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FDA orders Juul e-cigarettes to be removed from U.S. markets

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Yahoo Finance health care reporter Anjalee Khemlani explains how the FDA has banned Juul e-cigarettes and what it could mean for other e-cigarette companies.

Video Transcript

[MUSIC PLAYING]

- The US Food and Drug Administration plans to pull Juul e-cigarettes off the US markets. That's after a two-year investigation into the company. Yahoo Finance's Anjalee Khemlani is following this story for us.

And Anjalee, it's official now, the FDA is saying in a statement, those currently on the US market-- referring to Juul products-- must be removed or risk enforcement action. Tell us a little bit more about what came to this. We know that they had been looking at it. What ultimately led to this?

ANJALEE KHEMLANI: Yeah, Juul really got itself in a lot of hot water because, actually, its flavored pods, right, the ones that were like candy-flavored and fruit-flavored, really was appealing to youth. And this is part of a crackdown on youth addiction. And that's where this is coming from.

We know that e-cigarettes have been largely identified as a way to wean adults off of traditional cigarettes. And so that's one benefit the FDA has identified for e-cigarettes. We know that other e-cigarette makers have been approved, one competitor, of course, in the US, Reynolds.

So that's an interesting sort of sidebar to the story of Juul, which has had such a tumultuous last few years, starting in 2018 when the FDA first identified these problems with the spike in use in youth, 48% year over year that year. And that really is what led to the crackdown. Juul voluntarily stopped selling those sweeter flavors.

And of course, we know parent Altria has had a 35-- not parent, sorry, Altria had a 35% stake, and then decided not to pursue its own e-cigarette products. Instead, that stake really boosted Juul to a significant valuation that has now plummeted to just $1.6 billion as of this year. So a lot going on when it comes to the company's fall.

Now, Juul really has borne the brunt of this effort on youth addiction. It remains to be seen what else will happen. The FDA has taken action against other e-cigarette users, as well, and really focused on making sure that the pods that are available are specifically menthol or tobacco flavored and not appealing to youth use.

- Yeah, and what's interesting, too, is that the release makes note that the products that are covered here are pods that have nicotine concentrations of a certain level. And this kind of is the second punch, if you will, after earlier this week hearing from the White House and the FDA that they'll propose a product standard on a max nicotine level, not just in e-cigarettes, but in cigarettes entirely. How do these things kind of work together?

ANJALEE KHEMLANI: So yeah, and I'm glad you brought that up, because that is the second part of why Juul specifically is under watch. Because they have had questions about what is in their product. And they haven't provided enough-- according to the FDA, they haven't provided enough data to the regulatory authority to say that their product is, in fact, safer or why they specifically chose that 5% for their nicotine levels.

And that is really a concern, as well as some parts of the ingredients. I'm not going to get too nerdy here with the details. But there are concerns about the types of chemicals that they're using, as well, which differs them from other players in the market.

And of course, there were ahead of the game, right? They did come out first. So as you know, there are always versions and upgrades that need to be done. So we'll see what happens with the company. But it really is quite a blow to this company.