Juul in FDA's Sights as U.S. Rethinks Position on E-Cigarettes

(Bloomberg) -- U.S. public health officials are changing their stance on the upstart e-cigarette industry.

Last year, the Food and Drug Administration pushed back until 2022 a deadline for e-cigarette companies to submit their products for review in order to continue selling them. Commissioner Scott Gottlieb said he wanted to ease the regulatory pathway for products that are potentially less harmful sources of nicotine than smoking.

But now, calling vaping by children and teenagers an epidemic, the FDA is coming out in force against market leader Juul Labs and other e-cigarette makers. FDA inspectors last week took more than 1,000 pages of documents on sales and marketing from Juul Labs’ headquarters in San Francisco. The document seizure came a few weeks after Gottlieb told manufacturers that he was considering a ban on flavored versions of the nicotine devices.

“FDA has clearly recognized that there’s a crisis and that there’s a need for change,” said Matthew Myers, president of the Campaign for Tobacco-Free Kids, who had warned that the FDA’s action in 2017 would lead more children to take up vaping.

Juul is the e-cigarette of choice for underage vapers. Sales of the devices, which are sleek and come in flavors such as mango and cucumber, rose more than 600 percent in a year to 16.2 million in 2017, the Centers for Disease Control and Prevention wrote Tuesday in the Journal of the American Medical Association. By the end of 2017, Juul accounted for almost 1 in 3 e-cigarettes sales in the U.S., CDC found.

The FDA confirmed that youth vaping jumped 75 percent in the past year as teens were increasingly drawn to Juul. In 2017, more than 2 million middle- and high-school students used e-cigarettes, according to the CDC.

The increase in underage use is the fault of “an irresponsible e-cigarette company and a complete lack of regulation up until now,” Myers said. The lack of regulation has allowed “Juul and other e-cigarette companies to market freely products that appealed to kids,” he added.

Juul’s Commitment

The visit Juul employees had been anticipating finally came on the morning of Sept. 24, when two FDA investigators showed up at the front desk of the startup’s San Francisco office, said three people with knowledge of the events. The pair -- at times joined by a third official -- took over a conference room for the next five days to review documents and interview members of the marketing and enforcement teams. The meetings lasted about 40 hours in total, said the people, who asked not to be identified because they weren’t authorized to discuss the matter publicly.

Juul Labs Chief Executive Officer Kevin Burns said the company has released more than 50,000 pages of documents to the FDA since the agency originally requested information on sales and marketing in April.

“We are committed to preventing underage use, and we want to engage with FDA, lawmakers, public health advocates and others to keep Juul out of the hands of young people,” Burns said in a statement Tuesday.

Gottlieb said Tuesday on Twitter that e-cigarettes present an opportunity for adult smokers to quit cigarettes “but we’ve said all along it can’t come at the expense of hooking kids on these products.”

The commissioner made the same point last month when he announced that the agency may ban flavored e-cigarettes.

“I have grown increasingly concerned around what we’re seeing as rising youth use in these products,” Gottlieb said in September.

Investors originally thought the agency announcement on flavored e-cigarettes was full of “hot air and nothing could come of it,” Owen Bennett, an analyst with Jefferies, said in a note Tuesday. But after the FDA inspection, Bennett said there’s now a “very good possibility” Juul and other e-cigarette manufacturers such as British American Tobacco and Altria Group Inc. will have to stop selling flavored products.

They also could face a tougher time undergoing FDA product review than previously thought, he said.

--With assistance from Janine Wolf.

To contact the reporters on this story: Anna Edney in Washington at aedney@bloomberg.net;Olivia Zaleski in San Francisco at ozaleski@bloomberg.net

To contact the editors responsible for this story: Drew Armstrong at darmstrong17@bloomberg.net, Mark Schoifet, Timothy Annett

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