Canada Gazette, Part I, Volume 157, Number 6: Regulations Amending Certain Regulations Concerning the Disclosure of Cosmetic Ingredients

February 11, 2023

Statutory authorities
Food and Drugs Act
Cannabis Act

Sponsoring department
Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues

This regulatory proposal addresses a number of matters related to the requirements for cosmetics under the Food and Drugs Act and includes consequential amendments to the Cannabis Regulations under the Cannabis Act.

Disclosure of certain fragrance allergens on cosmetic labels

There is a growing demand from the public for readily accessible health protection information on chemicals in consumer products, including cosmetics. On February 9, 2022, the Government of Canada introduced Senate Bill S-5, Strengthening Environmental Protection for a Healthier Canada Act, and committed to addressing this growing demand. On March 4, 2022, the Government of Canada commenced consultations in connection with its commitment to make the presence of chemical ingredients more transparent with enhanced labelling. These commitments are also included in the 2021 mandate letters of the Minister of Health and the Minister of the Environment.

In Canada, the Cosmetic Regulations (the Regulations) under the Food and Drugs Act already require the disclosure of all ingredients on the label of a cosmetic. Fragrance ingredients are commonly used in cosmetics and are added to produce or mask a particular odour. Fragrance ingredients may be individual substances, but generally are complex mixtures of many different ingredients at very low or trace amounts. According to the International Fragrance Association, more than 3 000 unique fragrance ingredients can be used to create fragrance mixtures.^{footnote 1} Disclosure of all ingredients of a fragrance mixture used in a cosmetic would result in a product label that is hundreds of ingredients long and impractical with respect to legibility. Globally, fragrance ingredients and mixtures are considered proprietary information. There are no jurisdictions that require the entire fragrance composition of a cosmetic on the product label.

In accordance with subsection 21.4(3) of the Regulations, the presence of fragrance ingredients must be indicated on a cosmetic label either by

• Individually identifying the fragrance ingredient, in descending order of predominance as part of the list of ingredients, or
• Using the term “parfum” at the end of the list of ingredients.

Most manufacturers and importers of cosmetics use the term “parfum” rather than list all fragrance ingredients. Accordingly, consumers may not be aware of the fragrance ingredients that are used in a cosmetic by reading the label. While fragrance ingredients are safe for the majority of the population, like any ingredient, they can cause allergic reactions for certain individuals. For those individuals, contact allergic reactions to cosmetics are a result of repeated topical exposure to a fragrance allergen leading to a reaction, and may cause skin irritation such as redness, itchiness, or rashes — also known as allergic contact dermatitis (ACD). Fragrance ingredients are the most common cause of contact allergies to cosmetics, followed by preservatives and hair dyes.^{footnote 2}

The frequency of ACD experienced as a result of exposure to fragrance ingredients in Europe is estimated to be 1% to 3%.^{footnote 3,footnote 4,footnote 5} In patients with eczema, the frequency of ACD as a result of fragrance ingredients is higher, likely between 6% and 14%.^{footnote 6} Similar statistics are expected to be observed in the Canadian population. ACD is a lifelong condition and may be aggravated with re-exposure.

The lack of disclosure of fragrance allergens on cosmetic labels can negatively impact the health and safety of Canadians, add a burden to the health care system, and contribute to absenteeism in the workplace. These impacts could lead to economic losses and a decrease in productivity.

Disclosure of ingredients for cosmetics sold in small packages

The Food and Drugs Act and the Regulations require that information provided on labels of cosmetics must be displayed in a legible manner for consumers. Some cosmetics, whose immediate container or outside package is small, have very limited space for all required label information to be present in a legible manner. Examples of cosmetics sold in small packages include eyeliner pencils, hotel or travel-sized amenities (moisturizer, shampoo, body wash), lipsticks and nail enamels. To address this issue, the Regulations allow for some flexibility for the disclosure of ingredients for cosmetics sold in small packages. If necessary, the list of ingredients can be disclosed on a tag, tape or card affixed to the container or package.

With this regulatory proposal, if a product contains fragrance allergens, the list of ingredients would be slightly longer. Since cosmetics sold in small packages have less space to disclose all ingredients in a legible manner on their labels, the addition of fragrance allergens may require an increase in packaging size, or the creation of a tag, tape or card to attach to the product. Either of these solutions would lead to additional environmental waste.

Industry trade associations, both in Canada and Europe, have advocated for added flexibilities for cosmetic labels. Particularly for small packages, industry has identified that the current flexibility for ingredient disclosure is lacking a modern and sustainable option.

Regulatory oversight of cosmetics

There are provisions in the Regulations that require modernization and updates to improve the regulatory oversight of cosmetics given changes to the marketplace. As such, Health Canada proposes to address the following issues:

• (a) Definition of “manufacturer”
  • The definition for “manufacturer” in the Regulations reads: “means a person, a partnership or an unincorporated association that sells, or manufactures and sells, a cosmetic under its own name or under a trademark, design, trade name or other name or mark owned or controlled by it.”
  • There are aspects of the definition that would benefit from clarification, such as the fact that the regulated party must be located in Canada and clarifying the responsibility of third-party manufacturers when the brand owner is located outside Canada.
• (b) Definition of “importer”
  • The term “importer” is used in various sections of the Regulations, although not defined. Certain obligations are specific to the importer and to help facilitate compliance, it is proposed in the amendments to the Regulations to clearly set out the roles and responsibilities of the importer.
• (c) Cosmetic notification requirement
  • The Regulations have several requirements related to cosmetic notification. First, the Regulations require that the manufacturer and importer submit a cosmetic notification to Health Canada within 10 days of the first sale of the cosmetic in Canada. Second, if any change is made to the information provided in the cosmetic notification, a revised notification must be submitted within 10 days of the modification. Third, Health Canada may also request information with regard to the notification, and the person who submitted the notification must promptly provide that information. Through these three different types of notifications, essential information regarding the product and the regulated parties is collected and maintained by Health Canada.
  • The proposed amendments to the Regulations would clarify that the discontinuation of sale in Canada is a change requiring notification. This would be expected to lead to a greater level of compliance with this requirement.
  • In addition, the timelines for responding to a request for information from a regulated party are unclear.
  • Finally, if a cosmetic notification, amendment, or request for information is not received, Health Canada contacts the manufacturer or importer. If the manufacturer or importer does not respond or comply, Health Canada may pursue prosecution or seizure from the market, measures that are both time-consuming and resource intensive. Including additional tools in the proposed amendments to the Regulations to mitigate these types of non-compliance (such as the ability to stop sale) would allow for a more proportional response at various levels of the distribution chain.
• (d) Distributor information on the cosmetic notification
  • The cosmetic notification requires the name and address in Canada of the manufacturer, importer or distributor.
  • In modern supply chains, a manufacturer or importer may have multiple distributors, which can change throughout the lifespan of a product. For every change of distributor, the notifying parties must update their cosmetic notification, which is an administrative burden. For compliance and enforcement purposes, Health Canada can obtain this information from the notifying party on an as-needed basis.
• (e) “Rinse-off” or “leave-on” product information
  • The Regulations require manufacturers and importers to identify a product’s function and form on the cosmetic notification. However, the notifier is not required to indicate whether a product is “rinse-off” or “leave-on.” Over time, Health Canada has identified that this information is needed when screening a cosmetic notification, because the risk profile of an ingredient can often be significantly different if it is rinsed off versus left on the body.
  • In addition, with the introduction of a new requirement to disclose certain fragrance allergens when used above specified limits, Health Canada will need to know whether a product is “rinse-off” or “leave-on” for compliance verification purposes.
• (f) Ingredient identification on the cosmetic notification
  • The Regulations require the disclosure of each ingredient present in a cosmetic product on the cosmetic notification. Although the ingredient name on a cosmetic label must be disclosed using the International Nomenclature Cosmetic Ingredient (INCI) term, the Regulations do not require this nomenclature to be used when identifying ingredients on the cosmetic notification. As a result, Health Canada receives notifications using various nomenclature to identify the same ingredients, and must maintain a database of synonyms to INCI terms in order to assess compliance with ingredient concentration restrictions or other conditions of use.
  • In 2020, there were 7 220 instances where Health Canada carried out additional follow-up work to identify ingredients included in cosmetic notifications because the ingredient term used was not known to the Department. If an INCI name is not used on the cosmetic notification form, this results in additional actions for Health Canada to be able to identify the ingredient used, and to determine if there is a potential health risk associated with the cosmetic.
  • In addition, discrepancy between the ingredient names on the cosmetic notification and the label of a cosmetic may signal a violation that requires compliance verification actions. If the nomenclature used in the notification is not INCI, however, this cannot be easily verified.
• (g) Concentration ranges for ingredients on the cosmetic notification
  • The Regulations require manufacturers and importers to provide a list of the cosmetic’s ingredients and, for each ingredient, indicate either its exact concentration or corresponding concentration range on the cosmetic notification. The table in the Regulations outlines concentration ranges that may be used instead of an exact concentration.
  • Some of the current concentration ranges are very broad, such as range 1, which includes concentrations of more than 30% up to 100%. Broad concentration ranges can pose a challenge when Health Canada conducts risk assessments of ingredients under the Food and Drugs Act or the Chemicals Management Plan. In the absence of exact concentrations, Health Canada uses the higher concentration from a concentration range for exposure calculations. In these cases, Health Canada’s final assessment may be overly conservative, and may not reflect the actual exposure to the ingredient through use of the cosmetic.
  • More practical, narrower concentration ranges would facilitate Health Canada’s screening of cosmetic notifications, reduce requests to notifiers for clarification, and enhance the risk assessments conducted by Health Canada.
• (h) Requests for evidence of safety
  • Section 29 of the Regulations authorizes Health Canada to request evidence from a manufacturer in order to establish the safety of a cosmetic when used under the recommended or normal conditions of use. In the instance that a manufacturer does not submit evidence of safety, or if the evidence of safety they submit is not sufficient, section 29 indicates that the manufacturer must stop selling the product.
  • Most cosmetics sold in Canada are imported. When an importer submits a cosmetic notification, and if Health Canada suspects that a safety issue exists, the importer is contacted. Health Canada makes requests to importers for evidence of safety information on a regular basis, and has done so for over a decade. Most importers are responsive; however, if the requested information is not provided, Health Canada cannot exercise section 29 of the Regulations to issue a stop sale in the case of insufficient safety data. Extending the application of section 29 to importers would help to better protect the health and safety of Canadians.
• (i) Manufacturer’s information on the label
  • Paragraph 30(2)(a) requires that the name and address of the manufacturer as it appears on the label as per section 20 be provided in the cosmetic notification. As a result of the changes to the definition of “manufacturer,” and the introduction of the term “importer,” updates are required to paragraph 20(a) to maintain flexibility as to the name and contact information that appears on the label. Furthermore, the current requirement can be modernized to allow for the use of alternate contact methods, like websites and email addresses.

Changes of an administrative nature

Amendments to the Regulations of an administrative nature are necessary, as follows:

1. Update the publisher’s name of the International Cosmetic Ingredient Dictionary and Handbook;
2. Revise ingredient names in the Schedule to the Regulations to reflect the current ingredient names, and revise the subheadings within the Schedule to the Regulations;
3. Clarify that it is permitted to use all three terms for an ingredient in the Schedule for disclosure purposes, on a label (the use of all three terms is not clearly described in the Regulations but is accepted in practice);
4. Revise terms in section 2 of the Regulations that are not reflective of current drafting conventions.

Background

Health Canada helps to protect the health and safety of Canadians by minimizing the risk associated with the use of cosmetics marketed in Canada. The regulatory oversight for cosmetics was first introduced in the Food and Drugs Act in 1939, where it was included in the definition of “drug.” This measure was taken following cases of injuries due to certain substances in cosmetics. In 1954, requirements respecting cosmetics were outlined in the Food and Drug Regulations under the Food and Drugs Act, but it wasn’t until 1977 that the Regulations were promulgated as a separate set of regulations for cosmetics. Products in this category largely include general hygiene and grooming products that are widely available and used daily by consumers, such as hand and body cleansers, deodorants, moisturizers, shampoos and makeup.

All cosmetics sold in Canada must meet the requirements of the Food and Drugs Act and the Regulations. Under this legislation, no person can sell any cosmetic that has in it any substance that may cause injury to the health of the user when the cosmetic is used according to the directions on the label and under normal conditions of use.

