Tobacco Stocks Jump After FDA Threatens E-Cig Crackdown

US government considers ban on flavored e-cigarettes over youth 'epidemic'

US government considers ban on flavored e-cigarettes over youth 'epidemic'

The U.S. Food and Drug Administration is considering a ban on flavored e-cigarettes from Juul Labs and other companies as it grapples with an "epidemic" of youth e-cigarette use that threatens to create a new generation of nicotine addicts, the agency's head said on Wednesday.

The agency sent more than 1,100 warning letters and 131 fines to retailers it said illegally sold JUUL and other e-cigarette products to minors during a nationwide undercover sting including brick-and-mortar and online stores this summer.

FDA Commissioner Scott Gottlieb said the agency will soon release data that show a "substantial increase" in youth vaping this year compared with 2017.

"We as a company focus on mature marketing and we are not in the business to sell to kids. And we're seriously considering a policy change that would lead to the immediate removal of these flavored products from the market". Gottlieb would be on much firmer ethical ground if he took the opposite position: In trying to stop teenagers from vaping, we won't deny adult smokers access to products that could save their lives.

The data is expected to be published in the coming months.

FDA had taken a slow approach to allow manufacturers to figure out how to submit products for consideration.

"We see clear signs that youth use of electronic cigarettes has reached an epidemic proportion", Gottlieb said.

"I've been warning the e-cigarette industry for more than a year that they needed to do much more to stem these youth trends", he said. "The disturbing and accelerating trajectory of use we're seeing in youth, and the resulting path to addiction, must end", he said.

As regulators threatened to pull e-cigarettes from shelves if they do not address "widespread" teen use, shares of Altria Group Inc.

Wells Fargo analyst Bonnie Herzog, in a research note, said Juul appears "most at risk" from the crackdown because of its "strong appeal to youth and the FDA's comments on flavors".

"If a kid comes in, even over 18, and I ask him, 'Have you ever smoked a cigarette?' He says, 'No.' 'Did you ever Vape before?' He goes, 'No.' Then I'll tell him, 'Why do you want to start?'" Lee said. But health officials have warned nicotine in e-cigarettes is harmful to developing brains.

However, Gottlieb claims e-cigarette brands haven't done enough to stop kids from using the products. They comprise more than 97 percent of the USA market for e-cigarettes. As long as some retailers are careless, some adults are willing to buy e-cigarettes on behalf of minors, and some teenagers manage to swipe them from parents or older siblings, there will be leakage from the adult market. Such grim statistics prompted the FDA to recently propose that the level of nicotine, the addictive substance that gets people hooked, permitted in products should be brought down, either suddenly or gradually over time, to eventually wean people off smoking.

In Boston Public Schools, high school administrators have reported more instances of students in possession of vaping devices at school. Earlier this year, the FDA opened an inquiry into Juul's practices, and has requested documents to show its strategy.

"JUUL Labs will work proactively with FDA in response to its request", the company said in a statement. "They must demonstrate that they're truly committed to keeping these new products out of the hands of kids, and they must find a way to reverse this trend", Gottlieb said.