FDA May Pull E-Cigarettes To Fight Youth Vaping "Epidemic"

Cigarette stocks dropped (then rebounded), after a Bloomberg report that the Food and Drug Administration is threatening to pull flavored electronic cigarettes like Juul off the market if the tobacco industry doesn’t do more to combat growing use of the products by children and teens.

Citing FDA Commissioner Scott Gottlieb, Bloomberg notes that the FDA will soon release data that show a “substantial increase” in youth vaping this year compared with 2017.

"I have grown increasingly concerned around what we see as rising youth use in these products, and I’m disappointed in the actions the companies have taken to try to address this," Gottlieb told Bloomberg in an interview.

The FDA told five major e-cigarette manufacturers Wednesday to come up with ways to address youth use in 60 days or the agency could require them to stop selling flavored products that appeal to children. The products being targeted are: Juul, Altria Group Inc.’s MarkTen, Fontem Ventures BV’s blu, British American Tobacco Plc’s Vuse and Logic.

Additionally, to gain clearance to return to the market, the tobacco companies would have to prove that the benefits to adults who use e-cigarettes to stop smoking outweigh the risks associated with youth vaping, Bloomberg adds.

“I certainly am in possession of evidence that warrants that,” Gottlieb said, adding that the problem has reached "epidemic proportion" although he declined to disclose the evidence.

That said, a quick look at the numbers confirms as much. According to data from Wells Fargo and Agora Financial, vaping sales reached $10 billion worldwide, a far cry from the mere $20 million in 2008. It is safe to assume that a substantial amount of sales is to young consumers.

In a separate report, of the 3.6 million middle- and high-school students who said in 2017 they are current tobacco-product users, 2.1 million used e-cigarettes, according to the Centers for Disease Control and Prevention. “There is no question that a lot of the youth use is being driven by Juul,” Gottlieb said.

While a variety of vaping products are available in the market, Gottlieb appears to be focused on Juul: "There is no question that a lot of the youth use is being driven by Juul" he told Bloomberg.

Produced by San Francisco-based Juul Labs Inc., Juul devices resemble a USB thumb drive and have become popular among students. The company has more than two-thirds of the U.S. e-cigarette market, according to Nielsen data. The FDA is currently developing a survey to determine what percentage of youth vapers are using Juul products, Gottlieb said.

From June through August, a nationwide sting operation resulted in more than 1,300 warning letters and fines to retailers who sold Juul products and other e-cigarettes to kids. It was “the largest coordinated enforcement effort in the FDA’s history,” according to the agency.

Gottlieb recently began to ask whether the use of Juul and other similar products by kids is overshadowing any benefit to adult smokers using the devices to help them quit cigarettes. He said in June tobacco companies “better step up and step up soon” but he didn’t divulge what consequences the industry could face - until now.

Following a sharp drop in stock prices across the tobacco sector, names like Altria and others have spiked and were up over 4% following speculation that the FDA's crackdown was not as severe as some had feared.