Health Canada regulates the safety of cosmetics using a post-market approach. A key component of the cosmetic regulatory framework requires manufacturers and importers to notify Health Canada within 10 days after they first sell a cosmetic, and provide information about the product such as its formulation, function and form. The Consumer Product Safety Program (CPSP) within Health Canada screens and processes the submitted cosmetic notifications. In the past five years, the program received on average 56 634 cosmetic notifications per year. This number has been increasing steadily since notifications moved from a paper-based to an online system in 2013.

Since 2006, the Regulations have required cosmetic product labels to list all ingredients present in the product using an internationally recognized nomenclature for cosmetics called INCI. This is the same naming convention used in the European Union (EU), and similar requirements apply in the United States (U.S.) and other international jurisdictions. It has been a requirement to disclose fragrance allergens on cosmetic labels in the EU since 2005.

Objective

The key policy objective of this regulatory proposal is to increase the chemical transparency of cosmetics in order to help reduce risk to human health, which will be achieved by introducing a requirement to disclose certain fragrance allergens on product labels when present in cosmetics. The proposal also has the objective of making amendments to the Regulations to improve the regulatory oversight of cosmetics, and to address administrative updates.

Description

This regulatory proposal includes amendments to the Regulations, which are summarized below.

Introduce a requirement to disclose certain fragrance allergens on cosmetic labels

Health Canada is proposing amendments to require the disclosure of certain fragrance allergens on cosmetic labels when present above a specified limit, namely, when any of the specific fragrance allergens are present in the formulation at a concentration greater than 0.01% in rinse-off products and 0.001% in leave-on products.

This proposed amendment would require fragrance allergens to be disclosed within the list of ingredients on cosmetic labels. As a result of these amendments, the information about the presence and concentration of fragrance allergens would also need to be reflected on the cosmetic notification.

Currently, there are 24 fragrance allergens identified for disclosure in Annex III of the European Commission’s Cosmetic Products Regulation (EC Cosmetic Products Regulation).^{footnote 7} It is proposed to have the fragrance allergens identified in Annex III referenced in the Regulations via ambulatory incorporation by reference, including the transition period set out in that Annex. This ensures that the implementation date for the disclosure of new fragrance allergens on labels of cosmetics sold on the Canadian market would correspond to the implementation date for cosmetics made available on the EU market.

Add greater flexibility for the disclosure of ingredients for cosmetics sold in small packages

Health Canada proposes an amendment that would add greater flexibility for cosmetics sold in small packages, namely, the option to use a website to disclose the complete list of ingredients, including fragrance allergens. In addition, it is proposed to require that a bilingual statement appear on the cosmetic label to inform and direct consumers to the website where the list of ingredients can be found.

In recognition that industry may be exploring other innovative options for the disclosure of ingredients, this proposed amendment would not preclude the presence of a digital mechanism to access the list of ingredients, such as the use of a QR code following the required statement.

Improve oversight of cosmetics

Health Canada proposes to amend the Regulations in the following manner to improve the oversight of cosmetics, and to support compliance and enforcement actions:

• (a) Update the definition of “manufacturer”
  • It is proposed to update the definition of “manufacturer” in section 2 of the Regulations to increase clarity of who is captured by this term, as follows:
  • “means a person that, in Canada, sells a cosmetic under the person’s own name or under a trademark, design, trade name or other name or mark owned or controlled by that person, or in the absence of such a person, a person that fabricates or processes a cosmetic in Canada on behalf of another person”.
  • This revised definition would help clarify that the manufacturer is a person located in Canada who sells a cosmetic under their own name. In the case where the brand owner is not in Canada, a person who fabricates or processes the cosmetic in Canada on behalf of the brand owner would meet the definition.
  • Guidance material for the regulated parties would describe the activities included under “processes”, such as packaging, labelling or relabelling a product.
• (b) Add a definition for “importer”
  • To increase clarity, it is proposed to add a definition for “importer” in section 2 of the Regulations. This definition would be consistent with modern definitions for the same term that appear in other regulations administered by Health Canada. The proposed definition reads:

    “importer

    means a person that imports a cosmetic into Canada for the purpose of selling it”.

• (c) Strengthen the cosmetic notification requirement
  • To strengthen the cosmetic notification requirements, it is proposed to add a provision to clarify that discontinuation of sale requires the submission of a notification.
  • Also, consistent with other provisions in the Regulations related to the submission of a cosmetic notification, it is proposed that a clarification be added to provide that the manufacturer or importer, as the case may be, has 10 days to respond to a request made by the Minister for additional information.
  • Lastly, it is proposed to add a provision to allow Health Canada to stop the sale of a product if the notification requirements are not met, or the information requested is not provided. This provision would give Health Canada an additional tool that can be used in the case of non-compliance with these requirements.
• (d) Remove distributor information from the cosmetic notification
  • It is proposed that the requirement for the name and address in Canada of the distributor be removed from the cosmetic notification, given that Health Canada is able to follow up with the manufacturer or importer, as needed, regarding distribution of the product for compliance and enforcement purposes.
• (e) Add a requirement to identify “rinse-off” or “leave-on” on the cosmetic notification
  • It is proposed to amend the Regulations to require manufacturers and importers to specify on the cosmetic notification whether the cosmetic is a “rinse-off” or “leave-on” product. Definitions for these terms would be added to the Regulations as follows:

    “rinse-off product

    means any cosmetic that is intended to be removed after application to the skin, hair or mucous membranes”;

    “leave-on product

    means any cosmetic that is intended to stay in prolonged contact with the skin, hair or mucous membranes”.

  • The proposed definitions are aligned with the definitions present in the EC Cosmetic Products Regulation.
• (f) Add a requirement to identify ingredients by their INCI names on the cosmetic notification
  • It is proposed to amend the Regulations to require that ingredients disclosed on the cosmetic notification be identified by their INCI names, when available. If an INCI name does not exist, a chemical name would be required to identify the ingredient.
• (g) Amend the table of concentration ranges for the cosmetic notification
  • It is proposed to amend the number of concentration ranges in the Regulations, increasing from the current 7 to 13 as indicated in the table below.

  Table 1: Proposed concentration ranges for the cosmetic notification

  Item	Concentration range	Corresponding number
  1	More than 80%, up to 100%	1 table a1 note a
  2	More than 65%, but not more than 80%	2 table a1 note a
  3	More than 50%, but not more than 65%	3 table a1 note a
  4	More than 40%, but not more than 50%	4 table a1 note a
  5	More than 30%, but not more than 40%	5 table a1 note a
  6	More than 20%, but not more than 30%	6 table a1 note a
  7	More than 10%, but not more than 20%	7 table a1 note a
  8	More than 3%, but not more than 10%	8
  9	More than 1%, but not more than 3%	9
  10	More than 0.3%, but not more than 1%	10
  11	More than 0.1%, but not more than 0.3%	11
  12	More than 0.001%, but not more than 0.1%	12 table a1 note a
  13	More than 0%, but not more than 0.001%	13 table a1 note a
  Table a1 note(s) Table a1 note a Indicates a new concentration range being proposed. Return to table a1 note a referrer

• (h) Add the ability to request evidence of safety from the importer
  • It is proposed to amend section 29 of the Regulations to provide that the importer, in addition to the manufacturer, may be required to provide evidence of safety. For the purposes of protecting proprietary information, a foreign manufacturer or a third party would be able to provide the evidence of safety information to Health Canada on an importer’s behalf.
• (i) Modernize the contact information present on the label
  • Paragraph 20(a) of the Regulations would be amended to specify that the inner label must include a telephone number, an email address, a website address or any other information that would enable a consumer to direct any product-related questions about the cosmetic to a contact person.
  • This proposed amendment would introduce flexibility and modernize the contact information on the product label for consumers, should they have questions about a product. Based on consultations under the Self-Care Framework, product-related questions are often received through companies’ websites and the postal address is used infrequently. This change would provide access to modernized contact information on the cosmetic label, instead of a postal address.
  • As a result of the change to paragraph 20(a), the notification requirements set out in paragraph 30(2)(a) of the Regulations would be amended to be consistent with the changes proposed in paragraph 20(a) as it relates to the contact information provided on the label.

Administrative changes

Amendments of an administrative nature are proposed as follows.

• (1) Update the publisher’s name of the dictionary for cosmetic ingredients (International Cosmetic Ingredient Dictionary and Handbook).
• (2) Update the schedule to the Regulations as follows:
  • (a) Reflect changes and revisions that have occurred to ingredient names;
  • (b) Rename the column headings in the schedule to facilitate its understanding by regulated parties as follows:
    • (i) In the English version of the schedule, the heading of column 1, “EU Trivial Name”, would be replaced by “EU Technical Name”, and the heading of column 2, “English Equivalent”, would be replaced by “INCI Name”;
    • (ii) In the French version of the schedule, the heading of column 1, “Nom trivial attribué par l’UE”, would be replaced by “Nom technique attribué par l’UE”, and the heading of column 3, “Équivalent anglais”, would be replaced by “Apellation INCI”.
• (3) Specify that ingredients included in the schedule can also be disclosed on the label using all three terms listed for the same ingredient, e.g. “Water / Eau / Aqua”.
• (4) Make non-substantive amendments to definitions in order to better align with current drafting conventions, namely
  • (a) In subsection 2(1) of the English version of the Regulations, the definitions of “Act”, “botanical”, “child-resistant container”, “flame projection”, “flashback”, “INCI name”, “ingredient”, “inner label”, “official method”, “ornamental container”, “outer label”, “practitioner”, “prescription” and “principal display panel” would be amended;
  • (b) In subsection 2(1) of the French version of the Regulations, the definitions of “emballage de securité”, “étiquette intérieure”, “ordonnance” et “praticien” would be amended.

Consequential amendments to the Cannabis Regulations are also proposed to replace references to “EU trivial name” with “EU technical name” in English, and “nom trivial attribué par l’UE” with “nom technique attribué par l’UE” in French.

Regulatory development

Consultation

Health Canada has conducted the following consultation activities to obtain early feedback from consumers and impacted stakeholders on the policy elements of the proposal. Health Canada took into account the combined findings as it developed and refined the regulatory proposal in preparation for prepublication in the Canada Gazette, Part I.

Pre-consultation

In July 2021, Health Canada posted a Notice to Interested Parties (a pre-consultation) to seek feedback and comments on proposed amendments to the Regulations under consideration. The pre-consultation was open for comments from July 16, 2021, to August 30, 2021. Health Canada received 65 submissions in response to the pre-consultation. With regard to the proposal to require the disclosure of certain fragrance allergens, the comments provided were supportive, both from consumers and from industry. The number of responses from various stakeholders was as follows: consumers (36), industry (22), subject matter experts in dermatology (2) and non-governmental associations (5).

Health Canada has considered all comments received during the pre-consultation. Health Canada’s responses are described below.

Format for the disclosure of fragrance allergens

Two formats were proposed for consideration in the pre-consultation: option 1 was to include the fragrance allergens within the list of ingredients, while option 2 was to disclose fragrance allergens in a separate list. The following prompt was suggested for the second option: “Fragrance allergens / allergènes de parfum : fragrance allergen 1, fragrance allergen 2…”

Consumers indicated a preference for option 2, where fragrance allergens would be listed separately from the list of ingredients. The rationale provided for this preference was that separating them out from the list of ingredients would enable them to be viewed more easily, drawing the attention of consumers more effectively.

Industry stakeholders preferred option 1 and indicated that separating the fragrance allergens from the list of ingredients as described in option 2 would be inconsistent with the format used in the EU and impose a huge cost on business. They also thought option 2 would be misleading for consumers. Separating fragrance allergens could also cause a consumer to not review the full list of ingredients, thereby potentially missing other disclosed ingredients that the consumer might be allergic to or to which the consumer might have a sensitivity.

An industry stakeholder recommended that the reference to “fragrance allergens” be replaced by “contact allergens.” Health Canada considered this recommendation; however, these particular contact allergens are most commonly associated with fragrance ingredients. Therefore, they are often not individually disclosed like other ingredients, but are instead captured under the umbrella term “parfum” or “fragrance” at the end of the list of ingredients. Many contact allergens are already present in the list of ingredients outside of the term “parfum.” Thus, to emphasize that this proposal relates to the disclosure of fragrance ingredients that may cause ACD, the proposal uses “fragrance allergens.”

Considering that the disclosure of fragrance allergens has been a requirement in the EU since 2005, a proportion of consumers may already be familiar with this format and know to look for certain fragrance allergens within the list of ingredients. Furthermore, companies that also sell in the EU are familiar with this requirement, which would also increase alignment with the EU requirements to support trade.

