Juul Labs on Friday said it is in the early stages of exploring several options including financing alternatives, as the company deals with lawsuits and a potential ban on sales of its e-cigarettes by U.S. health regulators.
Bloomberg News earlier reported, citing sources, that Juul’s bankers at Centerview Partners are sounding out investors for a possible $400 million first-lien term loan due August 2023.
The proceeds would help refinance an existing term loan, which has around $394 million outstanding and matures on the same date, the report added.
A spokesperson for Juul told Reuters that the company is looking at options to protect its business and to address the “impact of the FDA’s now stayed order so we can continue offering our products to adult consumers who have or are looking to transition away from traditional cigarettes.”
Bloomberg News in its report said Juul was also considering a new $150 million second-lien term loan, which may have an August 2024 maturity, to help pay down some of the first-lien term loan and to increase liquidity, the report said.
Financing proposals for either loan are due July 21, according to the report.
Last month, the Food and Drug Administration (FDA) blocked sales of Juul e-cigarettes and said the applications “lacked sufficient evidence” to show that sale of the products would be appropriate for public health.
The U.S. Food and Drug Administration on July 13 sent its first warning letters to manufacturers for unlawfully marketing non-tobacco nicotine e-liquid products without the required authorization.
In March, President Joe Biden signed into law a spending bill [the Act] that gives the FDA authority over synthetic nicotine. The provision took effect in April and gave manufacturers until May 14, 2022, to submit premarket tobacco product applications (PMTAs) to the FDA.
Since no authorizations have been granted as of today, many industry experts question whether the FDA will use its enforcement discretion to continue reviewing PMTAs.
In a recent op-ed, Tony Abboud, president for Strategic Government Solutions, and executive director of the Vapor Technology Association (VTA), stated that the FDA should use its enforcement discretion for synthetic products that have submitted PMTAs.
“In a series of direct engagements with FDA since the passage, the VTA has provided a complete set of scientific and policy justifications for synthetic nicotine products, and specific recommendations on how FDA should use its enforcement discretion – just as it has in the past – to allow synthetic nicotine products to remain on the market during the PMTA review process,” explained Abboud.
The recipients of the FDA’s first warnings letters, AZ Swagg Sauce and Electric Smoke Vapor House, have listed a combined total of approximately 10,000 products with FDA. Neither company submitted a premarket application for its non-tobacco nicotine products by the deadline, according to the FDA.
In addition, the FDA issued 107 warning letters to retailers in the last two weeks for illegally selling non-tobacco nicotine products, including certain e-cigarette or e-liquid products, to underage purchasers.
“FDA has been fully committed to actively implementing this critical new law regulating non-tobacco nicotine products since its passage, and the warning letters announced today are just the beginning of our compliance and enforcement actions” said Brian King, director of the FDA’s Center for Tobacco Products, in a statement. “In the coming weeks, we will continue to investigate companies that may be marketing, selling, or distributing non-tobacco nicotine products illegally and will pursue action, as appropriate.”
The FDA says it is currently processing applications for approximately 1 million non-tobacco nicotine products submitted by more than 200 manufacturers by the May 14, 2022, deadline.
“FDA is working diligently to process the substantial number of applications submitted and, as always, will make marketing decisions based on the best available science and will pursue compliance and enforcement actions when warranted,” said King. “We remain fully committed to taking whatever steps are necessary to protect the public health and to provide timely updates on our ongoing progress regulating non-tobacco nicotine products.”
American Vapor Manufacturers (AVM) president Amanda Wheeler is asking the U.S. Department of Health and Human Services Inspector General (OIG) to launch an inquiry into whether “political pressure” is driving U.S. Food and Drug Administration Commissioner Robert Califf’s marketing denials for vaping products.
AVM wants the OIG to help the public learn about the commissioner’s coordination with elected officials, allied activists, and reporters as his agency continues its review of premarket tobacco product applications (PMTA), according to a press note.
“I am asking the Inspector General to intervene,” said Wheeler. “The PMTA process is rigged. Arbitrary standards rewritten behind closed doors corrupt any effective review. It’s embarrassing for the commissioner, but one U.S. senator’s call for his resignation was enough for Dr. Califf to override the standards set for the PMTA process. We are confident that OIG intervention will reveal what we have feared all along, ideology, not science, is driving decisions at the FDA.”
In a letter sent to HHS Inspector General Christi A. Grimm requesting an inquiry into “improper political pressure,” Wheeler contends that “interference has corrupted FDA’s statutory obligation to properly implement its premarket tobacco product application (PMTA) review process based solely on scientific, empirically-based judgment.”
