Cosmeceuticals may contain purported active ingredients such as vitamins, phytochemicals, enzymes, antioxidants, and essential oils. However, these ingredients may not necessarily be effective, and if they are effective, the cosmeceutical may not have the active ingredient(s) in an effective formulation or at effective concentrations.
An important distinction lies in the delivery method. The "cosmeceutical" label applies only to products applied topically, such as creams, lotions, and ointments. Products which are similar in perceived benefits but ingested orally are known as nutricosmetics.
However, according to the United States Food and Drug Administration (FDA), the Food, Drug, and Cosmetic Act "does not recognize any such category as "cosmeceuticals." A product can be a drug, a cosmetic, or a combination of both, but the term "cosmeceutical" has no meaning under the law"
Additionally, the FDA states that: "Food, Drug, and Cosmetic Act defines drugs as those products that cure, treat, mitigate or prevent disease or that affect the structure or function of the human body. While drugs are subject to an intensive review and approval process by FDA, cosmetics are not approved by FDA prior to sale. If a product has drug properties, it must be approved as a drug."
To avoid inquiry and punitive action by the United States Federal Trade Commission, cosmeceuticals which do not intend to be regulated as drugs by the FDA are carefully labeled to avoid making statements which would indicate that the product has drug properties. Any such claims made regarding the product must be substantiated by scientific evidence as being truthful.
Generally speaking, it is to the financial benefit of the cosmeceutical manufacturer that their products are not regulated by the FDA as drugs, because the FDA review process for drugs can be very costly and may not yield a legally-marketable product if the FDA denies approval of the product. However, as mentioned above, the reputation of the product may be falsely enhanced if the consumer incorrectly believes that a "cosmeceutical" is held to the same FDA standards as a drug.