By Victor Reklaitis, MarketWatch
The Trump administration on Wednesday announced a crackdown on electronic cigarettes in an effort to combat the youth vaping epidemic, with Health and Human Services Secretary Alex Azar tweeting that the goal was to “clear flavored e-cigarettes from the market.”
“The Food and Drug Administration intends to finalize enforcement guidance which will require that any flavored e-cigarette products, not including tobacco flavor, be removed from the market until they apply for and secure approval under the pre-marketing tobacco authority at the Food and Drug Administration,” Azar said, speaking outside the White House.
Shares in tobacco giant Altria Group Inc. /zigman2/quotes/208895754/composite MO +1.46% — which owns 35% of e-cigarettes heavyweight Juul Labs Inc. — lost ground following the news on Wednesday afternoon that the Trump administration was stepping up its efforts to address youth vaping. But the stock then recovered to close higher for the session, after trading lower by more than 1%. The stock recently was down 0.8% intraday Thursday and lower by 10% this year, while the S&P 500 was higher by 0.6% for the day and up 20% in 2019.
The FDA plans to share more specifics about its plan soon, the Department of Health and Human Services said in a news release . Azar stressed that tobacco-flavored e-cigarettes also could end up being targeted.
“We want the tobacco-flavored e-cigarettes to remain available for adults who may be using e-cigarettes to be off of combustible tobacco. But if we find that children start surging into tobacco-flavored e-cigarettes, or if we find marketing practices that target children… we’ll engage in enforcement actions there also,” the HHS chief said.
Just before Azar’s remarks, President Donald Trump voiced support on Wednesday for cracking down on youth vaping. He said “very, very strong action” may be needed on vaping to protect “innocent children.”
Juul, for its part, signaled some degree of support for the Trump administration’s move. The company said: “We strongly agree with the need for aggressive category-wide action on flavored products. We will fully comply with the final FDA policy when effective.”
As federal regulators and members of Congress take aim at Juul, the San Francisco-based company — which is the dominant e-cigarettes player in the U.S. with an estimated market share of about 70% — has ramped up its lobbying efforts in Washington, D.C. It disclosed lobbying spending of $1.01 million in this year’s second quarter after shelling out $940,000 in the first quarter , meaning it already has topped last year’s outlay of $1.64 million .
Juul critics have said that while the company says it’s committed to curbing youth vaping, its actions run counter to that promise.
The Trump administration’s latest move comes a day after the FDA issued a warning letter to Juul for selling its e-cigarettes as “modified risk tobacco products” without permission from the agency. The FDA and the Centers for Disease Control and Prevention also recently said they were looking into hundreds of cases of severe respiratory disease possibly associated with e-cigarette use. In addition, Michigan this month took steps to become the first U.S. state to ban flavored e-cigarettes, after San Francisco in June became the first major American city to ban the sale of all e-cigarettes.
The Campaign for Tobacco-Free Kids said the Trump administration’s planned action on flavored e-cigarettes was “a necessary and long-overdue step,” adding that it “must be comprehensive, immediate and long-lasting.”
“It has taken far too long to stop Juul and other e-cigarettes companies from targeting our nation’s kids with sweet-flavored, nicotine-loaded products that are addicting a new generation and threaten decades of progress in reducing youth tobacco use,” the prominent advocacy group also said in a statement. “We will work to support a comprehensive prohibition on flavored e-cigarettes, and we urge the administration not to back down in the face of the inevitable pressure from Juul and other manufacturers.”