It went from terrible to worse. The maker of e-cigarettes narrowly survived a Federal Drug Administration effort to ban its products nationwide, only to be hit with a $500 million settlement this week. The company agreed to pay $439 million to end a two-year investigation into whether it marketed its products to children and teens. A long list of injunctive terms with the effect of winnowing down the company's marketing and sales practices will be agreed to by Juul. As part of the settlement, the company agreed to stop marketing to people under the age of 35, refrain from advertising on public transportation, and stop funding education programs. The monetary penalty will be paid over a period of six to 10 years, with the penalty rising as the company pays it off. If it takes the entire 10 years to pay the penalty, it will end up paying $476 million. The Connecticut Attorney General said in a statement that Juul marketed its products to young people, manipulated their chemical composition to be palatable to inexperienced users, and misled consumers about the nicotine content and addictiveness of its products. We secured hundreds of millions of dollars to help reduce nicotine use and forced JUUL to accept a number of strict injunctive terms to end youth marketing. The settlement was acknowledged on Juul's website.
Juul said that they remained focused on the future as they work to fulfill their mission to transition adult smokers away from cigarettes.
Juul did not reply immediately.
The investigation was led by Attorneys General from Connecticut, Florida, Nevada, Oregon and Texas. The Texas AG claims that Juul achieved its dominance atop the mountain by engaging in an advertising campaign that appealed to youth. Young models, launch parties and free samples were used to market to children. According to the investigation, the packaging of the devices didn't clearly state that they used nicotine.
With a technology focused, sleek design that could easily be concealed, JUUL sold its products in flavors known to be attractive to under age users. The chemical composition ofJUUL's product was changed to make it less harsh on the throats of young and inexperienced users. JUUL used age verification techniques that were not effective in preserving its customer base.
The settlements put an end to one of the biggest threats to the company. According to ABC News, there are at least nine more lawsuits against Juul from other states. There is the whole saga with the FDA.
The FDA banned Juul from selling its products in the US after issuing a marketing denial order.
The company is still alive and well. Less than a day after the announcement, the company appealed the ban. The FDA was accused of singling them out among a crowded field of nicotine products. The FDA decided to stay the marketing denial due to numerous scientific issues unique to the JUUL application.
The FDA will have to do a complete review of all of the science and evidence before it will reverse its marketing denial.
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