Amanda Wheeler
A timeline of suspect events shows Califf’s decision to deny a marketing order for Juul Labs, Inc. came within hours of a U.S. senator calling for the commissioner’s resignation. Within days, a federal judge blocked the FDA from implementing its order, forcing the agency to re-open its review of the JUUL application.
The FDA backtracked on its decision, claiming there were “scientific issues unique to the Juul application that warrant additional review.” An OIG inquiry can show the public how the commissioner and his staff were forced into their decision by political pressure while ignoring salient facts.
“Manufacturers are routinely meeting the PMTA requirements to scientifically demonstrate how their products are appropriate for the protection of public health,” Wheeler said. “Despite compliance, the agency isn’t approving the vape products sought by adults who want to quit smoking. The OIG should open the door and hold the FDA accountable to its standards.”
Wheeler is requesting a full review to affirm the FDA’s assertion that the administrative stay was based on incomplete information. The agency is also thwarting Freedom of Information Act requests, so the OIG has an opportunity to create a new level of transparency.
Wheeler is requesting the OIG make public communication between the commissioner and members of Congress, the media, and ideologically aligned advocacy organizations.
Under the new law governing synthetic nicotine products signed on March 15, 2022, Congress imposed a short 60-day deadline for companies to file premarket tobacco product applications (PMTAs) and declared that if such applications were not approved within 120 days (the Act) they would be “in violation of” the Federal Food Drug & Cosmetic Act’s (FDCA) PMTA requirement.
Since no authorizations have been granted as of today, the question is will FDA use its enforcement discretion to continue reviewing PMTAs, or will it precipitously declare that all synthetic nicotine products must be removed from the market after July 13, 2022?
There is no question that the FDA should use its enforcement discretion. In a series of direct engagements with FDA since the Act’s passage, the Vapor Technology Association (VTA) has provided a complete set of scientific and policy justifications for synthetic nicotine products, and specific recommendations on how FDA should use its enforcement discretion – just as it has in the past – to allow synthetic nicotine products to remain on the market during the PMTA review process.
However, some have suggested that Congress mandated all products be removed from the market this week if they are not approved by FDA. But a close review of the Act reveals that the opposite is true: Congress did not require synthetic nicotine products with pending PMTAs to be removed from the market after July 13.
In interpreting laws, a court will first look to the plain language of the Act and, only if there is an ambiguity, will it look to Congressional intent to resolve such a question. Here, both support the FDA’s continued use of enforcement discretion for pending PMTAs.
The Plain Language Supports Enforcement Discretion
There are four relevant sections of the Act. First, under Section (d)(2)(A), Congress expressly stated that “as a condition to market” all manufacturers wishing to continue selling their products must file a PMTA no later than May 14, 2022.
Tony Abboud
Second, under Section (d)(2)(B), Congress expressly stated that companies which filed PMTAs “may continue to market” their products during what the Act calls a “transition period.”
Third, under Section (d)(2)(C), Congress expressly required that if a company did not file a PMTA for its synthetic products by May 14, 2022, that company is “not eligible for continued marketing.” In each of these sections, Congress expressly uses some variation of the term “market” to articulate its direction on what may (not) be marketed and when.
However, in the operative Section (d)(3), which addresses what happens after July 13, 2022, Congress makes no statement regarding marketing at all. Instead, it states that products with pending PMTAs not yet approved would be “in violation of…section 910” of the FDCA (21 USC 387g).
When presented with this question, a court likely would rule that because Congress did not expressly state that pending applicants are “not eligible for continued marketing” or that they “may not market” after July 13, as it clearly said in the immediately preceding sections, Congress did not require the removal of products with pending PMTAs.
This places synthetic nicotine products with pending PMTAs in precisely the same position as all other products with pending PMTAs which, for years, FDA has made clear are “illegal” (i.e., in violation of section 910) but are allowed to remain on the market at FDA’s enforcement discretion.
Even if a court finds that Section (d)(3) is ambiguous, there is nothing in Congressional intent that would lead to the conclusion that Congress intended for products with pending PMTAs to be removed from the market.
First, Congress could have banned synthetic nicotine products, if that is what it intended, but it did not do so. To the contrary, Congress expressly authorized manufacturers to bring new products to market after the Act’s passage. Thus, it would be folly to suggest that Congress intended all synthetic nicotine products be removed from the market without PMTA review.
Second, Congressional intent is generally divined by on the record statements made in committee hearings and in floor debate (not from press releases or media statements). But there is little to nothing which a court could rely on [with] this question because the provision was quietly slipped into the Ukraine-omnibus spending bill with no relevant hearing or floor debate.
