The Daily - The Promise and Peril of Vaping, Part 2: The Story of Juul

Episode Date: October 30, 2019

When Juul was created, the company’s founders told federal regulators that its product would save lives. Those regulators were eager to believe them. Today, part two in our series on the promise and the peril of vaping.Guest: Sheila Kaplan, an investigative reporter for The New York Times covering the intersection of money, medicine and politics. For more information on today’s episode, visit nytimes.com/thedaily. Background reading: Here’s the first episode in this two-part series, describing how one man’s mysterious death changed our understanding of vaping and its consequences.The federal government has repeatedly delayed or weakened efforts to regulate e-cigarettes, allowing a new generation to become addicted to nicotine.

From The New York Times, I'm Michael Bavaro. This is The Daily. Today. From the moment that Juul was created, it told federal regulators that its product would save lives. Those regulators were eager to believe it. Part two in our series on the promise and the peril of vaping. It's Wednesday, October 30th.

Sheila, where does the story of Juul begin? The story starts in around 2007 on the beautiful palm tree lined campus of Stanford University, where two design students, James Monsis and Adam Bowen, are trying to figure out how to stop smoking. Sheila Kaplan has been investigating Juul for the Times. The problem is that products that are available for smokers to quit, the nicotine patch or gum, often don't work. A lot of smokers don't like them. So they wanted to come up with a new alternative for health-conscious smokers. And they came up with this very slick new e-cigarette, and it's basically a heating unit. And you add in a liquid nicotine flavor pod into the unit, and when it's heated, it gives off a vapor that you can draw into your lungs and get your nicotine fix. Mm-hmm. Hence the term vaping. that you can draw into your lungs and get your nicotine fix.

Hence the term vaping. Yes. And it's very small. It looks like a flash drive. You charge it up in your computer. It's tiny. It's portable. It looked like it was designed by Apple. You know, they wanted their product to disrupt the industry. And in 2017, after a few fits and starts, they launched Juul Labs. So their target audience is kind of like themselves, smokers who want to quit. Right. But they can't say that on the box. And the reason they can't is because the FDA doesn't permit them to make health claims for the product yet.

Juul hasn't been studied by the FDA. Juul hasn't submitted evidence yet to show that it's safer than cigarettes. And until then, Juul has to be very, very careful about its wording. Juul can't make claims that the product will help people quit. It's not approved as a smoking cessation device. They can't even say that it's safer, although they imply it. But the FDA seemed very excited about Juul and the other e-cigarettes. And in July of 2017, they said they were going to give Juul and the other companies five extra years to prove their health claims. Wow.

In the meantime, the FDA allows them all to stay in the stores. So there's a sense that the agency has been very friendly to the vaping industry. And Sheila, what did that suggest to you? to the vaping industry. And Sheila, what did that suggest to you? I think they looked at the product and thought, we still have questions about how it will work, but for the first time, there was a product that smokers might actually enjoy instead of smoking.

And if you're the FDA, that seems like a pretty good thing. Yeah, if you're the FDA, that's great news. The FDA says again and again that smoking cigarettes is the greatest preventable cause of death in the U.S. And they have been trying so many different things to try to get people to stop. And this was something that even looked a little glamorous. Maybe it would work. something that even looked a little glamorous. Maybe it would work. So with this implicit support of the FDA, I assume that Juul is kind of leaping headlong into this market of smokers who want to quit.

Well, no, actually. Publicly, Juul is saying that they want to be an alternative for smokers. But the advertising and the social media is really all about how cool Juul is. And what does that effort look like? Well, Juul takes on a very creative Silicon Valley-like ad campaign. Ads that had attractive young people vaping in glamorous settings at the beach, concerts. They have influencers on Instagram and Facebook who are beautiful and in love and vaping together. Jewel gets movie stars to vape their products. Oh, my vape pen?

You've got Dave Chappelle. You want to hit my vape pen? Awkwafina. I found out about Jewel very early in the process. Leonardo DiCaprio. At this year's Golden Globes, Leonardo DiCaprio was spotted vaping. But beyond that, Juul is trying to develop word of mouth. So they go around all over California.