Taking all of this into consideration, Health Canada is proposing to require the disclosure of certain fragrance allergens within the list of ingredients.

Fragrance allergens proposed for disclosure

In the EU, there are currently 24 fragrance allergens that must be disclosed in the list of ingredients, when present above a specified limit. From 2014 to 2020, the European Commission held consultations on an expanded list of fragrance allergens proposed for disclosure. Health Canada’s pre-consultation proposed that this expanded group of 87 fragrance allergens, when present above a specified limit, would be disclosed on cosmetic labels. This group of fragrance allergens is still under discussion in the EU. Six industry associations expressed their concerns with the expanded list of fragrance allergens. Industry indicated that this fragrance allergens list was still in development, and should not be used since it had not yet been adopted in the EU. In addition, with respect to implementation, it was recommended that Health Canada wait until after implementation in the EU is in effect.

Two industry associations indicated that fragrance allergens should only be disclosed on the label and not necessarily be required to be listed as an ingredient on the cosmetic notification.

Industry stakeholders expressed their support for the disclosure of the internationally recognized fragrance allergens when their concentration is greater than 0.001% in leave-on products or 0.01% in rinse-off products.

With the feedback from the pre-consultation, and to support alignment with requirements of the EU and other jurisdictions, which have regulations modelled after the EC Cosmetic Products Regulation, the proposal was modified to require the disclosure of 24 fragrance allergens on cosmetic labels. If it meets the specified concentration for disclosure, the fragrance allergen would be required to appear within the list of ingredients. Health Canada proposes to use an ambulatory incorporation by reference of the ingredients identified as fragrance allergens in Annex III of the EC Cosmetic Products Regulation. This would facilitate alignment between Canada and the EU when an expanded list of fragrance allergens is adopted and for any future updates. If there is a transition period for the substances identified for disclosure in the EU, a similar transition period would apply in Canada. This would improve alignment between the EU and Canada, while being predictable for regulated parties concerning when changes take effect.

Disclosure of other information about ingredients on the labels of cosmetics

One environmental non-governmental organization suggested that the list of ingredients should indicate the potential health impact in parentheses, directly following the ingredient name, for example, “chemical name (allergen, carcinogen, neurotoxin)”. The respondent considered this approach to be fully transparent.

Under the Food and Drugs Act and the Regulations, cosmetics must be safe for use by the consumer under the recommended conditions of use. Health Canada takes a risk-based approach considering both the properties of the substances in products, as well as the amounts to which people are exposed under normal conditions of use, to determine whether there is a risk that needs to be addressed. If an ingredient is a carcinogen through cosmetic exposure, for example, it is not permitted for use in a cosmetic. To include health impacts of this nature in the list of ingredients would not be consistent with the Department’s approach to regulating the risk of cosmetics.

Additionally, identifying all possible allergens could cause alarm to consumers, as many of these would not cause an allergic reaction in most individuals. Cosmetics may contain ingredients that are allergens for some people, which does not mean that the cosmetic is not safe for others to use; however, those with known allergies to these ingredients should avoid using products that contain them.

Furthermore, a list describing potential health effects would also create an issue concerning legibility, as the length of the list of ingredients would be significantly increased. In turn, this would cause an increase in packaging, creating more waste. For these reasons, this recommendation was not included in this proposal.

Disclosure of food allergens on the labels of cosmetics

Thirteen consumers and one non-governmental organization indicated that they would like to see priority food allergens disclosed in plain language on the labels of cosmetics. They suggested that if a food allergen is present, there should be an alert that would clearly inform consumers about its presence. For example, if casein is used in a cosmetic product, there would be an indication on the label that milk is in the product, such as “casein (milk)” or “Contains: Milk.” These stakeholders recommended that ingredient labelling requirements for cosmetics should follow those for pre-packaged food products, referencing Health Canada’s Food Allergen Labelling Guide.

The current requirement to disclose all ingredients on the label using the INCI name allows consumers to make an informed choice when purchasing a cosmetic; ingredients that are considered food allergens already appear in the list of ingredients. Moreover, none of Canada’s key trading partners requires an alert statement for food allergens on the labels of cosmetics.

Health Canada recognizes that food allergens are an important concern for many Canadians, especially for parents of children suffering from food allergies. A Type I allergic reaction (e.g. an anaphylactic reaction that may be fatal) usually occurs when a product containing an allergen is ingested. Cosmetics are not intended to be ingested, and the primary route of exposure is dermal. Health Canada will continue to monitor the situation for food allergens to determine if additional risk management options should be considered for cosmetics in the future.

Flexibility for disclosure of ingredients for small packages

Consumers stated that ingredients for small packages must be made easily accessible whether on a tag, tape or card attached to the container. Accessibility was identified as a concern with respect to the disclosure of ingredients on a digital space such as a website, especially for seniors and those that do not have a smartphone.

Industry stakeholders welcomed the proposal for added flexibility for disclosure of ingredients for small packages. However, it was suggested that the added flexibility to disclose ingredients on a website should apply to all products, irrespective of packaging size. Industry thought that this should be considered as a labelling option to provide sufficient flexibility to accommodate the identification of new fragrance allergens that would need to be disclosed in the future.

Health Canada considered allowing the disclosure of ingredients on a digital space, such as a website, for all sizes of packaging; however, this would have a negative impact for the consumer. The disclosure of ingredients is a cornerstone requirement for cosmetics, and that information should be easily accessible to consumers. Cosmetics sold in larger size packages already meet the labelling and legibility requirements; thus, even with additional fragrance allergens being disclosed, additional flexibility would not be necessary. Cosmetics sold in small packages face a greater challenge given the limited space available on the label to include all required information in a legible manner. To address this challenge, Health Canada proposes to provide flexibility for the disclosure of ingredients for small packages only.

Improving oversight of cosmetics

Industry stakeholders identified some considerations with regard to the proposed clarifications, emphasizing that it is important to align definitions with other jurisdictions. The addition of a definition for “importer” was welcomed. They stated that the proposed definition for “manufacturer” was misaligned with the EU and that the definition should not be modified. Comments regarding definitions being added or clarified were considered by Health Canada. Given that the current definition for “manufacturer” could capture an importer if it is also the brand owner, this was viewed as an opportunity to help clarify the roles in the supply chain and their responsibilities.

All stakeholders supported the proposal to identify whether a product is “leave-on” or “rinse-off” on the cosmetic notification form. With regard to the proposal to require the INCI name on the notification form, industry stakeholders expressed their support.

Industry questioned how the narrower concentration ranges were established and indicated that an increased number of concentration ranges could have unintended consequences on the proprietary rights of companies to protect their formulas. With respect to informing risk assessment and determining appropriate risk mitigation, there was support for the consideration of more refined exposure estimates. It was recommended that Health Canada work with stakeholders to seek more refined use estimates when necessary, instead of making this a regulatory change. One respondent was concerned whether the change in the concentration ranges would be retroactive to previously submitted cosmetic notification forms.

Health Canada has taken into consideration the comments and proposes to move forward with the narrower ranges of concentration. The proposed ranges would still allow companies to protect their formulations, while supporting risk management actions (e.g. processing of cosmetic notification forms, conducting risk assessments). Manufacturers and importers who have previously filed notification forms would not need to re-notify their products using the new concentration ranges. Instead, the new concentration ranges may be updated at the time when they submit an amendment or update their cosmetic notification. It is proposed that changes to the cosmetic notification form would be implemented by the coming-into-force date.

With respect to the strengthening of the cosmetic notification requirements by adding the authority to issue a stop-sale for non-compliance, industry expressed that there should be a stepwise approach with regard to enforcement actions, especially since a 10-day period to submit the cosmetic notification form following first sale is already relatively short. Industry recommended that there should be appropriate enforcement discretion and flexibilities for cosmetic notification forms that are submitted late.

Health Canada recognizes that the oversight of cosmetics is a post-market regime. Also, a progressive and proportional-to-risk enforcement approach will continue to be applied, as for any regulatory requirement for cosmetics. This amendment has been proposed to allow for more practical enforcement measures.

Industry raised concerns about the proposal to expand the request of evidence of safety to the importer. Industry felt that the importer may not have access to safety information that could address the evidence of safety request, as the manufacturer would own that information. Furthermore, when an importer has relevant information, there could be proprietary concerns and the importer might not be in a position of authority to disclose such evidence. In conclusion, some industry stakeholders felt that the evidence of safety request should continue to apply only to the manufacturer.

Health Canada has successfully been making requests for evidence of safety to importers for purposes other than section 29 of the Regulations since approximately 2010. However, in some instances where an importer does not respond to a request, or the information Health Canada receives from an importer is insufficient, the Department is unable to initiate actions under section 29 of the Regulations. This proposed amendment would require the importer in Canada to provide this information to Health Canada when requested (either themselves or through a third party). If necessary, importers should make the appropriate business agreements with the product manufacturer in order to be able to do so.

Linkage to the Self-Care Framework

Industry stakeholders indicated that proposed amendments to the Regulations should have been included under the Self-Care Framework and that this was a missed opportunity for Health Canada. Health Canada was encouraged to further advance the present regulatory modernization activity by leveraging elements to help shape, facilitate, and advance the Self-Care Framework as a key departmental priority.

The Department continues to work closely on activities related to self-care products such that any steps forward, including these proposed changes to the Regulations, are done in a coordinated manner that is consistent with the long-term vision of the Self-Care Framework.

Cost-benefit analysis survey

In January 2022, the cost-benefit analysis (CBA) survey materials were shared with five industry associations to distribute to their membership, or to a sampling of their membership they thought might be affected and interested in providing inputs. In addition, in February 2022, the survey materials were also sent to 2 005 email contacts who submitted a cosmetic notification in the past five years.

During the first survey, some industry stakeholders suggested that the number of cosmetic stock keeping units (SKUs) should be used to assess the economic impact on industry in the CBA instead of market value. An extensive search was undertaken to identify estimates of the number of cosmetic SKUs sold in Canada; however, no aggregate information was found. The cosmetic industry varies greatly in business size, from many micro-sized home businesses to several large multinational companies, and there is a large number of import and export categories for cosmetics and personal care products, which makes it challenging to quantify the number of SKUs for cosmetics.

The initial CBA survey generated 123 responses from a variety of cosmetic industry members, with representation from all sizes of businesses. The sales of individual companies ranged from less than $1,000 per year to several in excess of $100M per year. These companies accounted for approximately $2B of cosmetic sales, a significant share of the $11.7B annual market in Canada.

In response to the original CBA survey, 114 companies provided a response to whether they generally disclose the 24 specific fragrance allergens, with 33.3% reporting that they already did and 66.7% that they did not. Within the context of the market coverage of the survey, $80M worth of cosmetics were identified as containing at least one of the 24 specific fragrance allergens. Since this represents about 5% of products by value, for those companies that reported, it is estimated that about 5% of products contain any of the specified fragrance allergens and would be required to disclose one or more fragrance allergens on their label.

In July 2022, a follow-up CBA survey took place with 26 companies who participated in the initial survey. The purpose of the follow-up CBA survey was to gather information about the number of cosmetic SKUs sold in Canada, as well as the nature of the costs associated with the disclosure of fragrance allergens, and to better characterize other costs and cost savings. Ten questionnaires were received and, with additional contact with companies, an estimate of the total number of cosmetic SKUs in Canada was determined.

Modern treaty obligations and Indigenous engagement and consultation

In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, an initial assessment was conducted on this regulatory proposal. The assessment concluded that implementation of this proposal would be unlikely to impact on the rights, interests or self-government provisions of treaty partners. All people of Canada, including Indigenous Peoples, would benefit from this proposal.

Instrument choice

The following options were considered for this proposal.

Non-regulatory options — Voluntary approach

In 2014, Health Canada approached industry stakeholders to discuss the voluntary disclosure of certain fragrance allergens on the labels of cosmetics in Canada to align with the requirement in the EU. Through those discussions with industry, Health Canada determined that the adoption of a voluntary labelling approach would be low in the absence of a regulatory requirement.

Moreover, with this option, regulated parties would not have an additional flexibility to disclose the ingredients of cosmetics sold in small packages. In addition, Health Canada would not address issues with respect to clarity of definitions, or lack thereof, within the Regulations. The level of detail of information submitted on the cosmetic notification form would not be improved, and compliance and enforcement tools would continue to be limited.

For these reasons, a voluntary approach is not the preferred option.

Regulatory options — Preferred option

The preferred option is to amend the Regulations to introduce a requirement to disclose certain fragrance allergens on cosmetic labels, provide greater flexibility for disclosure of ingredients for cosmetics sold in small packages, improve the oversight of cosmetics, and include changes of an administrative nature.