Third, Congress was fully aware that FDA could not review PMTAs within 180 days (as required under the FDCA). In fact, the FDA told a court it will not be finished reviewing tobacco derived PMTAs until June of 2023. Thus, no one could suggest that there ever was any reasonable expectation or intent that the FDA would rule on synthetic nicotine PMTAs in 60 days.
Hence, the only reasonable conclusion that can be drawn from the plain language and Congressional intent is that Congress did not require removal of products with pending PMTAs but, rather, expected the FDA to continue to use its discretion in enforcing its PMTA regulation after July 13.
Congress did, however, expressly state that products for which no PMTA was timely filed have no continuing ability to market, authorizing the FDA to take immediate action. VTA has repeatedly communicated to the FDA the need for it to aggressively remove all tobacco products from the market for which no PMTA has been filed and to publish a list of all products covered by a synthetic nicotine PMTA so that retailers know which products can be sold.
A Careful and Complete Evaluation of Synthetic Nicotine PMTAs is Required
We live in a world that remains captive to [combustible] cigarettes. Congress won’t ban them and Congress has prevented the FDA from doing so. While electronic nicotine-delivery system (ENDS) products offer a technological solution to delivering nicotine in a substantially less harmful way, synthetic nicotine now represents the first technological innovation in nicotine itself.
Synthetic nicotine uniquely offers consumers the cleanest and purest form of nicotine with numerous benefits, i.e., the absence of heavy metals, nitrosamines, and pesticides. Synthetic nicotine uniquely offers consumers the opportunity to break free from the last remaining vestige of the tobacco plant.
Synthetic nicotine uniquely offers the FDA unprecedented product constituent clarity, replicability, and traceability down to the batch level. Not only does synthetic nicotine offer companies the opportunity to change the dynamics regarding total reliance on tobacco-derived nicotine for all tobacco and pharmaceutical nicotine products, but it also provides companies the ability to address their ESG [sustainability] goals and take a significant step to ameliorate the adverse environmental impacts of tobacco.
Our message to the FDA has been constructive and clear: it is critical to the adult smoker that FDA takes aggressive steps to create an orderly and regulated marketplace with a diversity of desirable nicotine alternatives.
Given recent history with tobacco derived PMTAs, the best way for FDA to realize that objective now is to avoid the blanket denial mistakes of the past which have mired the agency in protracted litigation. Such litigation will only delay the time until we achieve an orderly and regulated marketplace.
Instead, we have asked the FDA to work companies which timely filed synthetic nicotine PMTAs – the good actors – through the PMTA scientific process and provide them the requisite time and guidance to fulfill FDA’s requirements.
At the same time, we have asked the FDA to aggressively enforce against the non-compliant companies that have refused participate in the PMTA process – the bad actors – by interdicting such products at the border and removing such products from the market Congress has clearly required.
In the end, it is incumbent on the new FDA leadership to use its power to create an orderly marketplace by embracing scientific innovations, stimulating additional financial investment, accelerating authorizations of pending tobacco-derived PMTAs, and ensuring that synthetic nicotine products which now contain the cleanest and purest form of nicotine that science has created are available to adult smokers.
Tony Abboud serves as president for Strategic Government Solutions, Inc., and executive director of the Vapor Technology Association (VTA).
The U.S. Food and Drug Administration tomorrow is expected to officially close the loophole that allows synthetic nicotine to be sold. July 13 is the deadline for the regulatory agency to complete its approval process on synthetic nicotine products.
It is unlikely the FDA will have been able to have reviewed premarket tobacco product applications (PMTAs) that were submitted by the May 14 deadline. The agency has not yet completed reviews for many other electronic nicotine-delivery system (ENDS) products using tobacco-derived nicotine that submitted PMTAs by the Sept. 9, 2020 due date.
Attorneys in the vaping industry say Congress set unrealistic deadlines for manufacturers to submit PMTAs and for the FDA to review them. The law, which took effect April 14, gave companies until May 14 to submit a PMTA, and all existing products that haven’t garnered authorization must come off the market by July 13.
The FDA said last week that it’s still reviewing the “large number of applications” it received for synthetic nicotine products, but declined to share the total number submitted, according to media reports.
Synthetic nicotine products on the market after July 13 “without an FDA marketing granted order” would be considered in violation of federal law and “may be subject to FDA enforcement,” the agency stated.
It is expected that FDA will issue at least some marketing denial orders for companies that submitted a PMTA but didn’t include required data, such as an environmental impact assessment.
