WASHINGTON -- In his most dramatic statement yet, the head of the U.S. Food and Drug Administration (FDA) suggested that the agency may pull the entire e-cigarette and vaping category from store shelves if youth smoking rates fail to drop over the next year, according to The Hill.
“If the youth use continues to rise, and we see significant increases in use in 2019, on top of the dramatic rise in 2018, the entire category will face an existential threat,” said FDA Commissioner Scott Gottlieb at a hearing at the agency's headquarters.
Gottlieb pointed to 2018 National Youth Tobacco Survey data saying that youth vaping rates had nearly doubled over the past year, with use among high school students jumping 78% and increasing 48% among middle school students. About 1.5 million young people took up vaping from 2017 to 2018, according to the study.
Referring to the historic decline in smoking over the past several years, Gottlieb said that progress toward cutting smoking rates is “being undercut, even eclipsed” by the rise in youth vaping. Addressing drug therapies for young smokers, Gottlieb said that talking about young people needing such nicotine-addiction therapies a few years ago “would have been incredible to me.”
Gottlieb cited San Francisco-based Juul Labs as having one of the most popular brands of e-cigarettes among young people.
“Underage use of Juul and any other vaping products is completely unacceptable to us and is directly opposed to our mission of eliminating cigarettes by offering existing adult smokers a true alternative to combustible cigarettes,” a Juul spokesperson said to The Hill.
RICHMOND, Va.—Close talks with the U.S. Food and Drug Administration (FDA), a minority stake in upstart Juul e-cigarettes and a public step into the marijuana business all happened in a matter of weeks at the tail end of 2018 and into the new year for one of the country’s largest producers of tobacco products, Altria Group Inc.
Faced with the steady decline of cigarette volume across the United States in recent years, tobacco companies like Richmond, Va.-based maker of the popular Marlboro brand of cigarettes have had to scramble to remake their destinies. But none has moved quicker in the past few weeks than Altria.
Here’s a summary of their latest moves …
Following warning letters sent by the FDA last fall to several manufacturers of electronic cigarettes and vaping devices, Altria announced plans to remove its MarkTen Elite and Apex by MarkTen pod-based vaping products until they “receive a market order from the FDA or the youth issue is otherwise addressed,” the company said in a press release.
The move is the first in what could be many steps by manufacturers as the FDA investigates marketing practices for such devices. The FDA held meetings with top manufacturers late last year and announced its intentions to call for more meetings in 2019.
Announced alongside its quarterly earnings report on Oct. 25, Altria related its actions back to the FDA’s September announcement of steps it is taking to address the problem of minors using vaping products.
On Dec. 7, Altria announcement it would discontinue the production and distribution of all its MarkTen and Green Smoke e-vapor products, as well as Verve oral nicotine-containing products. The company said its decision was based on current and expected financial performance of these products, coupled with regulatory restrictions that burden Altria’s ability to quickly improve these products. The company said it will refocus its resources on “more compelling” reduced-risk tobacco-product opportunities.
Altria signed and closed on a $12.8 billion investment in Juul Labs Inc., a San Francisco-based maker of electronic cigarettes and e-vapor products. Announced in December, the investment represents a 35% economic interest in Juul, valuing the company at $38 billion. Altria will participate in the e-vapor category only through Juul, it said.
Altria’s stated strategic rationale for the investment in Juul is that it:
- Provides a significant stake in the largest and fastest growing e-vapor company with a highly talented management team, successful in-market products and strong innovation pipeline.
- Offers exposure to strong revenue and volume growth opportunity with attractive unit economics and to significant international growth plans and global e-vapor profit pool.
- Better positions Altria with adult smokers interested in alternatives while continuing to compete vigorously in all other tobacco product markets.
Juul will remain fully independent, the companies said, but it will have access to Altria’s infrastructure and services.
In December, Altria also made a significant move in the marijuana business, entering an agreement to acquire newly issued shares in Cronos Group Inc., a Toronto-based cannabinoid company. The transaction represents a 45% equity stake in Cronos Group for an aggregate investment of approximately $1.8 billion.
Regarding its heat-not-burn product, iQOS, Altria officials said they could move the devices to market as quickly as three to four months after the FDA approves the tobacco company’s new-product application.