This option would address the concerns identified by consumers with respect to the disclosure of fragrance allergens on cosmetic labels. In the past, the disclosure of fragrance allergens was also raised in the context of cosmetics during Self-Care Framework consultations. This option would be consistent with the long-term vision of the Self-Care Framework.

This option would also bring cosmetics into closer alignment with digital flexibilities proposed for other self-care products of similar risk, which is an objective of the Self-Care Framework initiative.

Lastly, this option would clarify terminology and responsibilities in the Regulations, and improve the level of detail to be provided on the cosmetic notification to facilitate its use for risk assessment and risk management purposes. With this option, compliance and enforcement tools would be enhanced, supporting Health Canada’s mandate to minimize the risk associated with the use of cosmetics marketed in Canada.

Regulatory analysis

Benefits and costs

The cost-benefit analysis (CBA) aims to estimate the proposed benefits and costs of making amendments to the Regulations in a quantitative and qualitative manner. In 2021, Health Canada retained Cheminfo Services Inc. of Markham, Ontario, to analyze the costs and benefits associated with this regulatory proposal. The CBA report is available upon request from the contact listed at the end of this Regulatory Impact Analysis Statement.

The analysis identified three groups that would be directly impacted by the proposed amendments: Canadian consumers, Canadian cosmetic industry stakeholders and the Government. Consumers would benefit from this proposal by having valuable information about certain fragrance allergens on cosmetic labels. This information would strengthen consumer decision making regarding product purchase and use in order to better protect their health. It is estimated that the major costs for cosmetic industry stakeholders would be associated with the disclosure of certain fragrance allergens on cosmetic labels. Some of these amendments would also create administrative costs to the cosmetic industry; however, the digital option to disclose ingredients for cosmetics sold in small packages is expected to result in some cost savings.

It is expected that amendments to improve the oversight of cosmetics would lead to some implementation costs for the Government; however, cost savings in ongoing compliance and enforcement activities are also anticipated. Details about how estimates were calculated for each of the impacts are described below.

Baseline scenario versus the regulatory option

In the baseline scenario, the current Food and Drugs Act and the Regulations are in force. For clarity, in this scenario, no requirement to disclose fragrance allergens on cosmetic labels, no additional flexibility for ingredient labelling for cosmetics sold in small packages, no improvements to oversight, and no administrative changes have been adopted.

The regulatory scenario adopts the proposed regulatory amendments outlined in the “Description” section and include

• the introduction of a requirement to disclose certain fragrance allergens on cosmetic labels;
• the addition of a flexibility for the disclosure of ingredients for cosmetics sold in small packages;
• amendments to oversight, including clarifying terms and strengthening notification requirements; and
• changes of an administrative nature that involve references and terminology in the Regulations.

The regulatory scenario involves an increase in costs and cost savings to some industry stakeholders (manufacturers, importers, wholesalers and retailers), as well as benefits to Canadians through avoided allergic reactions to some cosmetics. The centrepiece of the consultation with cosmetic industry stakeholders focused on the costs of disclosing fragrance allergens.

The key assumptions were the following:

• (i) All costs and benefits are presented in 2022 constant dollars;
• (ii) The analysis evaluates the costs and benefits over a 10-year period (2023–2032), using 2023 as the present value base year;
• (iii) A discount rate of 7% is used in the analysis as recommended by the Treasury Board Secretariat’s Canadian Cost-Benefit Analysis Guide;^{footnote 8}
• (iv) The study estimated 228 466 cosmetic SKUs on the Canadian market, with 86 817 SKUs supplied by Canadian companies;
• (v) There are approximately 673 affected cosmetic companies in Canada, based on the two North American Industry Classification System (NAICS) categories for cosmetics (424 soap and cleaning product manufacturers in NAICS 32561 and 249 toilet preparation manufacturers in NAICS 32562) that would be within the scope of the proposed Regulations;
• (vi) Based on the follow-up CBA survey, the cost to disclose certain fragrance allergens is estimated to be $2,500 per SKU;
• (vii) The estimated costs apply to the disclosure of 24 fragrance allergens. This proposal would incorporate by reference the fragrance allergens from the Annex III of the EC Cosmetic Products Regulation. The list of fragrance allergens is expected to expand in the future. The costs associated with the expanded list are considered outside the scope of this CBA;
• (viii) Costs borne by foreign companies are not included in the analysis and it is assumed that these costs will not be passed on to Canadian distributors and importers;
• (ix) The requirement to disclose fragrance allergens on cosmetic labels would come into force two years after publication in the Canada Gazette, Part II, while the remainder of the proposed amendments would come into force 180 days after registration. Assuming registration occurs sometime in 2023, the provisions regarding fragrance allergen disclosure could come into force some time in 2025, while the remaining amendments are expected to come into force in 2023;
• (x) Costs associated with the disclosure of fragrance allergens on cosmetic labels are expected to be largely incurred in 2024 and 2025. For the purpose of this CBA, a conservative assumption has been made that the majority of costs would be borne in 2024;
• (xi) Once the proposed amendments are in force regarding fragrance allergen disclosure on labels, manufacturers or importers of cosmetics containing one or more fragrance allergens would be required to submit a cosmetic notification to reflect the information disclosed on the cosmetic labels. For the purpose of the CBA, it was assumed that this cost would begin in 2025;
• (xii) The CBA survey revealed that 33.3% of companies already disclosed fragrance allergens. However, to be conservative, this was not included in the costing;
• (xiii) The market share of cosmetics that are sold in small packages is uncertain. It is also uncertain what proportion of cosmetic industry stakeholders would choose to disclose their list of ingredients on a website; and
• (xiv) The average time to sell existing inventories of cosmetics is eight months and the average time that a label is used before it is modified or redesigned is approximately two years.^{footnote 9} Given the two-year coming-into-force period, the analysis assumes that there will be no costs associated with stranded inventories.

Cosmetics industry background

To conduct the CBA, an estimate of the national cosmetic market was required. This was used to extrapolate the company-level information gathered through the consultation process to a national total for further cost analysis. Given that the available information about the size of the Canadian cosmetic market is limited, the following information was considered in order to estimate its value:

• The average Canadian household spent $699 on hair care products, makeup, skin care, and manicure products, fragrance products, personal deodorants, body soaps, oral hygiene products, and other personal care supplies and equipment in 2019.^{footnote 10} Given that there are approximately 14–15 million households in Canada,^{footnote 11} this suggests that the market for cosmetics (defined by the products identified above) is approximately in the range of $9.8 to $10.6B.
• The Cosmetics Alliance Canada is a Canadian trade association for the cosmetics and personal care products industry. The association reports that its members are at the forefront of a $9.5B (retail) industry in Canada in 2014.^{footnote 12}
• Euromonitor reported that the Canadian market for the beauty and personal care industry was about Can$11.4B in 2021 and was expected to reach $11.7B in 2022.^{footnote 13}
• Based on import data of $7.1B in 2021 (for NAICS 3256) and the national market for cosmetics in 2021, it is estimated that foreign companies supplied at least 62% of the cosmetic market and that Canadian companies supplied the remaining 38%.^{footnote 14} It is possible that the Canadian portion may be overestimated, due to the fact that the codes used to identify goods under the import categories may cover more than cosmetics, as defined under the Food and Drugs Act.
• Based on the responses from the sampled companies in the follow-up CBA survey, the average number of SKUs per company was estimated at 129 SKUs. With their reported share of the market and number of SKUs, it is estimated that about 228 466 cosmetic SKUs are on the Canadian market, and that nearly 87 000 of these are supplied by Canadian companies.
• The follow-up CBA survey aimed to identify the cost for disclosure of fragrance allergens per SKU. Eight companies suggested disclosure costs ranging from $625 to $10,000 per SKU. Several of the companies did not provide estimates, indicating that they already disclose fragrance allergens or do not use them.^{footnote 15} Taking into account the small sample size and wide range of costs per SKU, for the purpose of this CBA, the cost to disclose fragrance allergens was estimated at $2,500 per SKU.

Overall, it is expected that the market is in the range of $11.4B in 2021 and $11.7B in 2022. The average annual growth rate of real gross domestic product (GDP) in the sector has fluctuated extensively over time. Between 2001 and 2021, the average annual growth rate was 0.0%.^{footnote 16} However, between 2011 and 2021 the average annual growth rate was 4.6%. This study assumes an average annual growth rate of 2% in the future.

Direct costs

Costs to industry

As part of the CBA, a survey of cosmetic industry stakeholders (manufacturers, importers, wholesalers, and retailers, including direct sellers) was conducted in January 2022. In July 2022, a follow-up CBA survey was conducted to gather additional information on cosmetic SKUs and to validate the nature of the costs and cost savings associated with the proposal.

Disclosure of certain fragrance allergens on cosmetic labels

The disclosure of certain fragrance allergens on the cosmetic labels is currently done on a voluntary basis by industry, but it is presently not a requirement. The proposed amendments to the Regulations would require disclosure of fragrance allergens, on the cosmetic labels, when present above a concentration limit. Cosmetic industry stakeholders are expected to incur costs as a result of this proposal, primarily to identify the presence of the specified fragrance allergens on product labels. It is notable that these impacts would be limited to cosmetic industry stakeholders that manufacture or import cosmetics that contain one or more of the 24 specified fragrance allergens, above the threshold limits, and not involve all cosmetics industry stakeholders or all cosmetic products.

A study completed in the EU, between December 2015 and October 2016, reviewed 5 888 cosmetic products for the disclosure of fragrance allergens. This study found that, on average, 3.2 fragrance allergens were identified on the labels.^{footnote 17} It is expected that a similar number of fragrance allergens would be disclosed on the labels of cosmetics in Canada.

The CBA consultation process explicitly asked cosmetic industry stakeholders for estimates of the one-time (for example ingredient research, label design) and recurring costs (for example packaging reconfigurations). It is reasonable to assume that in the calculations for one-time costs, cosmetic industry stakeholders will need to determine whether their cosmetics contain one or more fragrance allergens and whether they meet the thresholds for disclosure, which may require testing.

It is assumed that some cosmetic industry stakeholders may begin to prepare and incur costs prior to the coming-into-force date; therefore, these costs are expected to be largely incurred in 2024 and 2025. Without a reliable means to estimate the share of costs in each year, it is conservatively assumed that the one-time costs to disclose fragrance allergens on cosmetic labels will be borne in 2024. Details for the calculations of one-time costs for disclosure of fragrance allergens are described below:

One-time costs for disclosure of fragrance allergens on cosmetic labels

The one-time costs for disclosure of fragrance allergens on cosmetic labels were calculated as follows:

673 Canadian cosmetic suppliers

× 129 cosmetic SKUs per supplier
× 5% of cosmetic SKUs containing fragrance allergens
× $2,500 cost of disclosing fragrance allergens for a SKU

This calculation yields a one-time cost of $10.8M.

The one-time cost estimated for the disclosure of fragrance allergens on cosmetic labels (beginning in 2024) is estimated at $10.14M PV over a 10-year period.^{footnote 18}

No ongoing annual disclosure costs are applied given that most companies did not identify the annual costs in the initial survey and few suggested ongoing costs would apply in the follow-up CBA survey. Further, respondents to the surveys advised that the average time a label was used before it was modified or redesigned was approximately two years. This is important information to consider, as the requirement to disclose fragrance allergens is proposed to come into force two years after registration of the proposed amendments to the Regulations. The impact on cosmetic industry stakeholders is therefore expected to be somewhat mitigated, because changes to the label would likely be considered during the period between registration and the end of the two-year transition period.

Costs to submit an amended or a new notification for cosmetics containing fragrance allergens

As per the Regulations, it is a requirement to submit a cosmetic notification within 10 days of the first sale of a cosmetic in Canada. The cosmetic notification includes information regarding the formulation of the products such as ingredients and their concentration or concentration range. The proposed amendment to the Regulations would require that the information about the presence and concentration of fragrance allergens be reflected in the cosmetic notification.

Manufacturers and importers of previously notified or new cosmetics containing one or more fragrance allergens would be required to provide this information to Health Canada, either within an amended or new notification, respectively, indicating the presence of the fragrance allergens in the product formulation, when present above a specified concentration.

