Reddit reviews Developmental Biology, Tenth Edition

Retinoids are category C drugs. From the FDA:

> Animal reproduction studies have shown an adverse effect on the fetus and there are no adequate and well-controlled studies in humans, but potential benefits may warrant use of the drug in pregnant women
despite potential risks.

http://depts.washington.edu/druginfo/Formulary/Pregnancy.pdf

There is no clear evidence that it causes birth defects in humans because it would be grossly unethical to perform that study. You would have to deliberately administer potentially terotogenic drugs to pregnant women and then document their side effects. But it is recommended not to use it during pregnancy because the benefits do not outweigh the risks. Other category C drugs sometimes are used during pregnancy because they're more necessary for the mother's health than acne cream is. Antidepressants are a good example. Many of them are category C but it would be dangerous for some women to quit taking them so they accept the possible risk for the benefit of the drug.

BUT your question was HOW and I just so happen to have a developmental biology text book from 2013 right behind me. From the section on retinoic acid:

> These anomalies are largely due to the failure of the cranial crest cells to migrate into the pharyngeal arches of the face to form the jaws and ear. Radioactively labeled RA binds to the cranial neural crest cells and arrests both their proliferation and their migration.....Retinoic acid probably disrupts these cells in several ways. One mechanism is that excess RA activates the negative feedback pathway that usually ensures the proper amount of this compound. Transient large increases in RA thus activate the synthesis of RA-degrading enzymes, causing a long-lasting decrease of RA.

tl;dr

When an embryo is exposed to high doses of retinoic acid it activates a negative feedback loop which destroys RA resulting in a deficit of this necessary developmental chemical.

Aren't you glad you asked.