Democratic senators question Juul about its Altria deal

Published April 8, 2019

Eleven democratic senators, led by Sen. Dick Durbin (D-IL), have penned a letter to Juul Labs, asking a series of questions around the product’s marketing, its effectiveness as a tool to help people quit smoking combustible cigarettes, sales figures and, perhaps most importantly, more information on the deal that gave Altria a minority stake in Juul Labs.

“The corporate marriage between two companies that have been the most prolific at marketing highly addictive nicotine products to children is alarming from a public health standpoint and demonstrates, yet again, that JUUL is more interested in padding its profit margins than protecting our nation’s children,” writes Sen. Durbin in the letter.

Questions in the letter include records around advertising and marketing spend for Juul products, as well as any changes that might have been made to Juul’s Youth Prevention Plan following the deal with Altria.

In late 2018, Juul announced it had sold a 35 percent minority stake of the company to Altria Group, makers of Marlboro cigarettes, for $12.8 billion. The company said that a partnership with Altria would help Juul market and distribute to currently addicted adult cigarette smokers.

In the letter, the senators cite the American Heart Association, which called the Altria/Juul deal “a match made in tobacco heaven.” Juul was already in hot water over its product’s popularity among young people, so it’s only expected that a partnership with traditional Big Tobacco would further fuel concerns among critics.

More from the letter:

JUUL’s decision to team up with Altria, the parent company of Philip Morris USA, is also bad news for children considering that Altria has a long and sordid history of spending billions to entice children to smoke through targeted campaigns that intentionally lied about the science and health effects from cigarettes. And their efforts have clearly paid off. According to the CDC, Altria’s Marlboro cigarette continues to be the most popular cigarette brand among children in the United States, with 48.8 percent of high school smokers preferring Marlboro cigarettes. Further, the proportion of high school smokers who smoked Marlboro cigarettes increased dramatically between 2012 and 2016, by a whopping 27 percent. While JUUL has promised to address youth vaping through its modest voluntary efforts, by accepting $12.8 billion from Altria—a tobacco giant with such a disturbing record of deceptive marketing to hook children onto cigarettes—JUUL has lost what little remaining credibility the company had when it claimed to care about the public health.

A Juul Labs spokesperson had this to say in response to the letter:

We welcome the opportunity to share information regarding JUUL Labs’ commitment to curbing underage use of our products while fulfilling our mission to eliminate combustible cigarettes, the number one cause of preventable death in our country. We agree that companies such as ours must step up with meaningful measures to limit access and appeal of vapor products to young people. That’s exactly what we’ve done, and we will do more to combat teen use to save the harm-reduction opportunity for the 34 million adult smokers in the United States. Don’t take our word for it — look at our actions. As part of our action plan deployed in November 2018 to keep JUUL products out of the hands of youth, we stopped the sale of certain flavored JUULpods to traditional retail stores, strengthened our retail compliance and secret shopper program, enhanced our online age-verification, exited our Facebook and Instagram accounts and are continuously working to remove inappropriate third-party social media content. We support the FDA’s draft guidance restricting the sale of certain flavored products, including JUULpods, at retail outlets and online, and will continue to work with FDA, Congress, state Attorneys General, local municipalities, and community organizations as a transparent and responsible partner in combating underage use.

U.S. Senators Patty Murray (D-WA), Ron Wyden (D-OR), Sherrod Brown (D-OH), Richard Blumenthal (D-CT), Jack Reed (D-RI), Elizabeth Warren (D-MA), Tom Udall (D-NM), Ed Markey (D-MA), Jeff Merkley (D-OR) and Chris Van Hollen (D-MD) joined Sen. Durbin in sending the letter. It comes just a month after the FDA proposed further regulations to the sale of flavored e-cig products.

Juul has until April 25 to provide answers and information in response to the letter.

Juul Labs hires former Apple employee to lead the fight against counterfeits

Published February 1, 2019

Juul Labs, the e-cig company under fire for its product’s popularity with young people, has brought on a new VP of Intellectual Property Protection with Adrian Punderson, formerly of PwC and Apple.

Punderson’s job is all about working alongside government agencies, as well as Juul Labs Intellectual Property VP Wayne Sobon, to combat the sale of counterfeit and infringing products. These can range from copycat vapes and pods that are actually marketed as Juul products all the way to products that are designed specifically to be Juul compatible without using the trademark.

These counterfeit and infringing products pose a serious threat to the company. Of course, no business wants its products infringed or its market share stolen.

With Juul, however, it’s far more complicated. Juul Labs is currently under heavy FDA scrutiny over the popularity of its products with minors.

“As you start to enforce generally on the sale of these types of products to youth, oftentimes they are going to look for another seller or distribution point of this product,” said Punderson. “The challenge is that oftentimes they’re going to platforms or places for this and you have no idea what the origin of the product is. A lot of it is counterfeit. So they get something they believe is Juul only to find out they have a counterfeit device or pod.”

He went on to say that, for Juul, a top priority is identifying counterfeit sellers and quickly putting that information into the hands of law enforcement. To the extent that they can’t take action, said Punderson, Juul will take civil action.

Part of the concern is that there is zero transparency into what ingredients are being used in infringing products, whereas Juul’s recipe at least meets the legal requirements for disclosure as it seeks full FDA approval.

Juul doesn’t currently have data around the scale of infringing products on the market, but counterfeit Juul products may inaccurately increase sales figures, intensifying scrutiny from the FDA.

Juul has already taken legal action against many infringing manufacturers and distributors, but Punderson aims to take Juul’s efforts against infringing products to a new level.

He sees the issue as threefold: Juul Labs must work to stop these products from being manufactured in the first place, ensure they aren’t allowed across borders into the country and take action against retailers who sell infringing products and remove them from the market.

“This isn’t a problem where there is only a production problem but there isn’t really a distribution or consumption problem,” said Punderson. “We don’t have the luxury of looking at the problem singly-faceted. From a global perspective, we want to stop the production and distribution of infringing products around the world, and we’ll work closely with government agencies attempting to stop illicit distribution of goods.”

Punderson previously served as managing director of IP Protection at PriceWaterhouse Coopers, VP of Global Anti-Counterfeiting/Anti-Diversion at Oakley and worked at Apple on the Intellectual Property Enforcement team.

Juul is currently viewed by many as a Facebook-ified, 2018 version of Marlboro. Notably, Juul Labs recently closed a $12.8 billion investment from Altria Group, the makers of Marlboro cigarettes. When asked why he chose to work for Juul, Punderson said his initial reaction was no. But after he did some research around the mission of the company, and thought of his own personal experience losing his father to emphysema, he came around quickly.

“I would do anything to get two or three more years with my dad, who was a lifelong smoker,” said Punderson. “[…] We’re trying to do good things here, move people away from tobacco and give them an alternative. To me, it’s a valuable, noble cause that’s worth being involved in and I’m proud to be here.”

It remains to be seen just how big of an issue infringing products are for Juul and other above-board e-cig makers, but Juul is ramping up its efforts to combat copycats from getting into the hands of consumers.