Costs associated with existing cosmetics and the submission of an amended cosmetic notification when the cosmetic contains fragrance allergens

The one-time cost of amending cosmetic notifications for the disclosure of fragrance allergens, which comes into force in 2025, was estimated by

• estimating the number of “active” cosmetic notifications as the sum of new notifications submitted from 2012 through 2021, which is 334 386;
• assuming that 38% of these costs would be borne by Canadian suppliers (based on the market share expected to be supplied by Canadian manufacturers described earlier);
• approximating the number of these that would require revision (about 5%) to identify fragrance allergens based on data gathered through the consultations;
• assuming that an update would take seven minutes (including accessing the notification, amending it, and reviewing it);^{footnote 19} and
• applying an average wage of $50 per hour.^{footnote 20}

To be conservative, it is assumed that the one-time cost of submitting an amended cosmetic notification to disclose fragrance allergens would be largely incurred in 2024.

The one-time cost of submitting an amended cosmetic notification to disclose fragrance allergens was estimated as follows:

334 386 active notifications

× 38% share from Canadian companies
× 5% of cosmetic notifications that would require an amendment to disclose fragrance allergens
× 7 minutes per notification
× $50 per hour

Based on the data, there is a one-time cost of $37,061.

There is considerable uncertainty about the number of active notifications. This approach yields a one-time cost (expected to be incurred in 2024) of approximately $34,637 PV over 10 years.^{footnote 21}

Cost associated with new cosmetics and the submission of a cosmetic notification when the new cosmetics contain fragrance allergens

After this requirement is in force, the manufacturer or importer of any new cosmetics sold in Canada would be required to identify fragrance allergens on their cosmetic notifications, when present above a specified limit. There will be an administrative cost for this activity. The incremental cost of including fragrance allergens on new notifications was estimated by

• forecasting the annual number of expected notifications over the 2023–2032 period based on notifications over the past five years (2017–2021), which is assumed to be 62 231 cosmetic notifications a year;
• assuming a 2% increase per year, based on the approximate rate of growth over the 2017–2021 period (the latest five years of data available);
• assuming that 38% of these costs would be borne by Canadian suppliers (based on the market share expected to be supplied by Canadian manufacturers described earlier);
• approximating the number of these that would require disclosure of fragrance allergens (5%) based on data gathered through the consultations;
• assuming that the incremental time to identify fragrance allergens on the notification would be four minutes (one minute per fragrance allergen with an average of about three fragrance allergens per cosmetic containing fragrance allergens); and
• applying an average wage of $50 per hour.^{footnote 19}

The incremental cost of new notifications to identify fragrance was estimated as follows:

62 231 cosmetic notifications per year

× 38% share from Canadian companies
× 5% of cosmetic SKUs containing fragrance allergens
× 4 minutes per notification
× $50 per hour

Based on the data, there is a cost of $3,941 in 2025.

This approach yields a cost of $23,433 PV over a 10-year period, beginning in 2025.^{footnote 22}

Costs to identify whether a cosmetic is “rinse-off” or “leave-on” on the cosmetic notification

As per the Regulations, the information on whether a cosmetic is “rinse-off” or “leave-on” is currently not required as part of the information to be provided in the cosmetic notification. This regulatory proposal would require manufacturers and importers to specify on the cosmetic notification whether the cosmetic is a “rinse-off” or “leave-on” product. This would be done through a check box on the electronic cosmetic notification. This would be required for any new and amended cosmetic notification submitted after this requirement comes into force.

This requirement is not retroactive; however, cosmetics that had a previous notification would have to identify whether the product is “leave-on” or “rinse-off” when future amendments are submitted.

The incremental cost of indicating whether cosmetics are rinse-off or leave-on was estimated by

• forecasting the annual number of expected future notifications to be 59 815 (new and amended) from 2023 to 2032, based on the average number of cosmetic notifications received over five years (2017–2021);
• assuming a 2% increase per year, based on the approximate rate of growth over the 2017–2021 period (the latest five years of data available);
• assuming that 38% of these costs would be borne by Canadian companies (based on the market share expected to be supplied by Canadian manufacturers);
• assuming that the incremental time to identify cosmetics as rinse-off or leave-on by marking a check box would be 0.5 minutes;^{footnote 23} and
• applying an average wage of $50 per hour.

The incremental cost of identifying whether products are rinse-off or leave-on for future cosmetic notifications (new and amended) was estimated as follows:

59 815 cosmetic notifications per year

× 38% share from Canadian companies
× 0.5 minutes per notification
× $50 per hour

Based on the data, there is a cost of $9,471 for 2023.

The estimated costs of notifying whether products are rinse-off or leave-on are approximately $77,081 PV over a 10-year time period, beginning in 2023.^{footnote 24}

Costs to Government

Implementation costs

A number of minor costs are expected for the Government. The costs would be absorbed by existing budget and resource allocation.

These include

• modifying the cosmetic notification form to require that ingredients be identified using their INCI name (cost to update form and industry guidance materials);
• modifying the cosmetic notification form to reflect the proposed revised concentration ranges (cost to update form and industry guidance materials);
• modifying the cosmetic notification form to include check boxes to indicate whether the product is rinse-off or leave-on (cost to update the form and industry guidance materials);
• modifying the cosmetic notification form to remove the requirement for the name and address of the distributor in Canada (cost to update form and industry guidance materials); and
• incorporating compliance and enforcement activities for the proposed requirement for disclosure of certain fragrance allergens on cosmetic labels and the cosmetic notification form (costs for testing, compliance verification, sampling and inspection).

Indirect cost impacts to industry

Based on the CBA surveys, costs associated with product reformulation and withdrawal were identified as potential impacts. These impacts are not included in the analysis because they are not treated as direct costs for CBA purposes. The proposed amendments are not requiring businesses to reformulate or discontinue product lines. Details about indirect cost impacts are described below.

Reformulation costs

The proposed amendments do not require that companies reformulate their products to meet the new requirement to disclose certain fragrance allergens on the label; therefore, for the purpose of this CBA, reformulation costs are considered indirect costs and are not included in the calculations. Some companies may decide that their lowest-cost or preferred option would be to reformulate, rather than disclose fragrance allergens when present. This would be considered a business decision and, as such, an indirect impact of this regulatory initiative. Six of the 123 companies surveyed indicated that they would reformulate some products. The market value of these products was about $0.25M in the survey sample, or about $1.3M when extrapolated to the national context.

The surveyed companies identified a total of $50,000 in one-time reformulation costs (anticipated in 2024) and annual cost increases of $7,500 (e.g. for higher-cost ingredients as replacements of the fragrance allergens). This translates into national cost estimates of $270,000 in one-time costs and about $40,000 in annual costs. The total 10-year costs would be nearly $640,000.

Products withdrawn

Six of the 123 companies surveyed reported that they would withdraw products. One large company reported that it might withdraw approximately 10% of its products rather than disclose the fragrance allergens or reformulate. The market value of these may be approximately $70M. The remainder of the companies suggested they might withdraw approximately $20M in products. This extrapolates to a market total of about $110M in other withdrawn products, or about 1% of the national annual market.

Other qualitative impacts

Supply chain de-harmonization

One company identified a significant cost to de-harmonize its supply chains for Canada and the United States, since the United States does not require fragrance allergen disclosure. These costs were described as including any cost associated with de-harmonizing North American packages, including the creation of separate manufacturing lines, as well as maintenance and management of additional SKUs (e.g. inventory and distribution controls, duplicate artwork) on an ongoing basis. This respondent also assumed that all of their products contain fragrance allergens; therefore, as an outlier, this cost was not included in the CBA.

Benefits

Benefits identified for this regulatory proposal were the following:

• Cost savings for industry from the use of an added flexible option for disclosure on a website of ingredients of cosmetics sold in small packages;
• Economic and social benefits for consumers from access to information about certain fragrance allergens on cosmetic labels; and
• Cost savings in the form of compliance and enforcement benefits to Government.

Cost savings for industry from added flexibility to disclose the list of ingredients on a website for cosmetics sold in small packages

The proposal would add flexibility for the disclosure of ingredients for cosmetics sold in small packages. This option would allow for the list of ingredients, including fragrance allergens, to be disclosed on a website instead of the current options of a tape, tag or card. The cosmetics would have an appropriate bilingual statement advising where the list of ingredients can be found.
Twenty-six of the surveyed companies identified and monetized savings from digital disclosure on a website. The original CBA survey did not collect or receive detailed descriptions or explanations for the cost savings associated with the values provided in the responses. The follow-up CBA survey did not result in any additional information on savings generated by this flexibility.

On the basis of the survey responses, it is assumed the digital disclosure of the ingredients of cosmetics sold in small packages will not generate one-time savings. However, it is estimated that there are annual savings that accrue from 2024 through 2032. The companies participating in the original survey reported average annual savings of $22,500 in 2022. These companies had a market share of $2.1B. Using the national market share of $11.4B in 2021, this suggests total savings of $121,000 for Canadian and foreign companies. Therefore, savings for Canadian companies are estimated at $46,000 per year (this value grows by 2% over the analysis period), based on the assumption that Canadian companies supply 38% of the national market.
It is assumed that these savings come in the form of lower disclosure costs associated with the use of a website, compared to disclosure on the package or reprinting of a new label, and the use of smaller packaging for the product, etc.

The annual savings associated with the disclosure of ingredients on a website were calculated as follows:

$22,500 total value of reported savings from the survey responses
× ($11.4B/$2.1B) ratio of annual market size to the survey coverage
× 38% share from Canadian companies

Based on the survey data, the annual savings are calculated at $48,233 in 2024.

Consumers benefit from access to information about certain fragrance allergens on cosmetic labels

The major benefit of this regulatory proposal would accrue to the over one million Canadians estimated to suffer from ACD caused by at least one of the 24 fragrance allergens that are currently captured by the term “parfum.” With these amendments, affected Canadians would be able to avoid using cosmetic products that contain these ingredients, thereby reducing the likelihood that they will experience an allergic reaction such as skin rashes, hives, redness or other irritation. These benefits could not be quantified, but can be described in terms of avoiding costs associated with

• medical and dermatologist consultations and treatments;
• prescription medications;
• over-the-counter treatments;
• lost time and income resulting from the need to take sick days from work;
• reduced productivity at work; and
• lower quality of life from the discomfort and social impacts of ACD.

In addition, the regulatory proposal will enhance transparency about the presence of chemicals, helping Canadians make informed decisions regarding their health.

Compliance and enforcement benefits

The implementation of the proposed amendments to the Regulations would result in the following benefits for the Government:

• The requirement to identify ingredients in the cosmetic notification form using their INCI names would result in a reduced number of follow-up emails or calls with notifiers related to ingredient identification at the time of notification.
• Revised concentration ranges on the cosmetic notification form would result in improved screening of cosmetic notifications, reduce the number of requests (emails or calls) for clarification, and would enhance the risk assessments and risk management decisions undertaken by Health Canada.
• The requirement to identify whether the product is rinse-off or leave-on on the cosmetic notification form would result in a reduced number of follow-up emails or calls with notifiers to determine compliance with the fragrance allergens disclosure requirement, would support risk assessments of ingredients, and would support risk management decisions when screening cosmetic notifications.
• Health Canada’s ability to make a request for suspension of sale if the cosmetic notification requirements are not met would improve compliance with those requirements.
• Health Canada’s improved ability to enforce the evidence of safety provision of the Regulations with both manufacturers and importers would improve compliance with this requirement.
• An updated definition of manufacturer and adding a definition for the term importer would improve the interpretation of the Regulations, reducing the number of resources spent clarifying the roles and responsibilities of the regulated parties.

Results of break-even analysis

While efforts were made to identify existing estimates of a willingness-to-pay (WTP) to avoid specific fragrance allergens in cosmetic products, none were found. In addition, performing additional primary research through revealed and stated preference studies, which can be costly and time consuming, was considered outside the scope of work for this regulatory proposal. For this reason, a break-even analysis was conducted to determine a WTP threshold that would be required to offset the net discounted costs of the regulatory proposal. This analysis gives an indication of the value Canadians with allergies and sensitivities to fragrance allergens would need to place on this information for the imposed costs to be justified. Therefore, this break-even analysis, while hypothetical, identifies that the required WTP would be small.

The discounted costs show a 10-year net cost of $9.94M. The required WTP was estimated by solving for the value that, when multiplied by the estimated number of Canadians with ACD in each year, would result in a total present value equal to the $9.94M in net costs. Under this analysis, if Canadians living with ACD were each willing to pay $1.33 annually, then the 10-year discounted costs of the regulatory proposal would be offset. Given that on average Canadian households spend $699 on cosmetics per year (approximately $291 per person based on an average household size of 2.4), this amount would be considered a relatively small additional expense for Canadian households (an average increase of one half of 1%). A value of $1.33 per year is also small in relation to the cost of a dermatologist visit and many over-the-counter medicines.

