Juul Labs did everything in the power players’ handbook to cement its status in Washington. The Silicon Valley start-up worked to make friends in the nation’s capital. It hired senior White House officials wired into President Trump and the first family. It sent politically connected officials to the West Wing to extol its products. It spent big on lawmakers in both parties.
But last week, the e-cigarette giant, along with the rest of the vaping industry, was caught off guard when President Trump decided to take drastic action, banning almost all flavored vaping products. “We can’t have our youth be so affected,” he said in the Oval Office.
The scope of the announcement stunned most of the industry, even big companies like Juul that have carefully nurtured relationships with policymakers to gain influence. But lately, those companies have also been undercut by a stream of reports about teen e-cigarette use and a mysterious lung illness tied to vaping — with a seventh death, in California, announced Monday.
Now some are going into crisis mode to try to protect against a ban that would probably put small operators out of business and result in million-dollar losses for the giants. Some companies have harnessed staffers and lobbyists with ties to the White House and Capitol Hill to gather information about the still-unfinished policy and figure out how they might navigate a path forward, according to current and former administration officials and others with knowledge of the efforts.
Market-leading Juul has sent lobbyists to talk to Hill Republicans but has not yet decided whether to challenge the ban on mint and menthol e-cigarettes, its two biggest moneymakers. The company might argue to keep its menthol flavor on the market because it is legal in cigarettes and it wants to give smokers an alternative to menthol cigarettes, a Juul official said.
“They’re still actively talking to folks to try to help shape what happens,” said a former senior administration official who said he has recently spoken with Juul lobbyists. “The fight they’re making is all about mint and menthol, to be able to keep it.”
Ironically, the company accused of igniting the underage vaping epidemic a few years ago might benefit from the ban over the long term because the prohibition will be even harder on smaller competitors, some experts say. Tobacco giant Altria owns about a 35 percent stake in Juul.
Smaller players, such as the Vapor Technology Association, say many of its members could not survive such a ban and vow a fight. The group plans to send hundreds of vaping advocates to swarm Capitol Hill on Wednesday to express their ire.
“We are going to make it clear that this is the wrong approach, that it will literally cut down an entire industry that has grown up, with 166,000 jobs, to challenge the tobacco industry, and they are mostly small businesses,” said Tony Abboud, executive director of the trade group.
Vaping advocates and consumers, meanwhile, are bombarding the White House and members of Congress, complaining on Twitter and launching petition drives to protest the ban, said Greg Conley, president of the American Vaping Association.
Some of them were heartened by a Trump tweet Friday evening that suggested vaping might, in fact, be a good alternative to cigarettes, and the ban was simply to “make sure this alternative is SAFE for ALL!” and to keep e-cigarettes out of the hands of children.
A senior White House official said the tweet reflected the president being told some supporters were upset by the ban and did not signify a policy shift.
Despite its strong deregulatory approach, the Trump administration started focusing intensely on e-cigarettes a little more than a year ago when then-FDA Commissioner Scott Gottlieb saw data showing a 78 percent jump in high schoolers using e-cigarettes — a product ostensibly designed to help adult smokers quit cigarettes.
“E-cigs have become an almost ubiquitous — and dangerous — trend among teens,” he said then.
Over the next few months, Gottlieb met with e-cigarette makers, demanding they take steps to reduce the use of their products by minors and threatening sales restrictions and tighter regulation.
Around the time he announced his departure in March, he summoned the heads of Juul and Altria to a meeting where he accused them of reneging on commitments to quell teen use, according to people familiar with the discussions. He also said the companies were trying to undermine the FDA by going over his head to the White House, where the companies found a more sympathetic ear, they said.
Juul says it has supported policies to restrict youth vaping but declined to comment on that meeting. Altria spokesman David Sutton said it has consistently supported administration efforts to reduce teen vaping.
On the way out the door, Gottlieb also proposed sweeping sales restrictions — but not a ban. Health and Human Services Secretary Alex Azar promised to continue the anti-youth-vaping agenda, suggesting officials might consider tougher action if youth vaping continued to increase.
Then came a summer of devastating headlines about a mysterious vaping-related illness that had sickened 380 people in 36 states and resulted in seven deaths. Many of the victims used illicit marijuana products, according to health authorities and clinicians. But officials have not been able to unequivocally rule out nicotine products, giving vaping foes new ammunition to press their case for a crackdown.
Melania Trump began expressing concerns about e-cigarettes, according to senior White House officials, and Ivanka Trump also got involved in the conversation.
Some White House aides and political advisers were also concerned the vaping issue could become a 2020 campaign problem.
“Juul has created more public outrage in a shorter period of time than any other company I can think of,” said Matt Myers, president of Campaign for Tobacco-Free Kids. “When you prey on middle-class white kids, Republican or Democrat, you will make a lot of people angry.”
As the number of those illnesses rose, Azar got new data right after Labor Day showing that 27.5 percent of high schoolers in 2019 said they had used e-cigarettes in the past 30 days, up from 20.8 percent the year before — the second big jump in two years. The data also pointed to the surging popularity of mint and menthol e-cigarettes.
Alarmed, Azar and other top administration officials, including White House counselor Kellyanne Conway, domestic policy chief Joe Grogan, acting FDA Commissioner Norman “Ned” Sharpless and adviser Ivanka Trump had two meetings on the issue without Trump, including one on Sept. 9.
