A pointed claim made by the Food and Drug Administration commissioner about how teenagers obtain electronic cigarettes has served as a shot-across-the-bow to convenience stores.
Scott Gottlieb was interviewed Friday on cable business channel CNBC about the FDA’s efforts to tighten retail marketing and sale restrictions on e-cigs with top-selling Juul drawing the main focus.
Juul Labs Inc. entered the mainstream retail marketplace in January 2015. Juul is sold in the form of a pen or a USB flash drive that’s easy to use — and hide — because the vapor typically does not have a smell and quickly dissipates.
That product model and non-tobacco flavorings have drawn scrutiny from the FDA and public health groups, along with intense criticism from anti-tobacco advocates because they say it appeals to teenagers.
Gottlieb told CNBC that in the past year, there has been a 77 percent increase in high school students’ use of e-cigs based on a small sample size nationally.
Gottlieb has cited e-cigs’ potential to serve as a reduced-risk product for adult smokers.
However, he has made it clear in recent months the FDA will limit the availability of flavored e-cigs if necessary to curtail teenage consumption.
To that point, Gottlieb said the FDA is considering the sale of e-cigs being limited to vape shops, and taken out of convenience stores.
“This starts with the actions we’re taking … to crack down on retail sales of e-cigarettes to minors,” Gottlieb said. “A lot of the sales we’ve seen to minors are happening in the brick-and-mortar stores, the convenience stores.”
Anti-smoking advocates say the flavors are a pivotal element in helping adults switch from combustible traditional cigarettes.
The proposal is particularly sensitive to convenience stores since traditional cigarette sales represent 28.5 percent of all in-store sales, while other tobacco products, such as e-cigs and moist snuff, are 5.6 percent.
Food service products are second at 22.5 percent, followed by packaged beverages at 15.8 percent, snacks and candy at 9.9 percent and beer at 8.5 percent.
“It’s likely that we will put more restrictions on selling e-cigs online, if we allow them to remain online,” Gottlieb said. “We could ban online sales until regulations are in place.
“Most of these products are sold through brick and mortar stores. We’re looking at what can be sold in brick-and-mortar stores and what flavors should be sold in regular stores, whether 7-11, a truck stop or a gas station.
“Or whether, if there are flavored e-cigs on the market, they should be confined to adult-only vaping shops, which generally do a better job of checking ID,” he said.
On Sept. 12, the FDA announced it had sent more than 1,300 warning letters and civil money fines to retailers who illegally sold the top-five selling e-cigs, led by Juul at 74.5 percent, according to the latest Nielsen data.
Vuse is made by R.J. Reynolds Vapor Co., MarkTen XL by Altria Group Inc. subsidiary NuMark LLC, blu Cigs by Imperial Brands Plc subsidiary Fontem Ventures; and Logic, affiliated with Japan Tobacco.
Gottlieb said the cartridge-styled e-cigs are more problematic compared with the open-tank version more commonly sold in vape shops. He said the open tank e-cigs “aren’t generally used by kids.”
Lyle Beckwith, senior vice president of government relations for the National Association of Convenience Stores, said Gottlieb’s comments unfairly targeted convenience store operators without providing data to back up his assertions.
“That convenience stores have been singled out causes us grave concern since we are selling legal products in our stores,” Beckwith said.
Beckwith cited the success of its “We card” initiative in reducing the sale of tobacco products to minors, saying “we came out with an e-cig policy before the FDA did.”
“We look at every violation the FDA cites of convenience stores and we go to the retailers to provide them We card resources so they can sell tobacco products legally.”
The letters and fines were in response to those e-cigs — which comprise 97 percent of the U.S. market share — being sold illegally to minors “during a nationwide, undercover blitz of brick-and-mortar and online stores” from June to Aug. 31.
Gottlieb also announced Sept. 12 that the FDA announced it would consider banning the sale of flavored e-cigs if manufacturers can’t prove they are doing enough to limit youth consumption of the products.
