4th Report of the Market Access Ombudsman Council (March 17, 1997)

2-(2) Deregulation on cosmetics

1. Complainant: Tokyo Chamber of Commerce

2. Ministry concerned: Ministry of Health and Welfare

3. Background:

(1) Import/sales permit for cosmetics and quasi-pharmaceuticals

When importing and selling cosmetics, each business' branch must obtain an import/sales permit for cosmetics for each sales outlet (Pharmaceutical Affairs Law, Article 13, Clause 23.) Granting of permits requires that testing facilities be installed (use of other testing facilities is also permitted) and that technicians be assigned on duty (Article 17, Clause 23 of the same law). The use of outside testing facilities in place of the importer/seller's own testing facilities has been allowed for cosmetics as well as for quasi-pharmaceuticals for animal testing and some chemical testing.

(2) Permit by type and approval by type

Standards for ingredients used in cosmetics which are commonly believed to be harmless are set down for each type of cosmetics (classified into 25 types, for toning lotion, lipstick, etc.), and permit standards are set down for each type of cosmetics.

Cosmetics within these standards may be imported after receiving approval by type and by presenting a notification of product import for individual products (listing the domestic sales name, name of the importer/seller, name of the manufacturer, and list of ingredients contained).

For cosmetics which fall outside the standards for permit by type (cosmetics which include ingredients being used in Japan for the first type and so on), comprehensive approval by type, for the ingredients and quantities contained, must be obtained. Examination for approval is based mainly on safety data provided by the applicant, but if ingredients have previously been used in other cosmetics, the requirement for this data may be waived. The Organization to Promote Research and Aid Persons Suffering from Pharmaceutical Product Side effects (referred to hereafter as the "Pharmaceutical Products Organization") provides advice on the type of documentation (or whether documentation is required at all) for cosmetics concerning which businesses are planning to file an application. Industry organizations have also compiled a list of specific product names of ingredients used in cosmetics and their descriptions as well as a "List of Standard Ingredients for Cosmetics in Japan."

(3) Sales name for cosmetics

Although the sales name for cosmetics must be indicated on the product reporting form, it may be given any name by the manufacturer (importer/seller).

However, any points which are untruthful or misleading must be indicated (as required by Article 62, corresponding Clause 54 of the Pharmaceutical Affairs Law).

Permit authority over the manufacture (import) of cosmetics is delegated to the prefectural governments, which verify product-reporting forms submitted to the prefectural governor. When the sales name is untruthful or misleading, guidance is given.

In the Response to Market Opening Issues Relating to Standards, Certification, etc. (March 26, 1996, the Office of Market Access), the concerned ministry has indicated that it will take the following actions for deregulation on cosmetics ingredients and streamlining import procedures.

To promote international harmonization, a review of the overall system regulating cosmetics ingredients will be carried out during FY1996. When this is done, the following actions will be taken:

(1) To promote international harmonization where standards for permit by type are concerned, the standards in use in the United States and the EU will be incorporated into Japan's standards for permit by type, for ingredients whose use is allowed in the United States and the EU. Regarding the import of cosmetics incorporating the same ingredients as those used in cosmetics which have already been approved, standards for ingredients not included in the standards for permit by type will be laid down, based on data presented for approval procedures, and promptly incorporated into the standards for permit by type, to avoid the need for approval of those cosmetics.

(2) Regarding the system of import/sales permits for each sales outlet, the necessity of the requirement for technicians on duty and for testing facilities at each sales outlet will be reviewed during FY1996 and improvement measures taken promptly.

(3) Regarding the imported products reporting form submitted when products are imported, this requirement will be reviewed during FY1996 so that it imposes no actual burden and improvement measures taken promptly.

4. Complaint:

(1) Each company importing and selling cosmetics and quasi-pharmaceutical products is required to have its own testing facilities, and there are limits on the types of cosmetics for which outside testing facilities may be used. Although these requirements are ostensibly for the purpose of ensuring safety, they appear to be excessive regulation, and the use of joint testing facilities by affiliated company groups and the use of outside testing facilities for quasi-pharmaceuticals should be allowed.