They have this overnight pajama party in a Hollywood cemetery where they give everybody free jewels. Cemetery. Yeah, yeah. I'm not sure I understand the symbolism there, but... But none of these ads talk about quitting. The movie stars who were photographed vaping just look extremely cool. So how does all of this marketing work for Juul? It works great. They went from being a company nobody had heard of, selling a product nobody

even knew there was a market for, to owning the entire category. they went from 200 million in sales in 2017 to 1.3 billion the following year. Wow. The product became another word for vaping, as people say, juuling. So without question, they're the number one vaping company out there. Yes, but that's really just a small part of the story. What's up, guys? As you can see in the title, we're going to be doing a review on the Juul. This is a super popular vape, and we're just going to take some rips. We're going to get some nice nicotine buzz going. Yo, welcome back to another video. Today, I'm going to tell you how to sneak your jewel to school. It was around then, in the summer of 2018, that lots of reporters were coming over to me and saying that their kids were using this

new teeny little device called a Juul. And what on earth is it? And should we be worried? And what did you say? I said I had no idea, but I would look into it. And then all of a sudden in September 2018, this big bomb drops for Juul. Well, there's a new federal survey. The FDA releases its annual teen smoking survey.

Twice as many high school students are using e-cigarettes compared to last year. It is the biggest one-year increase in the 44-year history of that study. And most of the teens vaping are kids who never smoked cigarettes. The FDA says there were 2 million middle school and high school age students using e-cigarettes last year, and it's estimated Juul has about 70% of the market share. And most of the teens were using Juul. Hmm. And the question, of course, is what makes Juul so appealing to kids? so appealing to kids?

Well, it seems that it's a cool new thing. It's kind of expensive, so it becomes sort of a status symbol to have one. And beyond that, it comes in kid-friendly flavors. Like what? Mango, watermelon, creme brulee, and menthol, among others. And when you say kid-friendly, the assumption here is that an older person trying to quit smoking is not going to be vaping with creme brulee-flavored Jules.

Well, that's what most of the public health advocates say. To be fair, Jules says that older people who are trying to quit do like the dessert flavors and the fruit flavors, but they are also very, very appealing to kids. And so the FDA, which had been a friend to Juul and had given Juul and the other e-cigarette makers more time to establish themselves before being regulated, realizes they have made an enormous mistake. And the FDA very quickly decided they had to take action. They went to Juul and said, okay, guys, you've got 30 days to show us a plan explaining how on earth you're going to keep the products away from kids. If you can't do that, we're going to take you off the market.

Wow. For Juul, this is an extinction-level event. In the face of massive government pressure, e-cigarette company Juul will no longer sell some of its product on store shelves. flavored pods out of stores and limit their sales only to online purchases with strict age verification. The company has long maintained they launched the flavors to help adults switch from regular cigarettes and don't want kids to use their product. They didn't change the flavors, but they changed the names. So Fruit Punch became Fruit.

Creme Brulee became Creme. Cool Cucumber lost its coolness and just became Cucumber. And they promised not to use young people or those who looked young in their ads. And finally, they launched this ad campaign. Make the Switch. My name is Stacey. I'm 52 years old. It features testimonials from smokers who have quit. I was a pack-a-day smoker for 33 years. And how much better they feel. I really, like, took a hit from people's reactions to the fact that I was a smoker. Since I switched to Juul...

They're just trying to position themselves as a product now, strictly for smokers who want to switch. It's like a weight lifted off of you. This sounds like the genuine reaction of a company pretty freaked out about the consequences of not meeting the FDA's requirements here, either because they might go out of business or because they are genuinely alarmed by the patterns that they're seeing out there, or I guess a combination of the two. Yes, but it turned out that they also had this other motivation. They were trying to sell a huge chunk of their business to, of all people, a tobacco company. Not just any tobacco company, but Altria, the parent company of Philip Morris, the folks who brought you the Marlboro Man, the folks who they had said were their enemy. They touted themselves as the anti-tobacco

company. And it turns out that while they were making their public relations campaign to stave off FDA action, they were secretly talking to the tobacco companies. I happen to have been talking to a Juul consultant when the rumor came out that Juul was in discussions with Altria. And the consultant was stunned and said, oh boy, how are we going to deal with this? We'll be right back. Sheila, from everything you've said, Juul's founders got into the e-cigarette business because they wanted to help people quit smoking cigarettes. So why would they want to enter into a partnership with Altria,

