Juul Soon to Be Ordered Off the Market by FDA, WSJ Reports

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The US Food and Drug Administration is getting ready to order Juul Labs Inc.’s e-cigarettes off the market, the Wall Street Journal reported, citing people familiar with the matter.

The decision could be announced as early as Wednesday, according to the Journal. Juul representatives couldn’t immediately be reached for comment. FDA representatives didn’t respond to a request for comment.

The FDA banned the sale of fruity and sweet flavors for e-cigarettes following criticism that the products were targeted at minors, and regulators have been reviewing thousands of applications for vaping products since tightening their oversight of what had become an unruly marketplace.

Among Juul’s biggest backers is Marlboro maker Altria Group Inc., which holds a 35% stake in the company, according to a recent securities filing. Altria values its stake at $1.6 billion, after writing it down in a series of moves over the past few years. Shares of Altria declined as much as 10% in New York trading on Wednesday.

A spokesman for Altria declined to comment.

Earlier this year, the FDA allowed some products made by Juul rival NJOY Inc. to remain on the market, and last year authorized British American Tobacco Plc’s e-cigarette Vuse. Some observers had expected Juul to win the FDA’s backing after years of back-and-forth between the company and regulators.

Regulators have hoped that e-cigarettes could present an alternative for smokers who are trying to quit using traditional tobacco products, and Juul’s device has remained popular with some adults who say it helped them kick a cigarette habit. Yet public-health officials have also documented an epidemic of underage vaping they fear has hooked a new generation of users on nicotine. Other health issues, including a scare over an acute lung-damaging illness, have also been linked to e-cigarettes.

Once a richly valued startup with global ambitions, Juul has suffered a series of setbacks over the past few years after its sleek, USB-like device, flashy ads and fruity flavors raised questions about the health risks associated with vaping as well as the company’s marketing tactics. While Juul has said that it never sought to sell e-cigarettes to kids, the closely held company is facing thousands of lawsuits alleging it targeted minors. Dozens of states are also probing Juul’s advertising.

Being rebuffed by US regulators is likely to severely curtail Juul’s ambitions, at least in the near term. The company could appeal the FDA decision through the agency or challenge it in court, or file a revised approval application, according to the Journal report. Juul still sells e-cigarettes in some markets overseas.

Juul’s failure to win clearance would mark a second significant blow to the tobacco industry in as many days, after the Biden administration said it will order companies to cut nicotine levels in cigarettes in an effort to reduce smoking-related deaths. The FDA is expected to draft rules on the shift — a lengthy process that the industry is likely to fight.

Photo: A person smokes a Juul Labs Inc. e-cigarette in this arranged photograph taken in Brooklyn, New York/Bloomberg


Copyright 2022 Bloomberg.

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