay an annual fee of up to $12,000; (3) a requirement that all companies report “anticipated adverse events;” (4) the treatment of cosmetics in in similar fashion to the way other FDA-regulated products — food, medical devices and drugs — each of which is regulated very differently from cosmetics; and (5) the timing of a one-size fits all law that did not take into intersection between technology and the current recessionary economy, which are the combining to create new opportunities for people to pursue the American dream.Hearings on the draft bill took place on April 24, 2009.
- June 2008. On behalf of IBN, I issued a press release criticizing the draft of the FDA Globalization Act of 2008.
- May-July 2008. IBN Member Mobilization. After analyzing the legal issues involved, on July 24, I sent this letter (PDF) to Energy & Commerce on behalf of my IBN members. By August, we had collected over 4,000 comments and signatures from people who opposed the draft of the new law.
- August 2008. First Delegation To Energy & Commerce and FDA. On August 5, I led the first delegation to Energy & Commerce and the FDA to share my members views about the current state of cosmetics regulation and how the draft bill, if passed into law, would affect them. I was delighted to be accompanied by a proactive and well-spoken group of small business owners who thoroughly articulated our positions and spoke eloquently on behalf of small business owners nationwide. These women deserve special recognition for traveling thousands of miles at their own expense, taking valuable time away from their businesses to speak for other small business owners.They are: Kayla Fioravanti of Essential Wholesale, Lela Barker of Bella Lucce, Anne-Marie Faiola of Bramble Berry and Jamila White.One of the first things that became clear to us upon arrival was how interested the Congressional staffers and FDA directors and deputies were to hear from us. They took notes, asked questions and began to understand the dynamics of small business ownership in a new way. We remained engaged with them throughout the rest of the year.
The Soap Guild eventually joined our effort, and in October, IBN and the Soap Guild sent this joint letter (PDF) to Energy/Commerce to further elaborate on our position and policymakers were to hear from us.
We sent a joint supplemental letter in February of this year.
Our efforts continued through the end of the year. During this time, IBN members called and emailed their Congressional representatives to share their concerns that, if it became law, the FDA Globalization Act of 2008 would put them out of business for no reason and with no corresponding consumer benefit.
- January 2009.In January 2009, the FDA Globalization Act of 2009 was introduced as HR-759. The bill was substantially different from the 2008 draft in many ways.First, instead of applying current “Good Manufacturing Practices” as law across the board to all cosmetics manufacturers, it empowered FDA to promulgate new GMP. This gives companies of all sizes an opportunity to urge FDA to change GMP to accommodate different manufacturing styles.Second, the annual fee was done away with completely. Imagine our excitement about that one!
Third, the “anticipated adverse events” requirement was changed to be more reasonable. While we're certain Congress heard from people outside of our community of small manufacturers, we also know that the changes in the 2009 Act are a direct result of our advocacy efforts.
- June 2009. In June, Energy & Commerce removed food entirely from HR 759 and began to focus efforts there via the Food Safety Enhancement Act of 2009. Drugs, medical devices and cosmetics were put on the “back burner” so that food issues could be sorted out via the food-specific legislation. We are all but certain that Energy/Commerce is poised to circulate a 2010 Act, and we believe it is highly likely that the cosmetics portion will be separated out as the subject of its own piece of legislation. The time is obviously now, to return and see how the wind is blowing as we bring Congressional staffers us to date on how our industry is growing and thriving.Throughout the summer and until now, I am also seeing increased activity from consumer groups that are spreading untruths about how FDA regulates cosmetics in the United States. In particular, the Campaign For Safe Cosmetics, an organization I have reached out to on numerous occasions — to no avail — in an effort to find common ground on behalf of small cosmetics companies.While most of their fear mongering points blame at large companies, the adverse impact is felt by small manufacturers in large part because consumers don't always know enough about the industry to know how differently small companies operate from larger ones. I feel it is important to alert Congress and FDA to these issues so they can take them into account as they address the coming changes.
In light of these developments, I recommended to my members that a second visit to Energy/Commerce and FDA was in order, and those visits will take place on Thursday and Friday of this week. We will also be meeting with representatives from the Personal Care Products Council, the oldest trade organization serving the interests of the world's largest cosmetics companies. While our manufacturing practices and philosophies are quite different, it is the same set of lawmakers and the same regulatory agency that we must deal with.
It is important that we do our part to ensure the free flow of information and work together, if possible, to urge passage of laws that benefit consumers while encouraging a level playing field for all industry participants. It is possible we will be able to meet with at least one representative from the Small Business Administration but I'm still sorting that out at the moment.
While the focus of our meetings will be HR 759, you can see that this is not just about cosmetics. It should be clear to everyone reading this that the issues are far bigger than cosmetics.
This is about men and women, mothers and fathers, young people and old people, and anyone who wants to create a better life for themselves and their families.
Technology is opening up new opportunities for small businesses to be successful. The barriers to entry in many industries have fallen drastically, thus paving the way for new companies that would not have been able to even start just a few years ago.
I firmly believe that the promise of technology can only be fully realized if lawmakers, policymakers and regulators understand that
the fact that to companies compete in the same industry does not mean that it is in the public interest to regulate them in the same exact way.
It's not enough to simply say, as the Regulatory Flexibility Act requires, that the interests of small businesses are taken into account when new laws pass. More than that is required.
What's required? You and me, that's who! We cannot blame Congress and regulators for regulating us out of business if we are not at the table when the laws and regulations are passed. We have to show up. We have to introduce ourselves and participate in the process.
Complaining about how awful laws are does nothing to change them. Whining about the impact of bad legislation after the fact may result in lots of conversation and sharing of viewpoints, but it does nothing to change bad legislation. Bad-mouthing regulators for doing a poor job of regulating, and then refusing to communicate with them, perpetuates the problem.
We have to show up. So that's what we plan to do this week. And we plan to do it over and over again, and we plan to ask for your help. Won't you join us?
Question: What do you think of these issues? Are there other things you would like us to discuss? What have we missed?