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technology

Altria-Juul Pact Gets FDA Scrutiny as Limits on Vaping Near

Updated on

Altria-Juul Pact Gets FDA Scrutiny as Limits on Vaping Near

  • Commissioner Gottlieb requests a meeting with both companies
  • Limits on flavored vape-pod sales are expected within 30 days
Juul Labs Inc. E-Cigarettes As Altria Deal Signals Doubt In Future
Photographer: Gabby Jones/Bloomberg

Tobacco giant Altria Group Inc.’s efforts to gain a toehold in the burgeoning e-cigarette market are facing scrutiny, as a top U.S. regulator signaled that curbs on some vaping products are imminent.

The Food and Drug Administration is concerned that Altria’s $12.8 billion stake in e-cigarette startup Juul Labs Inc. contradicts commitments both companies previously made to address what health officials have called an epidemic of youth vaping.

FDA Commissioner Scott Gottlieb wrote to the companies Friday and asked to talk with them about “public statements that seem inconsistent” with vows they made last year to combat nicotine use by minors. Youth adoption of e-cigarettes has surged, provoking calls for action from parents, public-health advocates and lawmakers.

The commissioner also said that he expects to make good in the next 30 days on a pledge to issue draft rules restricting sales of most flavored e-cigarette products to vaping shops and online retailers who verify a purchaser’s age.

Juul spokeswoman Victoria Davis said the company is committed to preventing underage use of its products and looks forward to working with the FDA on the issue.

Altria Chief Executive Officer Howard Willard III sent a letter to Gottlieb on Friday, saying the company is reiterating its commitment to addressing underage vaping and outlining the prevention efforts it has taken so far.

Flavor Fight

Gottlieb insisted last year that e-cigarette manufacturers take steps to keep their products from being used by children. Many vaping pods come in fruit or candy flavors. Some have packaging resembling juice boxes or whip cream.

Altria said in a letter sent to Gottlieb in October that it would temporarily pull its flavored pod-based products from stores.

“We believe that pod-based products significantly contribute to the rise in youth use of e-vapor products,” Altria Chief Executive Officer Howard Willard III wrote in the letter, less than two months before the seller of Marlboro cigarettes said it would buy a stake in Juul.

“My question is, what changed?” Gottlieb said in an interview with Bloomberg.

Willard said in the letter that the company believed flavored pods could help adult smokers transition from traditional cigarettes and didn’t think it had a problem with youth access or use of its products.

Juul is a pod-based product with the flavored nicotine sold as a separate cartridge. Known for a sleek device that can be held in the palm of the hand, it’s popular among youth and young adults, including people who never used tobacco. San Francisco-based Juul Labs is one of the most richly valued startups in the country, worth $38 billion after Altria’s investment.

Vaping among high school students rose 78 percent between 2017 and 2018 to 3 million, according to the FDA and the Centers for Disease Control and Prevention. About 4.9 million middle and high-school students said they’d used a tobacco product in the past 30 days, according to preliminary results of the 2018 National Youth Tobacco Survey.

“If youth use goes up 40 percent or 50 percent this year we’re going to be having a very different discussion come this summer or fall,” Gottlieb said in the interview. He has threatened to ban all sales of flavored e-cigarettes if underage use isn’t controlled.

Juul said in November that it would shut down its social-media accounts and stop selling the flavored nicotine pods in stores, though retailers would be able to sell any remaining stock. Some are still available online in flavors such as mango and cucumber. Gottlieb wants to know if the company plans to reintroduce them to the brick-and-mortar market before the FDA’s sales restrictions are finalized.

Tobacco Crackdown

The letters to Altria and Juul follow a move Thursday by the commissioner to single out Walgreens Boots Alliance Inc. for being the biggest violator of prohibitions on youth tobacco sales. Walgreens said it has taken steps to crack down on such sales. Gottlieb had previously eased restrictions on e-cigarettes on the hope they would offer adult smokers a way to quit.

“I am aware of deeply concerning data showing that youth use of Juul products represents a significant proportion of the overall use of e-cigarette products by children,” Gottlieb wrote to the CEOs of Altria and Juul. “I have no reason to believe these youth patterns of use are abating in the near term, and they certainly do not appear to be reversing.”

Juul has an estimated 70 percent share of the $3 billion e-cigarette market, according to a Bloomberg Intelligence analysis of data from market researcher IRI.

Altria has touted the Juul deal as further helping the company move adult smokers to products that may carry less health risk, such as a device called IQOS Altria is seeking FDA clearance to sell. At the time of the Altria-Juul deal, executives said if concerns about youth smoking aren’t resolved, it could put the entire vaping business at risk, even for adults.

Philip Morris International Inc., which manufactures the IQOS device, said in a statement that it is addressing serious questions about its product as part of the current FDA review, including whether it “can reach the right audience.” It said that Juul brought a product to market without getting a review from the agency.

Altria has said it wants to raise the minimum age to buy tobacco products to 21.

— With assistance by Tiffany Kary, and Ellen Huet

(Updates with letter from Altria in sixth paragraph.)