The FDA is requiring those manufacturers to submit within 60 days “robust” plans on their efforts. If the agency does not find the plans to be “compelling,” it could pull flavored e-cigs out of the marketplace.
“We see clear signs that youth use of electronic cigarettes has reached an epidemic proportion, and we must adjust certain aspects of our comprehensive strategy to stem this clear and present danger,” Gottlieb said.
Beckwith said the trade group “is anxious to see the stats to support that statement.”
“The FDA has been vague about its surveillance of vape shops,” Beckwith said. “We specifically asked for that information three weeks ago when we met with the FDA.
“Given we are selling legal products, we want the FDA to continue to provide a level playing field for their sale,” Beckwith said.
Data shows high use among high schoolers
Gottlieb said the FDA plans to make public in November the data from which it is considering the retail restrictions. He said the data will show that about 20 percent of high school students are frequent e-users, typically defined as at least once over a 30-day period.
Gottlieb said he has met with officials with Reynolds, Juul and Altria within the past two weeks.
“We have had some good discussions and put some good ideas on the table,” Gottlieb said.
“We have a problem with access. They are too accessible to kids and they are too appealing to kids right now. It’s really the flavored products that are driving youth use.”
North Carolina’s attorney general, Josh Stein, followed Gottlieb’s lead on Oct. 15 by saying his office is investigating the marketing and operational practices of Juul Labs.
Gottlieb said the FDA has inserted into the National Youth Tobacco Survey for 2019 a specific question about which e-cig that they regularly use “so we’ll have an accurate read ... to know exactly whose products are most popular with youth, who are using Juul.”
“We need to look at the marketing because there will be another product in a year from now that will be attractive to youth,” he said.
Gottlieb said the FDA may conduct other inspections of e-cig manufacturer operations similar to how it gathered marketing documents at Juul’s San Francisco headquarters.
He said the goal is proving or disproving that e-cig products at retail currently were being sold prior to an Aug. 6, 2016, grandfather date for such products to be excluded from heightened regulatory restrictions.
Wells Fargo Securities analyst Bonnie Herzog said in response to Gottlieb’s statements that “we now think it’s more likely than not that the agency: bans online sales of e-cigs until it is able to formulate appropriate restrictions via regulation; possibly restricts the sale of cartridge-based e-cigs to vape shops; and bans/restricts certain e-cig flavors with high youth appeal.
“Interestingly, based on Gottlieb’s comments, we’re not sure the FDA will reduce or limit the level of nicotine in e-cigs especially, considering the FDA’s goal to convert adult cig smokers to reduced risk products.”
“Gottlieb claimed to have substantial evidence of Juul’s specific sales to kids,” Herzog said. “While it appears this could be a significant game-changer for Juul, but not game over, we think Gottlieb’s comments suggest Altria and Reynolds are much better positioned.”
Reynolds said Friday it had no comment on Gottlieb’s proposal.
Altria said in a statement that “the FDA said it will propose further regulations on the e-vapor category through the rulemaking process. Until any proposals are put through that process it’s premature for us to comment.”
Juul said in response to Gottlieb’s comments to CNBC by repeating an earlier statement that “we are committed to preventing underage use, and we want to engage with FDA, lawmakers, public health advocates and others to keep Juul out of the hands of young people.”
“We look forward to presenting our plan to address youth access in the 60-day time frame as outlined by FDA.”
Gregory Conley, president of the American Vaping Association, said that “limiting sales of flavored vaping products to adult-only stores is undoubtedly preferable to the sort of heavy-handed regulatory measures that Commissioner Gottlieb has floated in recent months.”
“Nonetheless, the fact remains that tens of millions of Americans — particularly those in rural areas — do not live in close proximity to a vape shop.
“For these adults, vaping products being available in traditional retail outlets or through age-verified Internet sales is not just a matter of convenience; it’s the only reasonable way for many to access these harm reduction products.”