(1) Background: Ethanol is a multifunctional excipient often used as a preservative in topical formulations. Due to its known ability to impair skin barrier function, this study investigated the effect of ethanol (EtOH) as a preservative in creams on the dermal penetration of active compounds. (2) Methods: A hydrophilic and a lipophilic fluorescent dye were used as active ingredient surrogates that were incorporated into creams with and without ethanol. The dermal penetration efficacy was assessed by epifluorescence microscopy on an ex vivo porcine ear model with intact and irritated skin. (3) Results: Ethanol reduced the dermal penetration by about 40% for the hydrophilic and about 20% for the lipophilic surrogates on intact skin, but had minimal impact on irritated skin. The bio-physical skin properties were also altered by the addition of ethanol to the cream. On intact skin, it increased transepidermal water loss (TEWL) and decreased skin hydration, whereas on irritated skin, it decreased TEWL and increased skin hydration. The results indicate that skin impairment can be considered to have different stages, while in an early stage of skin impairment, the formation of a “Pudding skin” is proposed. A “Pudding skin” is the formation of a thin layer of dried skin on top of the skin that “seals” the lower parts of the skin and reduces dermal penetration and water loss from inside the skin and reduces the dermal penetration of chemical compounds from outside the skin. (4) Conclusions: Overall, the findings emphasize the need to carefully consider the use of ethanol in formulations, balancing its preservative benefits with its potential to impair the efficacy of active ingredients, particularly in varying skin conditions.
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