St. Ives Skin Cream Claims Rub FDA the Wrong Way

St. Ives Laboratories has gotten under the skin of the U.S. Food and Drug Administration and the giant Johnson & Johnson Co. drug firm.

The dispute involves claims by the Chatsworth company that a beauty cream it sells “helps reduce the visible signs of aging.” Last week, the FDA disclosed that its district director in Los Angeles sent St. Ives a letter accusing the company of misleading consumers in selling a “Retinyl A” cream and threatening to take action against the company unless it stops selling it.

Officials from the FDA say they believe the company is trying to sell Retinyl A by linking it to a prescription drug with a similar name, Retin-A, a cream used to treat acne that is made by Johnson & Johnson’s Ortho Pharmaceutical Corp. subsidiary in Raritan, N.J.

Retin-A received widespread publicity in January when results of a University of Michigan study were published in the Journal of the American Medical Assn. suggesting that Retin-A reduces wrinkles and reverses premature aging of skin caused by too much exposure to the sun. Johnson & Johnson is suing St. Ives, accusing the company of taking advantage of the publicity through what it calls a “fraudulent marketing scheme designed to dupe the public.”

St. Ives, which denies it is misleading consumers, sells its cream in white, 3.8-ounce bottles that retail for $6 to $8 in drugstores, supermarkets and other stores nationwide. On the front of the bottle is the word “Retinyl” in large black letters and a large letter “A” in red, with “A breakthrough in skin care!” written on the back.

The FDA, Johnson & Johnson and St. Ives all agree that there are big differences between Retinyl A and Retin-A. Retin-A contains tretinoin, or retinoic acid, which is a relative of vitamin A. The St. Ives cream contains retinyl palmitate, a vitamin A derivative common in other moisturizers sold over-the-counter.

St. Ives is a publicly held company that sells shampoos, lotions and creams through drugstores, supermarkets and mass-merchandise stores. The company is headed by former insurance executive Gary H. Worth, who got into the business when he bought a fragrance-development firm in 1971.

In the year that ended Dec. 31, the company’s profit rose 44% to $4.1 million as sales climbed 13% to $87.9 million. In its six months that ended June 30, the company’s earnings rose 8% to $2.8 million as sales climbed 25% to $52.6 million. In an Aug. 8 news release, the company said the retinyl palmitate cream improved the profit margins of its personal care product line.

Stock Languished

Despite improved earnings and sales this year, the company’s stock has languished. St. Ives first sold stock in July at $13 a share, raising $12 million by selling the public a 28% stake in the company. On Monday, St. Ives closed at $7.875 a share in over-the-counter trading, up 25 cents.

John L. Boyle, St. Ives’ chief financial officer, said the company has sold about $2 million of the retinyl palmitate cream since introducing it in the spring. He says that the company does not believe consumers are confusing the St. Ives cream with Retin-A, adding that the St. Ives product is simply a beauty product that should be sold in stores alongside moisturizers.

Boyle said St. Ives sent a response last week to the FDA denying the agency’s allegations. Agency officials said Monday they had not received the response. Boyle said the company may be willing to change its label to satisfy the FDA and Johnson & Johnson, such as calling the product “St. Ives-A” or more prominently displaying the words “retinyl palmitate.” Indeed, some of the bottles now have “St. Ives” written in red across the “A” on the label.

Other Companies

The letter to St. Ives from the FDA is part of a stepped-up effort by the agency to crack down on nearly two dozen companies that, in the wake of the Retin-A publicity, are selling over-the-counter creams that they suggest reverse or slow the aging of skin. The FDA contends that the claims they make subject them to the same regulations as drugs. Cosmetics, which do not need FDA approval, are defined by the agency as products that cleanse or beautify in a superficial way.

In the letter sent to St. Ives, George J. Gerstenberg, district director of the FDA, said the agency is “unaware of any substantial scientific evidence” that the St. Ives cream is safe or effective in treating signs of aging. He said that St. Ives is violating federal food and drug laws by suggesting on its labels that there is evidence to support its claims. He noted that the FDA has the right to seize the product and go to court to stop the company from making and selling it.

St. Ives is not the only company selling retinyl palmitate for skin care. Prime Natural Health in Carson markets a cream with the words “Retinyl A” on the label. John Marshall, the company’s chief executive, said the company is careful not to promote the cream as an anti-aging treatment.

‘Certain Derivatives’

Another company, Derma-E in Chatsworth, sells a cream containing retinyl palmitate that also includes such ingredients as avocado oil. Some of the bottles have labels claiming that medical journals have recently said that “certain derivatives of vitamin A will help repair wrinkles and skin damage caused by the sun.”

David Stearn, Derma-E’s president, said that claim was made on the product’s old label. He said Derma-E has changed the label to read only that vitamin A is considered an important ingredient in fighting signs of aging.

“We figured if we don’t quote medical journals we’ll be a lot better off,” Stearn said.

Diane K. Temple, a securities analyst with Solomon Bros. investment bankers in New York, said imitation products are common in the cosmetics industry as are disputes over similar names.

Temple said it would be difficult to make a case that St. Ives can’t use the word “retinyl” on its label, since the retinyl palmitate that the cream contains is a government-approved ingredient. She added that there also is a demand for products such as the St. Ives cream because many consumers like to use vitamin A-derived products for skin care.