A man smokes a Philip Morris International Inc. iQOS electronic cigarette in this arranged photograph in Tokyo, Japan. (Photographer: Akio Kon/Bloomberg)

Vaping Surge Pushes FDA to Move Ahead With E-Cigarette Curbs

(Bloomberg) -- Facing a rapid increase in teen vaping, U.S. health officials plan to move ahead with a series of steps to sharply limit sales of tobacco products they say are designed to appeal to young people.

Among the measures outlined by Commissioner Scott Gottlieb Thursday, the FDA would restrict sales of most types of flavored e-cigarettes to specialized vaping stores and online retailers who verify a purchaser’s age.

The FDA also plans to draw up a ban on traditional menthol-flavored cigarettes and wants to eventually eliminate flavored cigars, which are popular with many younger smokers. The moves are part of a broader push by Gottlieb to reduce smoking and nicotine use.

Gottlieb has hinted for weeks that the FDA was likely to take action to try to halt a dramatic increase in underage people using e-cigarettes. Teens have been drawn to the fruit and candy flavors offered by many e-cigarette brands, as well as sleek and easy-to-conceal devices sold by companies including Juul Labs Inc.

The number of U.S. high school students who reported using e-cigarettes rose 78 percent between 2017 and 2018 to more than 3 million, according to data released by the FDA and the Centers for Disease Control and Prevention.

The plan to put sharp restrictions on the fast-growing e-cigarette industry marks a shift for Gottlieb, who had earlier expressed hope that vaping devices could offer a way to help adult smokers stop using traditional combustible cigarettes. The FDA chief indicated that he still hoped e-cigarettes could be beneficial to some adults, but not at the cost of creating a new generation of smokers.

“I will not allow a generation of children to become addicted to nicotine through e-cigarettes,” Gottlieb said in the statement. “We’ll take whatever action is necessary to stop these trends from continuing.”

Shares of tobacco companies fell after the FDA released its proposal. British American Tobacco Plc and Imperial Brands Plc both fell fell less than 1 percent in London, while shares of Altria Group Inc. declined 1.4 percent in New York at 10:22 a.m. Swedish Match AB, a major manufacturer of flavored cigars, was down 1.8 percent in Stockholm.

Menthol sales account for about 35 percent of U.S. cigarette market by volume, according to Bonnie Herzog, a Wells Fargo analyst. British American Tobacco’s Reynolds takes in about 55 percent of its U.S. volume in menthol. Altria, maker of Marlboro, gets around 20 percent of its profit from menthol cigarettes.

Policy Process

The announcement kicks off what is likely to be a protracted period of policy making and legal wrangling. The agency’s tobacco staff must draw up the new regulations, which will be eventually subject to public comment and could face court challenges from the industry.

The e-cigarette curbs are a compromise that allows adults who want to quit smoking to access the flavors but don’t go as far as Gottlieb threatened in September, when he said he was considering banning all sales of flavored pods unless the industry came up with ways to stem underage use. He said Thursday that the option to take all e-cigarettes off the market is still on the table if the trends surrounding youth use don’t change.

Sales of Juul, whose mango and cucumber flavors are popular among teens, make up more than 70 percent of the U.S. e-cigarette market, according to a Bloomberg Intelligence analysis of data from market researcher IRI. Juul said Tuesday it would temporarily stop selling its fruit-flavored nicotine pods to stores and shut down its U.S.-based Facebook and Instagram accounts. The curb is expected to reduce Juul’s in-store retail sales by 45 percent, according to a person familiar with the company’s sales projections.

The curbs would apply to a variety of e-cigarette styles, including cartridge devices like Juul that sell the heating mechanism separate from the pod of nicotine liquid, as well as so-called cigalikes that resemble cigarettes. The FDA aims to release guidelines soon for online age verification, Gottlieb said.

Menthol Measures

Companies that want to sell fruit- and dessert-flavored e-cigarettes in convenience stores would need to apply for FDA clearance to market their products. Last year, Gottlieb pushed back the date all e-cigarette makers had to apply for such clearance by four years to 2022. He said then that he wanted to ensure an industry with the potential to reduce smoking rates wasn’t stymied by regulation, but the surge in youth vaping has led him to change course.

E-cigarettes that contain tobacco, menthol or mint flavoring wouldn’t face restrictions under the proposal. Gottlieb said research shows menthol- and mint-flavored e-cigarettes are more popular with adults than kids, so he isn’t recommending restricting where they can be sold.

Gottlieb said in March the agency was considering restricting the use of menthol flavoring in cigarettes. Other flavors of cigarettes are already banned.

©2018 Bloomberg L.P.