one of the biggest cigarette brands in the world? Altria has a lot of money and a lot of savvy. You have to remember, Juul was in tremendous trouble at this point. I think Juul thought, well, public opinion about us can't get any lower. So why not connect with Altria, take their money, take their expertise, take their lobbyists, and then try to build up from there? So Sheila, what happens with this deal? In December 2018, Altria purchased a 35% stake in Juul. Altria, the company that owns Marlboro, is investing nearly $13 billion into Juul.

For nearly $13 billion. It's a lot of money. It's a lot of money. And Juul immediately used much of it to give bonuses to its employees. The investment makes two Stanford students who created Juul multi-billionaires and will reportedly pay its 1,500 employees a bonus of more than $1 million each. Thereby making sure that people who did not want to work for a tobacco company thought twice before leaving.

And what does this deal end up meaning for Juul as a business? Well, they're still in a lot of trouble with the FDA, but now they have Altria's political clout to help them. And Juul's sales are up, so they're doing very well in the marketplace. But what they didn't expect, and what nobody expected, was a medical mystery spreading across the country tonight. All over the country, people would start getting very sick. It started in the late spring. The Minnesota Department of

Health has issued an alert after four teenagers got seriously ill. The first reports came out of the Midwest. Mostly young people being rushed to the hospital unable to breathe. Quite a few of them within 24 hours could barely at all, and they were put on ventilators. It was horrible. They go from healthy adolescents to really in a life-threatening situation. Pretty quickly, within about six weeks... The CDC is looking into dozens of cases around the country. And then,

an adult in Illinois died from an unexplained pulmonary illness. People started to die. A fourth death has been reported from a severe lung illness. That brings to six the total number of deaths across the United States. As the mystery deepens, the search for answers continues. And nobody knew what was causing it. The doctors were baffled why young, otherwise healthy people were getting so sick? Is it an infectious disease? Is it some weird virus they had never heard of? And then what some of the doctors realized was that the one thing all the patients had in common,

they had all been vaping. But what complicated the situation and made it more of a mystery is that everybody seemed to be vaping something different. And in Washington, some of the pro-vaping groups, with the exception of Juul, are saying, you know what, everybody who's sick has been vaping pot. This is not nicotine. Nicotine vaping is safe. It's not our product. And why doesn't Juul join in making that claim? Because at this point, Juul is already in so much trouble

that while they are pretty confident that their products aren't hurting people, they really don't know. Juul is just trying to be super cautious at this point. And that turns out to be a pretty smart move because even though most of the cases seem to be associated with vaping pot, there are a number of cases where people got sick and even died. He wasn't breathing very often. And his last breath, I could tell because there was just a slight twitch in his neck. And their survivors say they only vape nicotine.

Do you know which brand? Mystics. Then he had Blue, and then he went to Juul. And he only went to Juul less than a year ago. So what does Juul do as suspicion starts to grow that perhaps the business

that they are in may be making people sick. Well, for once, Juul tries to get out front of a problem. Only on CBS this morning, the CEO of Juul Labs is defending his company's reputation. The CEO, Kevin Burns, goes on national TV and tells people he believes that Juul does not present a risk. We think we have a product that does not present a risk based on the guidelines of the category today to the American public. But he also says that the long-term effects are not known. That's true. That's a true statement. And then he really surprises listeners by saying...

Don't vape. Don't use Juul. Don't use Juul if you're not a smoker. Don't start using nicotine if you don't have a pre-existing relation with nicotine. Don't use the product. Wow. So what ends up happening? In early September, CDC makes a public announcement. The CDC and several medical groups now warning the public to stop vaping immediately. Everybody should stop vaping while we're figuring this out.

And then something else happens, which is that the new numbers come in from the Youth Tobacco Survey. And youth vaping is continuing to rise. The most recent data from the National Youth Tobacco Survey show that 27.5% of youths reported using e-cigarettes compared with 20.8% in 2018. Now it's up to 5 million teens who say they've vaped recently. So you've got this outbreak of a lung illness, and then in the midst of that, more kids are using e-cigarettes than ever.