That same day, Melania Trump tweeted she was “deeply concerned about the growing epidemic of e-cigarette use in our children.”
Officials kept a close hold on the information, strenuously avoiding leaks that would spur lobbyists to jump into action.
On Sept. 11, Trump was presented with a number of options, ranging from doing nothing to removing almost all vaping flavors from the marketplace. The president, who had previously expressed no opinions about vaping, had also been reading stories about people dying from a mysterious lung disease, say White House officials. Faced with a perfect storm of worsening youth vaping numbers and fatal illnesses potentially related to vaping, he chose the toughest course.
The policy, as laid out last week, would bar sales of almost all flavored e-cigarettes — mint and menthol, as well as sweet and fruity ones — in stores and online. The products would not be permitted back on the market until, and if, they received FDA approval. Only tobacco-flavored vapes would be exempt.
Officials said the guidance would be published in several weeks and go into effect 30 days after that. Flavored products would have to come off the shelves then. Manufacturers could seek FDA approval to bring their products back to the marketplace, but it’s far from clear they would be successful. Those manufacturers had already faced a May 2020 deadline for such applications, which among other things would need to show whether the product would make it less likely adults would smoke regular cigarettes and not entice young people to start smoking.
But under that earlier plan, companies could have kept their products on the market for some period of time while the agency weighed approval.
“The only players that are going to be left are the very largest companies which are, essentially, the tobacco companies,” said Michael Siegel, a professor of community health sciences at Boston University. “Those are the only companies that are going to have the resources to put in the applications that are going to be required by the FDA. I’m sure that they’re already getting these applications together.”
Juul has said it supports “the need for aggressive category-wide action on flavored products,” and will comply with the final FDA policy, when it takes effect.
That doesn’t mean, Juul-watchers say, it won’t try to change the policy before it’s finalized.
Last year, under mounting FDA pressure, Juul voluntarily stopped selling all flavors but mint, menthol and tobacco in retail outlets — and then watched as competitors and counterfeiters filled the void with their own sweet and fruity products. Since then, Juul says it has been eager for a government crackdown on those products to level the playing field, as well as to curb youth vaping.
Other big e-cigarette manufacturers may be hesitant to battle the administration head-on, as well. But they will almost certainly speed up applications to the FDA to try to get soon-to-be-banned flavored e-cigarettes back on the market.
Survival of the biggest?
If any company might be positioned to navigate or moderate the policy, it would be Juul. Its staff and consultants include a who’s who of Trump world, including Josh Raffel, a former spokesman for Jared Kushner and Ivanka Trump; Johnny DeStefano, a former counselor to the president; Rebeccah Propp, former director of media affairs for Vice President Pence, and Tevi Troy, who worked in the George W. Bush administration along with Alex Azar, the current health and human services secretary.
DeStefano, who is a Juul consultant, remains in touch with campaign and White House officials, although he is not allowed to lobby them for Juul under White House ethics rules. The other former Trump administration officials also are not allowed to contact their former White House colleagues on behalf of Juul.
In 2017, the start-up had just two lobbyists. Now, it has at least 10 times that number, including former staffers for House speakers Paul D. Ryan and John Boehner, according to federal lobbying disclosures. The company has already spent nearly $2 million in the first two quarters of this year on lobbying, up from $1.64 million for all of last year.
The political action committee for Altria Group, meanwhile, donated $500,000 to Trump’s inaugural committee and was a major contributor to Pence’s “Great America” committee. It also hired Jeff Miller, who has close ties to Pence, to lobby on tobacco and e-cigarette issues. Miller has already reported bundling more than $1 million in contribution’s to the Trump 2020 campaign.
Despite those broad investments, Gottlieb, the former FDA commissioner, said he doesn’t think Juul has been very effective.
“Juul took a shotgun approach to try to lobby this issue,” he said in a recent interview. “They were neither targeted nor effective in what they did.”
He said he thinks the company’s efforts hurt the whole industry.
Other e-cigarette companies with ties to deep-pocketed tobacco companies include Vuse, which is owned by tobacco giant Reynolds American, and Swisher International, a cigar maker that also sells e-cigarettes. Both are represented by Brian Ballard, a veteran Florida lobbyist who represented Trump’s businesses there and worked on the president’s 2016 campaign.
Reynolds paid Ballard’s firm $1.1 million to lobby entities including Congress, White House, HHS and the vice president’s office since 2017. Swisher, which hired Ballard in April, has so far paid the firm $60,000, records show. Reynolds American’s PAC donated $15,000 to committees for the Trump campaign and the Republican National Committee in 2016.
While lobbyists are not required to report exactly how much they spend on specific issues, much of the money would probably have gone to work on vaping-related issues — including Trump’s proposal in March for $100 million a year in user fees on the e-cigarette industry, and bills related to age restrictions.
Philip Morris International, for example, won FDA approval in April to market its “heat-not-burn” tobacco product called IQOS in the United States, but the agency has not yet ruled on whether the company can describe it as a “modified risk tobacco product” — in other words, safer than a cigarette. The company reported spending $2.1 million in the third quarter of last year to lobby on issues related to that.
Some other firms say their lobbying also supports legislation that would raise the legal age for smoking and vaping to 21.
“We prefer clean, a.k.a. straightforward, bills that do that,” said Altria spokesman Sutton.
Anu Narayanswamy contributed to this report.
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