In March, the U.S. Senate approved a $1.5 trillion legislation by a 68-31 bipartisan margin that included language that changed the definition of a tobacco product to include synthetic nicotine.
The rule became law 30 days after the bill’s passage date. Congress further granted synthetic nicotine products a transition period in which such products would be allowed to stay on the market until July 13, 2022, provided that they submit the required PMTA by the May 14 deadline—unless the FDA had already denied a non-synthetic version of the same product (meaning those manufacturers were subject to enforcement 30 days after the passage of the bill).
The language of the Tobacco Control Act changed to define a tobacco product as “any product made or derived from tobacco, or containing nicotine from any source, that is intended for human consumption.”
Matthew Myers, president of the Campaign for Tobacco-Free Kids, said that the FDA needs to act on Congress’ rules for synthetic products.
“It would be outrageous if the FDA failed to enforce the law after Congress acted with urgency to address a growing threat to the health of our nation’s kids: E-cigarette manufacturers’ use of synthetic nicotine to evade FDA regulation and keep selling flavored products that attract and addict kids,” he said. “In recent years, a growing number of e-cigarette makers have switched to using synthetic nicotine – nicotine that is made in a lab, rather than derived from tobacco – after the FDA acted against their flavored products made with tobacco-derived nicotine.”
The U.S. Food and Drug Administration has made several updates to the desktop Safety Reporting Portal (SRP) tobacco questionnaire to improve the clarity, internal consistency and utility of the information being collected, according to the regulatory agency. The move will enhance the agency’s Center for Tobacco Products’ (CTP) public health surveillance for new and existing safety signals.
Some of the updates include:
Questions have been edited for inclusiveness and clarity that FDA is interested in health and product problems arising both from direct use of (by users) or exposure to (in nonusers) tobacco products
Questions about a tobacco product’s manufacturer are now designed with a search/select response list that provides submitters who know the manufacturer’s name with the full contact information for many of the manufacturers
The optional health questions now include questions about use of alcohol and other substances of abuse, and ask more details about diagnostic testing, treatment settings, and final health outcomes
Additionally, when manufacturers register an account in the SRP, they are asked to specify the type of manufacturer.
“FDA encourages anyone who has had a reaction to, or was hurt by, a tobacco product – or knows someone who experienced such effects – to visit the SRP and provide as much information as possible,” according to an FDA statement. “Reports from consumers/concerned citizens and healthcare professionals may be submitted anonymously, but including contact information allows FDA the option to find out more about the adverse experience. FDA reviews all tobacco-related SRP reports to identify new or concerning trends.”
Even in the slow summer months in a college town, Aj’s Liquor in Ames, Iowa, sells roughly 160 Juul pods a week to customers between the ages of 21 to 24.
Will Montgomery, sales representative for Aj’s Liquor, said customers are already transitioning to alternative brands for nicotine products as the FDA considers a marketing denial order against Juul. Even if the ban is successful, Montgomery said he doesn’t expect electronic nicotine delivery systems to decrease in sales.
“People are still going to need nicotine,” Montgomery said.
Taylor Boland, director of communications for Kum & Go, said all Kum & Go stores ceased sales of all Juul products on June 23 but resumed sales following the federal court’s block.
“Kum & Go remains committed to selling age-restricted products responsibly and complying with local, state and federal laws, orders, and mandates,” Boland said in an email response to Iowa Capital Dispatch.
Montgomery said the majority of customers who buy Juuls aren’t using them to stop smoking. If they were, they’d buy lower-nicotine products, he said.
Payton Hartz started vaping because of how convenient the products were. After Juul limited their flavors, Hartz transitioned to an alternative disposable vape brand.
The potential ban has “opened the door for other companies to push to the front,” Hartz said. “I feel like the throw-away vapes hadn’t existed until the Juul really came around. I feel like with the laws, all it has really done is push more companies to be even with Juul.”
The U.S. Food and Drug Administration has received more than 110,000 comments on the proposed rule that would end the sale of menthol cigarettes and nearly 60,000 comments on the proposed rule that would prohibit characterizing flavors in cigars.
Many wrote to oppose the ban, including business owners who said it would force them to cut jobs.
“If implemented, this proposal could hurt retailers and wholesalers in the U.S. and directly impact my bottom line,” wrote a tobacco retailer in Florida. “This ban targets a significant portion of my revenue; menthol cigarettes alone make up 36 percent of all cigarette sales in the United States. Additionally, adult customers who purchase menthol cigarettes also purchase gas, food and other items that my store depends on.”