Cost-benefit statement

• Number of years: 10 (2023–2032)
• Base year for costing: 2022
• Present value base year: 2023
• Discount rate: 7%

Table 2: Monetized costs

Impacted stakeholder	Description of cost	Year 1	Year 2	Year 10	Total (present value)	Annualized value
Industry	Disclosure of fragrance allergen(s) on cosmetic labels	$0	$10,852,125	$0	$10,142,173	$1,444,017
Industry	Re-notification of previously notified cosmetics containing one or more fragrance allergens	$0	$37,061	$0	$34,637	$4,931
Industry	New notifications for cosmetics containing fragrance allergens	$0	$0	$4,527	$23,433	$3,336
Industry	New and amended cosmetic notifications with information on "rinse-off" and "leave-on"	$9,471	$9,660	$11,318	$77,081	$10,975
All stakeholders	Total costs	$9,471	$10,898,846	$15,846	$10,277,324	$1,463,260

Table 3: Monetized benefits

Impacted stakeholder	Description of benefit	Year 1	Year 2	Year 10	Total (present value)	Annualized value
Industry	Cost saving from the use of a website for disclosure of ingredients for cosmetics sold in small packages	$0	$48,233	$56,513	$337,581	$48,064
All stakeholders	Total benefits	$0	$48,233	$56,513	$337,581	$48,064

Table 4: Summary of monetized costs and benefits

Impacts	Year 1	Year 2	Year 10	Total (present value)	Annualized value
Total costs	$9,471	$10,898,846	$15,846	$10,277,324	$1,463,260
Total benefits	$0	$48,233	$56,513	$337,581	$48,064
NET COSTS	$9,471	$10,850,613	$40,667	$9,939,742	$1,415,196

Quantified (non-$) and qualitative impacts

Positive impacts

• Increases transparency with regard to chemical labelling for cosmetics, namely for the disclosure of certain fragrance allergens;
• Improves consumer access to information about certain fragrance allergens when present in a cosmetic above a specified concentration, and decision making regarding product purchase and use in order to better protect their health;
• Reduces the adverse health impact for Canadians affected by ACD; and
• Improves flexibility for the cosmetic industry for disclosure of ingredients for cosmetics sold in small packages.

Negative impacts

• Businesses could choose to terminate the supply of some cosmetics SKUs to minimize impacts (products withdrawn or discontinued).

Small business lens

Analysis under the small business lens concluded that the proposed amendments to the Regulations would impact small businesses. During consultations with cosmetic industry stakeholders, businesses were explicitly asked whether they were “small” and whether they would face any unique impacts due to their smaller size.

Eighty-one of the businesses identified themselves as small. In terms of additional impacts on small business, 73 (90% of small businesses) did not identify any additional impacts. Businesses that identified unique impacts mentioned the following:

• small businesses have slower inventory overturn since their annual sales are lower than average; those that purchase packaging and labels in bulk may be at a greater risk to need to replace label stock. On the other hand, small businesses that custom produce labels would be more agile and may be able to avoid costs associated with lost label inventory;
• small businesses may face higher per label and package costs because of lower sales volumes as they cannot take advantage of economies of scale and have fewer units over which to spread upfront costs;
• small businesses are less likely to have a regulatory affairs department, so may find it more difficult to understand the requirements for cosmetic sales in Canada;
• small businesses have fewer staff and resources to multitask and may have to cease product manufacturing while labels are changed, and products are reformulated; and
• small businesses may experience difficulty obtaining information on the exact fragrance ingredients in their manufactured products. This would be due to factors such as unwillingness from the fragrance ingredient supplier to identify fragrance allergens in their ingredients/mixtures for businesses with only limited buying power. If a supplier will not provide the requested information, the business would need to incur costs to independently test products for the presence of the specified fragrance allergens.

For small businesses, the proposed amendments would have total present value compliance costs of approximately $9.17M. The total administrative costs were estimated at $127,957 PV. This would result in an average cost per impacted small business of $14,363 PV over a 10-year period.

The annual cost savings for small businesses from the added flexibility to disclose the list of ingredients on a website for cosmetics sold in small packages is estimated to be $315,562 PV. The one-time costs for fragrance allergens disclosure on cosmetic labels are estimated at $9.5M PV over a 10-year period.

Flexible option

In order to minimize impacts for all businesses (including small businesses) and achieve the policy objectives, the proposal to add a flexible option to disclose ingredients (including fragrance allergens) on a website for cosmetics sold in small packages would contribute to reducing costs to businesses (including small businesses). This flexibility would be available to businesses six months after the proposed amendments to the Regulations are registered.

During the consultation for the CBA, stakeholder responses revealed that the average time reported to sell existing inventories of cosmetics was eight months, and that, on average, a label was modified or redesigned after two years. Thus, Health Canada developed a transition plan to mitigate additional costs for all businesses (including small businesses). A two-year period following registration is proposed for the implementation of the requirement to disclose fragrance allergens, which is expected to offer sufficient time to sell inventory and update labels, if required. Given this fact, additional flexibility for small businesses was not determined to be necessary.

Small business lens summary

• Number of small businesses impacted: 647
• Number of years: 10
• Base year for costing: 2021
• Present value base year: 2023
• Discount rate: 7%

Table 5: Compliance costs

Activity	Annualized value	Present value
Cost of fragrance disclosure (one time)	$1,349,827	$9,480,621
Cost savings from digital disclosure (ongoing)	−$44,929	−$315,562
Total compliance cost	$1,304,898	$9,165,059

Table 6: Administrative costs

Activity	Annualized value	Present value
Cost of renotification (for cosmetics containing fragrance allergens)	$4,710	$33,081
Cost of future notifications (for cosmetics containing fragrance allergens)	$3,213	$22,568
Cost of future notifications (for "rinse-off" or "leave-on")	$10,295	$72,308
Total administrative cost	$18,218	$127,957

Table 7: Total compliance and administrative costs

Totals	Annualized value	Present value
Total cost (all impacted small businesses)	$1,323,116	$9,292,016
Cost per impacted small business	$2,045	$14,363

One-for-one rule

The one-for-one rule applies since there would be an incremental increase in administrative burden on business, and the proposal is considered burden “in” under the rule, as per the Policy on Limiting Regulatory Burden on Business. The Policy further defines “administrative costs” as the direct, monetized increase or decrease in costs to businesses that result from a regulatory change that increases or decreases administrative burden in relation to a baseline scenario.

The following three components of this regulatory proposal, also described in the CBA, would lead to an increased administrative burden:

• requiring an amended cosmetic notification for cosmetics that disclose on their labels one or more specified fragrance allergens. This would apply to the manufacturer and importer of the impacted cosmetic;
• requiring that all new cosmetics sold in Canada that contain one or more fragrance allergens to indicate the fragrance allergens in their notification; and
• requiring that any amended or new cosmetic notifications submitted to Health Canada indicate whether the cosmetic is a “rinse-off” or “leave-on” product on their notification.

The amendments would increase the administrative burden by approximately $7,684 in annualized average administrative costs to industry, or $11.42 per business. The numbers are calculated by the Treasury Board Secretariat’s regulatory cost calculator in a manner consistent with the required method from the Red Tape Reduction Regulations, where the numbers are presented in present values discounted to 2012, using a 7% discount rate, over 10 years, in 2012 dollars.

Table 8: One-for-one rule using the regulatory costing calculator
Note: Constant 2012 dollars, present value base year 2012; discounted using a 7% discount rate.

Totals	One-for-one rule results
Annualized administrative costs	$7,684
Annualized administrative costs per business	$11.42

Regulatory cooperation and alignment

In developing this regulatory proposal, Canada considered the requirements of its largest trading partners of cosmetics (the EU and the United States), as well as those of other international regulatory authorities. The elements of this regulatory proposal increase alignment with certain jurisdictions, remain neutral with others, and do not introduce any trade barriers.

Fragrance allergen disclosure

European Union

The proposed amendments would increase alignment with current requirements for disclosure of certain fragrance allergens in the EU. With these amendments, Canada and the EU would be aligned with respect to the substances, minimum concentration, and format of disclosure, as well as the transition time for any future additional substances that are identified as fragrance allergens in the EU.

United States

The U.S. Food and Drug Administration (USFDA) does not require the disclosure of fragrance allergens on cosmetic labels at this time. However, they are exploring ways to encourage industry to disclose fragrance allergens on a voluntary basis in the future.^{footnote 25} It is currently acceptable for any fragrance ingredient to be listed individually in the ingredient list rather than under the umbrella term “fragrance” in the United States; therefore, the inclusion of such information in Canada does not present an issue.

In June 2022, a proposed bill entitled Food and Drug Administration Safety and Landmark Advancements Act (FDASLA) was introduced in the United States Senate, which includes a requirement for the disclosure of fragrance allergens for cosmetics, aligning with the present requirement in the EU.

Other jurisdictions

Many other cosmetic regulators around the globe follow the same approach in regulating cosmetics as the EU, including in the disclosure of fragrance allergens, with which Canada would be aligned. For example, health authorities in Brazil, the United Kingdom, Norway and Turkey have the same fragrance allergen requirements as the EU.

Greater flexibility for ingredient lists of cosmetics sold in small packages

European Union

The flexibilities available in the EU for ingredient lists of cosmetics sold in small packages do not include publication on a website. Currently, cosmetics sold in small packages in the EU are permitted to disclose ingredient information on a fixed sign at the point of sale. Therefore, the flexibility to publish on a website (for Canada), coupled with the current flexibility when sold in the EU (use of a fixed sign), could allow for a single Canada-EU label.

In addition, the EU is presently consulting on a broad initiative for digitalization of information required on the labels of various products available to consumers, including cosmetics. Some of the considerations include what kind of label information should be on-pack, off-pack (i.e. digital), or both.

United States

The flexibilities available in the United States for ingredient lists of cosmetics sold in small packages do not explicitly include publication on a website. However, off-pack disclosure of ingredients in the form of a tear-away pad or leaflet is permitted under the following conditions:

• the cosmetic is not enclosed in an outer container (e.g. eyeliner pencil), or it is held in tightly compartmented trays or racks, and
• the package surface area is less than 12 square inches (77.4 square centimetres).

Therefore, the flexibility to publish on a website (for Canada), coupled with the current flexibility when sold in the United States (use of leaflets or tear-away pads at point of sale), could allow for a single Canada-U.S. label.

Other jurisdictions

Health Canada is not aware of any other jurisdictions that expressly permit the digital publication of ingredient lists of cosmetics sold in small packages. For those jurisdictions that follow the EU regulatory framework, the proposed amendments could allow for a single label as described above.

Within Canada, this added flexibility for disclosure of ingredients of cosmetics sold in small packages complements labelling approaches being proposed under the Self-Care Framework.

Improving the oversight of cosmetics

Generally, the Canadian regulatory framework for cosmetics is more aligned with the EU. For example, both jurisdictions require the notification of products and use lists to manage hundreds of cosmetic ingredients described as prohibited or whose concentration is restricted in cosmetics. Under the U.S. regulatory framework for cosmetics, the notification of cosmetics is voluntary and only 11 chemicals are specifically prohibited or restricted in regulation.

Below are the elements being considered to improve the oversight of cosmetics.

Update the definition of “manufacturer” and add a definition for “importer”

• European Union: The proposed definitions of “manufacturer” and “importer” align with the concept of the “responsible person” in the EU, although for their purposes, the responsible person can be a manufacturer, importer, or distributor, depending on the circumstance.
• United States: The U.S. framework uses the terms manufacturer, packer and distributor; however, these terms are not defined in regulation.
• Other jurisdictions: For those jurisdictions that follow the EU regulatory framework, the proposed amendments would be aligned with the concept of the “responsible person.”

Strengthen the cosmetic notification requirement

• European Union: This is aligned with requirements in the EU where, if the responsible person has reason to believe that a product is not in compliance, they must take immediate corrective measures, which can include product withdrawal from the market.
• United States: The submission of a cosmetic notification is not mandatory. The proposed FDASLA would require registration of cosmetics.
• Other jurisdictions: For those jurisdictions that follow the EU regulatory framework, the proposed amendments would be aligned as described above.

Removal of distributor information from the cosmetic notification

• As this is a removal of information being gathered through the notification, it will not introduce any trade barriers or misalignment in other jurisdictions.

