E-cigarettes to face new sales limits from FDA, says official

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.

Spokesmen for the FDA and Juul declined to comment. Plans for the new regulations were reported Thursday by the Washington Post.

British American Tobacco shares jumped as much as 2.3 percent in early London trading on Friday, while Imperial Brands Plc climbed as much as 2.5 percent. 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.

Tobacco activists said the FDA should impose even greater restrictions, including banning online sales. “It’s not enough,” said Meredith Berkman, co-founder of Parents Against Vaping E-Cigarettes. “There has to be a complete ban on flavors everywhere.”

The long-expected move by the U.S. comes amid similar concerns overseas. At least 27 regions including Singapore and Hong Kong have banned the alternative devices, heeding advice from the World Health Organization. Others such as the U.K. and New Zealand have taken a more accommodating stance.

Andre Calantzopoulos, chief executive officer of Philip Morris International Inc., said last month he expected regulators across the globe to become more open to cigarette alternatives and reverse their bans. Yet he said the possibility of FDA oversight of e-cigarettes was a fair move, as the agency lacked the authority to regulate those devices before they went on sale.

“It’s actually a positive thing that the FDA is acting,” Calantzopoulos said in an October interview.