Thousands of letters submitted online came from menthol cigarette smokers who perceived the proposed restrictions as an unfair attack on personal liberty.
“This regulation far beyond overreaches the authority that the government should have over the American people,” wrote one respondent. “We have age restrictions for a reason, and once you reach that age you should be able to make the choice to use any legal product that you wish.”
Others supported the proposal, saying removing menthol and other flavors would improve health and help rectify racial injustices.
“The ban on menthol in cigarettes is a necessary step toward health equity and health promotion,” wrote Kaelor Gordon. “This substance unjustly and unfortunately places the burden of tobacco use and death on Black individuals and communities of color at higher and disproportionate rates, so to ban menthol would be in tune with the anti-racist and health equitable culture we are strongly cultivating today.”
The U.S. Food and Drug Administration has temporarily halted its ban on Juul Labs products while the e-cigarette maker appeals the agency’s decision, the FDA announced on Twitter.
On June 23, the FDA ordered Juul Labs to pull its e-cigarettes from U.S. store shelves, saying the e-cigarette manufacturer had submitted insufficient evidence that they were “appropriate for the protection of the public health.”
A federal appeals court then granted Juul Labs a emergency stay of the order to give the judges time to evaluate the merits of Juul’s appeal. The e-cigarette company separately asked the FDA to stay its own order pending the appeal.
In a series of Twitter messages, the FDA said it had determined that there are scientific issues unique to the Juul application that warrant additional review. The agency stressed that the stay suspends but does not rescind it the marketing denial order (MDO).
The FDA initially rejected Juul’s request for a stay, prompting Juul to seek a stay of the ban in court, according to The Wall Street Journal.
In its court filing challenging the FDA ruling, Juul said the agency had overlooked more than 6,000 pages of data that the company had submitted to the FDA on the aerosols that users inhale. Juul also suggested that the FDA’s decision was influenced by political pressure.
The FDA’s marketing denial order for Juul surprised many in the vaping business, especially in the wake of marketing authorizations for vapor products manufactured by competitors such as Reynolds American Inc. and NJOY Holdings. A pioneer in the vaping segment and backed by Altria Group—a company boasting decades of experience with regulatory compliance—Juul labs appeared in a better position than most to meet the agency’s exacting standards.
Public health advocates criticized the stay of the FDA ruling.
“It is deeply disappointing and harmful to our nation’s kids that the FDA has issued an administrative stay of its marketing denial order for Juul’s e-cigarette products,” wrote Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, in a statement.
“This decision will allow the continued sale, at least for now, of the brand most responsible for creating and fueling the youth e-cigarette epidemic. We are nearly 10 months past a court-ordered deadline for the FDA to complete its review of e-cigarette marketing applications and can’t afford more delays by the FDA in removing kid-friendly products from the market.”
The U.S. Food and Drug Administration overlooked a key part of Juul’s premarket tobacco product application (PMTA) when the agency ordered Juul Labs’ products off the U.S. market, according to court documents.
In court filings Tuesday, Juul said the agency overlooked more than 6,000 pages of data that the company had submitted to the FDA on the aerosols that users inhale, according to the Wall Street Journal.
Juul also said the agency failed to consider the totality of Juul’s evidence, which the company said established that the public-health benefits of Juul products significantly outweighed the potential risks.
“FDA’s order acknowledged that ‘exposure to carcinogens and other toxicants present in cigarette smoke were greatly reduced with exclusive use’ of Juul products compared with combustible cigarettes,” Juul Labs stated in court documents.
The company added that the decision was reached “against a backdrop of immense political pressure” from Congressional lawmakers who “tainted the entire agency process” by pushing for a Juul ban. Juul officials say its products are held to a different regulatory standard than those made by rivals.
“If the court does not intervene, [Juul Labs] products will disappear from store shelves and politics will have won over sound science and evidence,” the filing said.
A federal appeals court last week granted Juul Labs a temporary stay of the FDA’s marketing denial order that requires the vaping company to pull its e-cigarettes off the U.S. market.
“The purpose of this administrative stay is to give the court sufficient opportunity to consider petitioner’s forthcoming emergency motion for stay pending court review and should not be construed in any way as a ruling on the merits of that motion,” the court wrote.
The FDA has until July 7 to respond to Juul’s motion and Juul Labs has until July 12 to reply to the FDA response if submitted.
“Having received the emergency temporary stay, we are now seeking the ability to continuously offer our products to adult smokers throughout our appeal with the court and science- and evidence-based engagement with our regulator,” said Joe Murillo, Juul Labs’ chief regulatory officer.