Add a requirement to identify products as “rinse-off” or “leave-on” on the cosmetic notification

• European Union: This is already a requirement in the EU for product notification. This amendment would bring Canada in closer alignment with the EU.
• United States: The submission of a cosmetic notification is not mandatory. The proposed FDASLA would require mandatory product listing of cosmetics that require the applicable cosmetic category or categories for the cosmetic product about the cosmetic.
• Other jurisdictions: For those jurisdictions that follow the EU regulatory framework, this would bring Canada into closer alignment.

Add a requirement to identify ingredients by their INCI names on the cosmetic notification

• European Union: This is already a requirement in the EU for product notification. This amendment would bring Canada in closer alignment with the EU.
• United States: The submission of a cosmetic notification is not mandatory. The proposed FDASLA would require mandatory product listing of cosmetics that require information about ingredients. Information about INCI names has not been identified for registration purposes.
• Other jurisdictions: For those jurisdictions that follow the EU regulatory framework, this would bring Canada into closer alignment.

Amend the table of concentration ranges for the cosmetic notification

• European Union: In the EU, ingredient concentrations must also be reported. The modifications to the concentration range table bring the EU and Canada closer in alignment.
• United States: The submission of a cosmetic notification is not mandatory. The proposed FDASLA would require a mandatory product listing for cosmetics, which includes information about ingredients.
• Other jurisdictions: This modification would bring Canada into closer alignment with the jurisdictions that follow the EU regulatory framework.

Add the ability to request evidence of safety from the importer

• European Union: This provision is aligned with the EU in that a request for data may be made to the “responsible person” in the member state where the product is sold. The “responsible person” equivalent under the Canadian regulatory framework is the manufacturer or importer.
• United States: The U.S. regulatory framework has no equivalent to this provision. The USFDA does not have the authority to require cosmetic manufacturers or importers to submit safety data; the burden is on the USFDA to prove that a particular product or ingredient is harmful when used as intended. The proposed FDASLA would require that the responsible person maintain supporting records to substantiate the safety of a cosmetic.
• Other jurisdictions: This modification would bring Canada into closer alignment with the jurisdictions that follow the EU regulatory framework.

Administrative updates

None of the amendments identified as being administrative in nature introduce trade barriers or misalignment. All modifications either update or provide clarity to existing requirements.

Strategic environmental assessment

In accordance with the Government of Canada’s Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

The proposed label changes requiring the disclosure of certain fragrance allergens on cosmetic labels are expected to have minimal environmental impact. The coming-into-force period of two years would provide ample time to incorporate the new labelling requirement without having to relabel or dispose of products that are currently available for sale at retail.

Gender-based analysis plus

These proposed Regulations are not expected to have any negative impacts on particular groups of Canadians on the basis of sex, gender, race, or ethnicity. However, it is likely that some population groups could be differentially impacted.

Considerations for the disclosure of certain fragrance allergens on the cosmetic labels, when present above a specified limit

This proposal is expected to protect the health and safety of all Canadians, regardless of their gender, age, education, language, geography, culture and income. The list of ingredients disclosed on cosmetic labels is a cornerstone requirement for cosmetics, which helps Canadians make informed decisions when purchasing and using cosmetics.

According to Health Canada’s public opinion research, the brand name of a cosmetic is the most common element on a product label that is reviewed at every purchase. Dosage, directions on how to use the product, and product warnings are the next most frequently looked at labelling elements on cosmetics. However, only a minority of Canadians (39–49%) do so at every purchase or during every use. Women and older Canadians (55 years or older) are both more likely to search for safety information from various sources. For all three categories of self-care products (natural health products, non-prescription drugs, and cosmetics), women are significantly more likely than men to rely on the name brand or reputation of a product, to read product labels or inserts, and to do research online.^{footnote 26} Thus, this initiative could have a greater positive impact on women, as it would facilitate access to safety information (presence of certain fragrance allergens) disclosed on cosmetics labels.

It has been reported that women use more cosmetic products; as a result, they tend to report adverse reactions more frequently. On average, adults use 9 cosmetic products daily, and more than 25% of women use 15 or more. Similarly, data from North America estimates that the average woman uses 12 personal care products daily, while the average man uses 6 personal care products each day.^{footnote 27} There is no evidence, however, to suggest that women are more frequently allergic to fragrance allergens than men, nor that they would benefit more from the disclosure of fragrance allergens, as this would benefit all individuals who are aware they have ACD to a fragrance ingredient. It could potentially be an added benefit for patients with eczema, as the frequency of ACD in reaction to fragrance ingredients appears to be higher for such individuals (between 6% and 14%).^{footnote 28}

Considerations for the proposed amendment to add a flexibility for disclosure of ingredients for cosmetics sold in small packages

This proposal would add a flexibility for the disclosure of all ingredients on cosmetic labels when sold in small packages. In addition to the option currently available that allows the list of ingredients to be set out on a tag, tape or card attached to the container if the legibility requirements cannot otherwise be met, the proposal would add the option to disclose the list of ingredients on a website, including on the label only a statement advising where consumers would be able to find this information.

The use of a tag, tape or card affixed to the container to disclose the list of ingredients for cosmetics sold in small packages would still be permitted. At this time, it is unclear if the use of a website would be widely implemented by manufacturers and importers of cosmetics.

This added flexibility would require access to the Internet. The vast majority of Canadians have access to the Internet in their homes or use a smartphone device. However, Canadians with no access to the Internet, or with limited, slow, or unreliable Internet access, could be negatively impacted. This could impact those who live in remote or rural communities, seniors, individuals of lower socio-economic status and households on First Nation reserves.

Although most Canadians had access to the Internet in 2020, 6% reported that they did not have Internet access at home. Of those without home access, 26% reported the cost of Internet service as the reason, and 13% cited the cost of equipment. With regard to households of those aged 65 and older, 83% had access to the Internet.^{footnote 29}

As a mitigation measure, consumers could be advised to contact the responsible company to obtain the list of ingredients for a cosmetic when that list is included on a website.

Implementation, compliance and enforcement, and service standards

Implementation

The proposed Regulations would come into force in two parts: (1) all amendments, with the exception of those related to the disclosure of fragrance allergens on cosmetic labels, would come into force 180 days following registration; and (2) the provisions regarding the disclosure of fragrance allergens would come into force two years following the date of registration.

During the period between registration and the first coming-into-force date, the Regulations would remain in force, and Health Canada would take steps to implement the amendments affecting the cosmetic notification form, such as adding narrower concentration ranges, providing a way to indicate whether the cosmetic is leave-on or rinse-off, removing the need to provide the name and address in Canada of the distributor, and adding a functionality that requires ingredients in the product formulation to be identified by their INCI names.

The proposed changes to the cosmetic notification would not apply retroactively to notifications received prior to the first coming-into-force date. Following this date, regulated parties would have to comply with the new requirements on the cosmetic notification form when submitting a new cosmetic notification or an amendment to an existing notification.

As described above, the proposed amendments to the Regulations to require the disclosure of certain fragrance allergens on cosmetic labels would come into force two years following registration. Health Canada intends to engage in proactive outreach to industry to promote compliance with the new requirements. In addition, the Department would develop information and educational materials for consumers regarding fragrance allergen disclosure to help them better understand the new information on cosmetic labels.

Compliance and enforcement

Compliance and enforcement of the proposed Regulations would be in accordance with a risk-based approach, aligned with departmental policies. Compliance and enforcement activities would follow established Health Canada approaches and procedures, including the sampling and testing of products, inspections at business locations, and follow-up on incidents reported by the Canadian public and public health organizations. Non-compliant products would be subject to the enforcement actions available to Health Canada inspectors under the Food and Drugs Act and could include voluntary commitments to product correction by industry, negotiation with industry for the voluntary removal of non-compliant products from the market, seizure or prosecution.

Contact

Magdalena Jurkiewicz
Consumer and Hazardous Products Safety Directorate
Healthy Environments and Consumer Safety Branch
Health Canada
269 Laurier Avenue West
Ottawa, Ontario
K1A 0K9
Address locator: 4908A
Email: cosmetics@hc-sc.gc.ca

PROPOSED REGULATORY TEXT

Notice is given, under subsection 30(1)^{footnote a} of the Food and Drugs Act ^{footnote b} and subsection 139(1) of the Cannabis Act ^{footnote c}, that the Governor in Council proposes to make the annexed Regulations Amending Certain Regulations Concerning the Disclosure of Cosmetic Ingredients.

Interested persons may make representations concerning the proposed Regulations within 70 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to Magdalena Jurkiewicz, Senior Regulatory Policy and Risk Management Advisor, Consumer and Hazardous Products Safety Directorate, Department of Health, Mail Stop 4908A, 269 Laurier Avenue West, Ottawa, Ontario K1A 0K9 (email: cosmetics@hc-sc.gc.ca).

Ottawa, February 2, 2023

Wendy Nixon
Assistant Clerk of the Privy Council

Regulations Amending Certain Regulations Concerning the Disclosure of Cosmetic Ingredients

Food and Drugs Act

Cosmetic Regulations

1 (1) The portion of subsection 2(1) of the Cosmetic Regulations ^{footnote 30} before the first definition is replaced by the following:

2 (1) The following definitions apply in these Regulations.

(2) The definitions ICI Dictionary and manufacturer in subsection 2(1) of the Regulations are replaced by the following:

ICI Dictionary

means the most recent edition of the International Cosmetic Ingredient Dictionary and Handbook, published by the Personal Care Products Council. (dictionnaire ICI)

manufacturer

means a person that, in Canada, sells a cosmetic under the person’s own name or under a trademark, design, trade name or other name or mark owned or controlled by that person, or in the absence of such a person, a person that fabricates or processes a cosmetic in Canada on behalf of another person. (fabricant)

(3) The definitions Act, botanical, child-resistant container, flame projection, flashback, INCI name, ingredient, inner label, official method, ornamental container, outer label, practitioner, prescription and principal display panel in subsection 2(1) of the English version of the Regulations are replaced by the following:

Act

means the Food and Drugs Act. (Loi)

botanical

means an ingredient that is directly derived from a plant and that has not been chemically modified before it is used in the preparation of a cosmetic. (substance végétale)

child-resistant container

has the same meaning as in section 2 of the Consumer Chemicals and Containers Regulations, as they read on September 30, 2001. (contenant protège-enfants)

flame projection

means the ability of the pressurized contents of an aerosol container to ignite and the length of that ignition, when tested in accordance with official method DO-30, Determination of Flame Projection, dated October 15, 1981. (projection de flamme)

flashback

means that part of the flame projection that extends from its point of ignition back to the aerosol container when tested in accordance with official method DO-30, Determination of Flame Projection, dated October 15, 1981. (retour de flamme)

INCI name

means the International Nomenclature Cosmetic Ingredient name assigned to an ingredient in the ICI Dictionary. (appellation INCI)

ingredient

means any substance that is one of the components of a cosmetic and includes colouring agents, botanicals, fragrance and flavour, but does not include substances that are used in the preparation of the cosmetic but that are not present in the final product as a result of the chemical process. (ingrédient)

inner label

means a label on or affixed to the immediate container of a cosmetic. (étiquette intérieure)

official method

means a method of analysis or examination designated as such by the Minister for use in the administration of the Act and these Regulations. (méthode officielle)

ornamental container

means a container that, except on the bottom, does not have any promotional or advertising material on it other than a trademark or common name, and that appears to be a decorative ornament because of a design that is on its surface or because of its shape or texture, and is sold as a decorative ornament in addition to being sold as the container of a cosmetic. (contenant décoratif)

outer label

means a label on or affixed to the outside package of a cosmetic. (étiquette extérieure)

practitioner

means a person who is registered and licensed under the laws of a province to practise the profession of medicine in that province. (praticien)

prescription

means a direction given by a practitioner. (ordonnance)

principal display panel

has the same meaning as in the Consumer Packaging and Labelling Regulations. (espace principal)

(4) The definitions emballage de sécurité, étiquette intérieure, ordonnance and praticien in subsection 2(1) of the French version of the Regulations are replaced by the following:

emballage de sécurité

Emballage doté d’un dispositif de sûreté qui offre au consommateur une assurance raisonnable que l’emballage n’a pas été ouvert avant l’achat. (security package)

étiquette intérieure

Étiquette apposée ou fixée au contenant immédiat d’un cosmétique. (inner label)

ordonnance

Directive donnée par un praticien. (prescription)

praticien

Personne inscrite et autorisée par les lois d’une province à exercer la médecine dans cette province. (practitioner)

(5) Subsection 2(1) of the Regulations is amended by adding the following in alphabetical order:

importer

means a person that imports a cosmetic into Canada for the purpose of selling it. (importateur)

leave-on product

means any cosmetic that is intended to stay in prolonged contact with the skin, hair or mucous membranes. (produit sans rinçage)

rinse-off product

means any cosmetic that is intended to be removed after application to the skin, hair or mucous membranes. (produit à rincer)

2 The Regulations are amended by adding the following after section 15.2:

15.3 (1) A person must not sell a cosmetic after the 10-day period beginning on the day on which the manufacturer or importer first sells that cosmetic if the Minister has not been provided with the documents required under subsection 30(1).