(2) Companies are required to apply individually for approval of cosmetics, and requiring them all to assemble data concerning the same ingredient for application is a waste of time and money for both examiners and applicants. Additionally, verification of previous examples of use and of standards for ingredients which have not previously been approved is carried out by the Pharmaceutical Products Organization in a 15-minute interview for each company. This imposes a substantial burden on applicants based away from Tokyo, who must travel long distances for the interview. Except in cases where the applicant requests confidentiality, the ingredient names and standards for approved ingredients should be made public immediately in some way, including the Official Gazette and over the Internet, so that whenever one company receives approval for a particular ingredient, that ingredient should thereafter be exempted from the requirement for approval by type and should be handled in the same way as standard ingredients under permits by type.

(3) The prefectural governments have the authority to decide whether a certain sales name may be used for cosmetics, but their standards lack uniformity, and although businesses may inquire beforehand whether a name is allowed, they do not receive a clear answer immediately. Examples of names which were not allowed in the past, and the decision-making standards should be clarified and made public immediately.

5. Results of deliberation:

The concerned ministry has established a study group of experts to study the system of regulation for cosmetics, which is hearing the views of industry groups (the Japan Federation of Cosmetics Manufacturers, the American Chamber of Commerce in Japan, the European Business Council, the Japan Cosmetics Import Group, etc.), and studying the current situation, including drawing up negative lists and positive lists for restrictions on ingredients and showing all ingredients. The study group will compile a report on ideas and problems to be considered by March 1997. Where the standards for permit by type are concerned, new ingredients (approximately 140) will be added to the standards, taking into consideration ingredients used in the United States and Europe, and types will be amalgamated (from 25 to 11 types) in March 1997. Based on comments made at last year's Market Access Ombudsman Council, the ministry's positive approach to streamlining regulation on cosmetics is a favorable development. But the fact that a complaint was made again this year indicates foreign businesses' strong desire for less regulation on cosmetics. Accordingly, the review currently being conducted by the study group should address the following points:

(1) Testing facilities are necessary to ensure the quality of quasi-pharmaceuticals, and the expanded use of facilities other than those owned by each company is being studied in FY1997. When doing so, the study group should also consider allowing the use of facilities owned by affiliated company groups for cosmetics as well.

(2) Regarding approved ingredients which it has been deemed no longer require approval, such ingredients should be incorporated into the standards for permit by type of cosmetics once a year, after the standards have been organized, and made public. Regarding ingredients which are not in the standards for permit by type, but which have been used before, a system of making such ingredients public should be introduced, with due regard for intellectual property rights.

(3) The concerned ministry has published a guidebook providing examples of untruthful or exaggerated (e.g. "miracle," "powerful") sales names for cosmetics or of misleading names (e.g. "nutrition," "fat-reducing") and reminded businesses to avoid using these. In addition, it should work more closely with the prefectures to ensure uniformity of standards in how names are handled, and after studying the prefectures' standards, provide a more extensive list of example during FY1996.

Government decision (March 25,1997)

2-(2) Deregulation on cosmetics

(1) Regarding companies facilities required in terms of quality assurance of quasi-drugs, the ministry concerned will study and expand the scope of use of facilities which are not owned by the company itself in FY 1997. During the study and expansion work, with regard to cosmetics as well, it will study the use of the facilities of affiliated group companies.

(2) Approved ingredients for which it is no longer necessary to require approval are reviewed annually. Based on specification establishment, they are added to the Comprehensive Licensing Standards Cosmetics by Category (CLS), thus made public .For the other ingredients not included in the CLS, but which are in previous examples of formulation, the introduction of a system to make these public will be studied in consideration of intellectual property right protection.

(3) A guidebook has been published, which includes examples of false, exaggerated or misleading product names in terms of. Of caution. The ministry will work in close coordination with the prefectures to avoid divergence in the guidance at a prefecture level. The ministry will inform additional example to be included in the guidebook on the basis of a prefecture surveillance conducted in FY 1996.