Juul to replace CEO, accept proposed ban on most flavored vaping products

E-cigarette maker Juul Labs, at the center of a public uproar over a surge in youth vaping, said Wednesday its chief executive officer is stepping down and will be succeeded by a top official from Altria Group, a part-owner of Juul.

Juul also said it was immediately suspending all product advertising in the United States, including its "Make the Switch" campaign that has drawn fire from the Food and Drug Administration for making safety claims for its products, and will refrain from lobbying on a planned ban on flavored vaping products recently announced by President Donald Trump. In another sign of the vaping fallout, Altria and Philip Morris International on Wednesday said they had ended merger talks.

The sudden developments underscore the concerns prompted by continued increases in underage e-cigarette use and growing alarm over a mysterious lung ailment linked to vaping that has stricken at least 530 people, nine of whom have died. Officials said Tuesday they still don't know the cause.

At a hearing Wednesday held by a subcommittee of the House Energy and Commerce Committee, lawmakers demanded to know why the FDA had not taken action against vaping sooner. Rep. Joe Kennedy, D-Mass., called it a "massive regulatory failure."

"In retrospect, the agency should have acted sooner," conceded Acting FDA Commissioner Norman "Ned" Sharpless, who replaced agency chief Scott Gottlieb earlier this year. Sharpless said earlier data had suggested youth vaping was declining and noted the agency has issued thousands of warning letters and penalties involving underage sales in the past year and a half.

Gottlieb, who in 2017 postponed the deadline for product-applications for e-cigarettes and then moved to accelerate it as the youth-vaping crisis emerged, said in an interview that the agency acted "boldly to reduce death and disease from tobacco including calling youth vaping an epidemic for the first time and seeking broad restrictions" on e-cigarettes sales, sometimes in the face of "intense opposition."

Juul, which has tried to market itself as an alternative for the adult smoker, has been heavily criticized for contributing to the youth-vaping problem. The company has denied marketing to kids. It is under investigation by the FDA, the Federal Trade Commission and others.

Several states and cities recently have moved to restrict flavored e-cigarettes or ban vape products altogether. On Tuesday, for example, Massachusetts Gov. Charlie Baker prohibited the sale of all vape products for four months. Walmart recently said it would stop selling e-cigarettes in the United States.

Amid the tumult over vaping, the future of Juul, once a spectacular Silicon Valley success, is unclear. Kevin Burns, the departing chief executive officer, is being replaced by K.C. Crosthwaite, Altria's senior vice president and chief strategy and growth officer. Altria owns a 35% stake in Juul.

Crosthwaite oversaw "commercial and regulatory efforts" related to the launch in the United States of IQOS, a "heat-not-burn" alternative to cigarettes, Juul said in a news release. IQOS is made by Philip Morris International and marketed in the United States by Altria.

Juul critics were not assuaged. "This announcement strips away any doubt about Juul," said Matthew Myers, president of the Campaign for Tobacco-Free Kids. "It is Big Tobacco."

He warned against "thinking that Juul has changed. They have promised reform before only to find new ways to deceive the public and policy makers."

But Hyunseob Kim, professor of finance in the Johnson Graduate School of Management at Cornell University and an expert in corporate governance, said that a former tobacco executive was "a natural pick" for Juul, given tobacco companies' experience with federal regulators - a key constituency for the embattled firm.

Altria and Philip Morris International split up in 2007 but announced in August that they might combine to form a behemoth to focus on e-cigarettes. On Wednesday, Altria's chairman and chief executive Howard Willard said in a statement that the companies could not reach agreement but would continue to work together to commercialize IQOS in the United States.

Juul, whose sleek and stylish e-cigarettes have enjoyed soaring popularity among young people, has triggered outrage among parents and teachers in recent years. Youth vaping jumped sharply in 2018 and then again in 2019, according to government data.

Trump, at a White House meeting Sept. 11, said he supported banning all flavored e-cigarette products except those formulated to taste like tobacco. The FDA is hammering out the policy and is expected to issue it in the next several weeks, Sharpless said. Under the plan, flavored e-cigarettes will have to be removed from the market until - or if - they get approval from the FDA, a process that could take months or years.

Juul, under pressure from the FDA, stopped selling many of its flavored products in retail settings late last year. But it still sells mint and menthol flavors in stores - and recent data showed that those products have become increasingly popular among young people. The policy outlined by the FDA and the White House earlier this month would include mint and menthol flavors, as well as sweet and fruity ones, and cut Juul sales by 80 percent, according to estimates.

Asked at the hearing about the rise in lung diseases tied to vaping, Sharpless and Anne Schuchat, principal deputy director of the Centers for Disease Control and Prevention, said they have not pinpointed a single substance, additive or product as the cause. Most cases involve THC, though some people who have been sickened said they vaped nicotine products. Schuchat said she expects this week's tally of reports to be "hundreds higher" than 530.

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The Washington Post’s Taylor Telford and Lena H. Sun contributed to this report.