E-cig­a­rettes to face FDA sales rules

The agency has called youth use of the va­p­ing de­vices an epi­demic.

The Atlanta Journal-Constitution - - BUSINESS - By Drew Arm­strong, Anna Ed­ney and Olivia Za­leski Bloomberg News

E-cig­a­rettes will face strict new lim­its im­posed by the Food and Drug Ad­min­is­tra­tion, ac­cord­ing to a se­nior FDA of­fi­cial, re­strict­ing sales of many pop­u­lar fruit fla­vors amid what the agency has called an epi­demic of youth use.

Sales of pop­u­lar e-cig­a­rette fruit fla­vors will be lim­ited to adult-only es­tab­lish­ments, such as va­p­ing stores. The re­stric­tions will ap­ply only to car­tridge-style de­vices, such as a pop­u­lar prod­uct from startup Juul Labs Inc., ac­cord­ing to the of­fi­cial.

On­line sales will be al­lowed but only by re­tail­ers who take steps to ver­ify the buyer’s age, just as al­co­hol can be sold on the web as long as there’s some­one 21 or older to sign for the pack­age, said the of­fi­cial. The reg­u­la­tions, set to be an­nounced next week, will take ef­fect in the com­ing months.

An­a­lysts said the FDA’s plans are pos­i­tive for big tobacco com­pa­nies be­cause it will be more dif­fi­cult for con­sumers to buy Juul’s pods.

“Any ac­tion that slows down the growth tra­jec­tory of Juul will be a pos­i­tive for tobacco sen­ti­ment,” Jef­feries In­ter­na­tional Ltd. an­a­lyst Owen Ben­nett wrote in a note.

He added that it will have a lim­ited im­pact on the ma­jor tobacco com­pa­nies, as the vape mar­ket is a “tiny part” of their sales.

The FDA has talked for months about ways to re­duce youth use, cit­ing ris­ing con­cern that e-cig­a­rettes are cre­at­ing a new class of nico­tine users, rather than pri­mar­ily help­ing peo­ple tran­si­tion off reg­u­lar cig­a­rettes. The FDA has called youth use of the de­vices “an epi­demic” and said it would con­sider sig­nif­i­cant ac­tion to stop it. Va­p­ing surged 77 per­cent among high school-age chil­dren and about 50 per­cent among mid­dle-school­ers in 2018, ac­cord­ing to pre­lim­i­nary gov­ern­ment data.

As al­ter­na­tives surge, the U.S. adult smok­ing rate plunged to 14 per­cent in 2017, the low­est mea­sure on record and down 67 per­cent from 1965, ac­cord­ing to the Cen­ters for Dis­ease Con­trol and Pre­ven­tion. About 10 per­cent of adults 18 to 24 years old lit up in 2017, down from 13 per­cent the year ear­lier.

Juul’s de­vice has be­come wildly pop­u­lar, ac­count­ing for al­most one in three e-cig­a­rette sales as of the end of 2017, ac­cord­ing to the U.S. Cen­ters for Dis­ease Con­trol and Pre­ven­tion. The San Fran­cisco-based com­pany is backed by high-pro­file in­vestors, in­clud­ing Tiger Global Man­age­ment and Tao Cap­i­tal Part­ners. Fundrais­ing ne­go­ti­a­tions this year pegged a $15 bil­lion valu­a­tion on the busi­ness, mak­ing its founders worth more than $800 mil­lion each.

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