Juul's $13 Billion Deal With Marlboro Maker Isn't Sitting Well With the FDA

Image: Seth Wenig (AP)

Juul may be sitting pretty following its $12.8 billion deal with big tobacco giant Altria, but the U.S. Food and Drug Administration (FDA) is not amused.

After accusing unnamed e-cigarette makers last month of “backing away from commitments made to the FDA and the public” to reduce the use of such products among teens, FDA Commissioner Scott Gottlieb is reportedly preparing to bring the hammer down on Juul and Altria, the maker of Marlboro, in particular.

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The New York Times reported Friday that Gottlieb is preparing letters to both Juul and Altria “that will criticize them for publicly pledging to remove nicotine flavor pods from store shelves, while secretly negotiating a financial partnership that seems to do the opposite.” Per the Times:

In October, after meeting with Dr. Gottlieb, Altria had agreed to stop selling pod-based e-cigarettes until it received F.D.A. permission or until the youth problem was otherwise addressed. In doing so, Howard A. Willard III, Altria’s chief executive, sent the F.D.A. a letter agreeing that pod-based products significantly contribute to the rise in youth vaping.

But the new deal commits the tobacco giant to dramatically expanding the reach of precisely those types of products, by giving Juul access to shelf space in 230,000 retail outlets where Marlboro cigarettes and other Altria tobacco products are sold. (Juul currently sells in 90,000 stores.)

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Gottlieb said in December that he planned to meet with the company leaders of e-cigarette manufacturers over teen vaping concerns, something that’s reportedly yet to happen but is being planned for. Gottlieb told the Times that he is “reaching out to both companies to ask them to come in and explain to me why they seem to be deviating from the representation that they already made to the agency about steps they are taking to restrict their products in a way that will decrease access to kids.”

The deal that gave Altria a 35 percent minority stake in Juul last month and pushed the latter’s value to approximately $38 billion came under fire by critics—including Juul’s own employees—who argued that it contradicted Juul’s mission statement.

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Juul seems to be primarily sticking to the script that this partnership will in fact help it further the company’s ostensible mission of getting adult smokers off of cigarettes, with CEO Kevin Burns releasing a carefully worded statement in December that said Juul “made it very clear that any investment would need to meet demanding and specific criteria to ensure that they are committed to our mission.”

Juul has also come under significant scrutiny for its part in contributing to what the FDA describes as an epidemic of teen vaping; it’s something Juul has taken apparent measures to counteract, including by pulling its flavored pods from stores and shutting down its social media accounts. Shortly before the deal with Altria was made public, Burns said in a statement that his e-cig company “won’t be successful in our mission to serve adult smokers if we don’t narrow the on-ramp” of kids to nicotine.

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It appears the FDA thinks Juul has some work to do on that front.

[New York Times]

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