(2) A person must not sell a cosmetic after the 10-day period referred to in paragraph 31(1)(a) unless the Minister has been provided with a revised notification, document or information.

(3) If the Minister requests additional information under paragraph 31(1)(b) respecting a cosmetic, and the manufacturer or importer has not provided it, a person must not sell the cosmetic after the 10-day period beginning on the day on which the Minister requests the additional information.

3 The portion of section 20 of the Regulations before paragraph (b) is replaced by the following:

20 Subject to these Regulations, a person must not sell a cosmetic unless its inner label contains

• (a) a telephone number, email address, website address, postal address or any other information that enables communication with a contact person to whom consumers may direct questions about the cosmetic; and

4 Subsection 21.2(4) of the Regulations is replaced by the following:

(4) An ingredient that is included in the schedule may be listed

• (a) by its European Union (EU) technical name set out in column 1 of the schedule;
• (b) by its appropriate INCI name set out in column 2 of the schedule and its appropriate French equivalent set out in column 3 of the schedule; or
• (c) by all three names.

5 (1) Subsection 21.4(1) of the Regulations is replaced by the following:

21.4 (0.1) The following definitions apply in this section.

European Restricted Substances List

means Annex III, titled List of Substances Which Cosmetic Products Must Not Contain Except Subject To The Restrictions Laid Down, of Regulation (EC) No. 1223/2009 of the European Parliament and of the Council of 30 November 2009 on cosmetic products, published by the European Union on its website, as amended from time to time. (Liste européenne de substances à usage restreint)

fragrance allergen

means a fragrance or flavour that can cause an allergic reaction and that is included in the European Restricted Substances List and for which the restrictions set out in column h of that list provide that its presence must be indicated in a cosmetic’s list of ingredients. (allergène de parfum)

(1) Subject to subsections (2) to (4), ingredients must be listed in descending order of predominance, in their concentration by weight.

(2) Subsection 21.4(3) of the Regulations is replaced by the following:

(3) In the case of fragrance and flavour, other than fragrance allergens, the words “parfum” and “aroma”, respectively, may be inserted at the end of the list of ingredients to indicate that such ingredients have been added to the cosmetic to produce or to mask a particular odour or flavour.

(4) A fragrance allergen must be listed if

• (a) in the case of a rinse-off product, the concentration of the fragrance allergen in the cosmetic is greater than 0.01%; or
• (b) in the case of a leave-on product, the concentration of the fragrance allergen in the cosmetic is greater than 0.001%.

(5) Despite subsection (4), a fragrance allergen is not required to be listed in a cosmetic’s list of ingredients before the later of

• (a) the day on which a provision of a regulation, published by the European Union on its website and amending the Regulation (EC) No. 1223/2009 of the European Parliament and of the Council of 30 November 2009 on cosmetic products by adding the fragrance allergen to the European Restricted Substances List, comes into force; and
• (b) if applicable, the day on which the fragrance allergen must be listed in the list of ingredients of a cosmetic in order for the cosmetic to be made available on the European Union market, as set out or referred to in the entry in the European Restricted Substances List for that fragrance allergen.

6 Subsection 21.5(1) of the Regulations is replaced by the following:

21.5 (1) Despite subsection 21.2(1), in the case of a cosmetic whose immediate container or outside package is too small for the label to comply with paragraph 18(b), the list of ingredients may appear

• (a) on a tag, tape or card affixed to the container or package; or
• (b) on a website, provided that the outer label contains a statement specifying that the list of ingredients appears on that website and includes the location of the website.

7 Section 29 of the Regulations is replaced by the following:

29 (1) The Minister may request in writing that a manufacturer or importer submit to the Minister, on or before a specified day, evidence to establish the safety of a cosmetic under the recommended or the normal conditions of use.

(2) A manufacturer or importer that does not submit the evidence requested under subsection (1) must cease to sell the cosmetic on the day after the day specified in the request.

(3) If the Minister determines that the evidence submitted by a manufacturer or importer under subsection (1) is not sufficient, the Minister must notify the manufacturer or importer in writing to that effect, and the manufacturer or importer must cease to sell the cosmetic until the manufacturer or importer

• a) has submitted further evidence to the Minister; and
• b) has been notified in writing by the Minister that the further evidence is sufficient.

8 (1) The portion of subsection 30(1) of the French version of the Regulations before paragraph (a) is replaced by the following:

30 (1) Le fabricant ou l’importateur remet au ministre, dans les dix jours suivant la vente initiale d’un cosmétique par le fabricant ou l’importateur, les documents suivants :

(2) Paragraph 30(2)(a) of the Regulations is replaced by the following:

• (a) the contact information that appears on the inner label of the cosmetic in accordance with paragraph 20(a);

(3) Paragraphs 30(2)(c) and (d) of the Regulations are replaced by the following:

• (c) the function of the cosmetic, including whether the cosmetic is a leave-on product or a rinse-off product;
• (d) a list of the cosmetic’s ingredients, according to their INCI name — or, in the absence of such a name, their chemical name — and, for each ingredient, either its exact concentration or the concentration range that includes the concentration of that ingredient, the latter of which may only be indicated by setting out either the applicable concentration range set out in column 1 of the table to this section or the number in column 2 that corresponds to the applicable concentration range set out in column 1;

(4) Paragraph 30(2)(f) of the Regulations is replaced by the following:

• f) the name and address in Canada of the manufacturer or importer;

(5) The table to section 30 of the Regulations is replaced by the following:

TABLE

Item	Column 1 Concentration Range	Column 2 Corresponding Number
1	More than 80%, up to 100%	1
2	More than 65%, but not more than 80%	2
3	More than 50%, but not more than 65%	3
4	More than 40%, but not more than 50%	4
5	More than 30%, but not more than 40%	5
6	More than 20%, but not more than 30%	6
7	More than 10%, but not more than 20%	7
8	More than 3%, but not more than 10%	8
9	More than 1%, but not more than 3%	9
10	More than 0.3%, but not more than 1%	10
11	More than 0.1%, but not more than 0.3%	11
12	More than 0.001%, but not more than 0.1%	12
13	More than 0%, but not more than 0.001%	13

9 Section 31 of the Regulations is replaced by the following:

31 (1) A manufacturer or importer that has provided the Minister with a notification under section 30 must

• a) provide the Minister with a revised notification, together with any applicable revised document or information within 10 days after the day on which the document or information becomes inaccurate; and
• b) provide the Minister, within 10 days, with any additional information that the Minister requests respecting the notification.

(2) For the purposes of paragraph (1)(a), an inaccurate document or inaccurate information includes a document or information in respect of a cosmetic that is no longer sold in Canada.

10 The schedule to the Regulations is replaced by the schedule set out in the schedule to these Regulations.

Cannabis Act

Cannabis Regulations

11 Subsection 130(1) of the Cannabis Regulations ^{footnote 31} is replaced by the following:

Presentation of information — general requirement

130 (1) All information that is included on a label must be in English and in French, except for the INCI name and the European Union (EU) technical name.

12 Subparagraph 132.17(1)(c)(iv) of the Regulations is replaced by the following:

• (iv) if an ingredient is included in the schedule to the Cosmetic Regulations, by its EU technical name set out in column 1 of that schedule, or by the appropriate INCI name set out in column 2 of that schedule and the appropriate French equivalent set out in column 3 of that schedule.

Coming into Force

13 (1) These Regulations, except section 5, come into force on the 180th day after the day on which they are registered.

(2) Section 5 comes into force on the second anniversary of the day on which these Regulations are registered.

SCHEDULE

(Section 10)

SCHEDULE

(Subsection 21.2(4))

EU Technical Names and Their INCI Names and French Equivalents

Item	Column 1 EU Technical Name	Column 2 INCI Name	Column 3 French Equivalent
1	Acetum	Vinegar	Vinaigre
2	Adeps Bovis	Tallow	Suif
3	Adeps Suillus	Lard	Saindoux
4	Aqua	Water	Eau
5	Bombyx Lipida	Silkworm Extract	Extrait de ver à soie
6	Brevoortia Oil	Menhaden Oil	Huile de menhaden
7	Bubulum Oil	Neatsfoot Oil	Huile de pied de bœuf
8	Butyris Lac Powder	Buttermilk Powder	Babeurre en poudre
9	Butyrum	Butter	Beurre
10	Candelilla Cera	Euphorbia Cerifera (Candelilla) Wax	Cire de candelilla
11	Caprae Lac	Goat Milk	Lait de chèvre
12	Cera Alba	Beeswax	Cire d’abeille
13	Cera Microcristallina	Microcrystalline Wax	Cire microcristalline
14	Colophonium	Rosin	Colophane
15	Copernicia Cerifera Cera	Copernicia Cerifera (Carnauba) Wax	Cire de carnauba
16	Dromiceius Oil	Emu Oil	Huile d’émeu
17	Faex	Lactic Yeasts	Levures lactiques
		Yeast	Levure
		Yeast Extract	Extrait de levure
18	Gadi Lecur Oil	Cod Liver Oil	Huile de foie de morue
19	Hoplostethus Oil	Orange Roughy Oil	Huile d’hoplostète orange
20	Lac	Milk	Lait
		Whole Dry Milk	Lait entier en poudre
21	Lactis Lipida	Milk Lipids	Lipides du lait
22	Lactis Proteinum	Milk Protein	Protéine du lait
		Whey Protein	Protéine du petit-lait
23	Lanolin Cera	Lanolin Wax	Cire de lanoline
24	Maris Aqua	Sea Water	Eau de mer
25	Maris Limus Extract	Sea Silt Extract	Extrait de limon marin
26	Maris Sal	Sea Salt	Sel marin
27	Mel	Honey	Miel
28	Mel Extract	Honey Extract	Extrait de miel
29	Montan Cera	Montan Wax	Cire de Montan
30	Mustela Cera	Mink Wax	Cire de vison
31	Mustela Oil	Mink Oil	Huile de vison
32	Olus Oil	Vegetable Oil	Huile végétale
33	Ostrea Edulis Extract	Oyster Extract	Extrait d’huître
34	Ostrea Shell Extract	Oyster Shell Extract	Extrait de coquille d’huître
35	Ostrea Shell Powder	Oyster Shell Powder	Poudre de coquille d’huître
36	Ovum	Dried Egg Yolk	Poudre de jaune d’œufs
		Egg	Œuf
		Egg Yolk Extract	Extrait de jaune d’œuf
37	Ovum Oil	Egg Oil	Huile d’œufs
38	Ovum Powder	Egg Powder	Poudre d’œufs
39	Paraffinum Liquidum	Mineral Oil	Huile minérale
40	Pellis Lipida	Skin Lipids	Lipides cutanés
41	Pisces Extract	Fish Extract	Extrait de poisson
42	Piscum Cartilage Extract	Fish Cartilage Extract	Extrait de cartilage de poisson
43	Piscum Lecur Oil	Fish Liver Oil	Huile de foie de poisson
44	Pix	Tar Oil	Huile d’anthracène
45	Propolis Cera	Propolis Wax	Cire de propolis
46	Salmo Oil	Salmon Oil	Huile de saumon
47	Salmo Ovum Extract	Salmon Egg Extract	Extrait d’œufs de saumon
48	Sepia Extract	Cuttlefish Extract	Extrait de seiche
49	Serica	Silk	Soie
50	Serica Extract	Silk Extract	Extrait de soie
51	Serica Powder	Silk Powder	Poudre de soie
52	Shellac Cera	Shellac Wax	Cire de laque
53	Sine Adipe Colostrum	Nonfat Dry Colostrum	Poudre de colostrum écrémé
54	Sine Adipe Lac	Nonfat Dry Milk	Poudre de lait écrémé
55	Solum Diatomeae	Diatomaceous Earth	Terre de diatomées
56	Solum Fullonum	Fuller’s Earth	Terre à foulon
57	Sus Extract	Pigskin Extract	Extrait de peau de porc
58	Tallol	Tall Oil	Tallöl

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