So we have a problem in our country. It's a new problem. It's a problem that nobody really thought about too much. President Trump makes this announcement. And it's called vaping, especially vaping as it pertains to innocent children. And they're coming home and they're saying, Mom, I want to vape. Next to him is the Secretary of Health and Human Services, Alex Azar. The Food and Drug Administration intends to require that all flavors,

other than tobacco flavor, would be removed from the market. And he says we are going to ban all flavored e-cigarettes. Which are the most popular among young people. Right. And which makes up about 80% of Juul's sales. Hmm. So this feels like yet another pretty much existential crisis for Juul. How do they respond to it? Juul stops pretending things are okay. Juul Labs USA announced there will be no more ads.

They stop all their ads and they kick out their CEO. Juul announced a new CEO, a former tobacco executive. And they replace him with a more experienced tobacco executive straight from Altria. They're now doing everything they can because they know that at any time, given everything that's happened, the government could yank them off the shelves and say game over. Just basically ban the sale of any Juul anywhere. Right. That's their fear. Juul is waiting to learn if health officials will say that their product has contributed to this horrible lung disease outbreak. And they're also waiting to see if the FDA will let them stay on the market, given the growing number of kids who are vaping their product. I mean, if Juul's products, Sheila, eventually are pulled from the shelves,

I wonder where that leaves these millions of people who took up vaping. Maybe they gave up smoking to use Juul, or they picked up Juul having never smoked and are now very much dependent on it, what happens to them? What do they do? Well, some of the industry analysts do predict that there will be a mass shifting to regular old cancer-causing cigarettes. That would be a very perverse outcome of this experiment in creating an entire industry that was supposed to get people to stop smoking. Yeah, but guess who would be totally fine with that? Altria, which spent $13 billion for a stake in Juul, because guess what their main business still is? Cigarettes. Cigarettes.

Sheila, looking back at all this, the story that you have just told us, it's hard not to think about how federal regulators approached Juul from the start. Did regulators just kind of behave too credulously here? Were they too willing to buy into Juul's story of itself and not do enough of their own due diligence? It does seem that in retrospect, the regulators were fooled. They really wanted to offer the public an alternative to smoking. Smoking is still the biggest public health problem in the country. And I know that the folks at the FDA believe that if they could offer safer alternatives, they could save lives. This could be the biggest public health gain ever in the U.S. public health gain ever in the U.S. And it does seem that they didn't ask enough questions, that they were too quick to believe what they wanted to believe,

you know, that innovation could solve this intractable problem. And if you talk to them now, they know they were wrong, and it's very sad. Sheila, thank you very much. We appreciate it. My pleasure. We'll be right back. Here's what else you need to know today. On Tuesday, the National Security Council's top expert on Ukraine,

Lieutenant Colonel Alexander Vindman, told House impeachment investigators that the White House transcript of the call between President Trump and the president of Ukraine omitted crucial words and phrases, and that his attempts to restore them had failed. The omissions included references to former Vice President Joe Biden and to the Ukrainian company that employed Biden's son, raising more questions about how records of the call were handled by the White House. That call has since become central to the impeachment inquiry. And... Boeing came to my office shortly after these crashes and said they were the result of pilot error.

Those pilots never had a chance. These loved ones never had a chance. They were in flying coffins as a result of Boeing deciding that it was going to conceal MCAS from the pilots. During a tense congressional hearing, senators demanded an explanation from the pilots. During a tense congressional hearing, senators demanded an explanation from the chief executive of Boeing about the company's handling

of flight control software blamed for two crashes that killed 346 passengers. The chief executive, Dennis Muhlenberg, acknowledged that he learned about pilots' concerns about the software, known as MCAS, after the first crash, but did not take action until after a second crash involving the same software. On behalf of myself and the Boeing company, we are sorry, deeply and truly sorry. company, we are sorry, deeply and truly sorry. As a husband and father myself, I'm heartbroken by your losses. I think about you and your loved ones every day, and I know our entire Boeing team

does as well. In his testimony, Muhlenberg said that Boeing had made mistakes and apologized to the families of those who died in the crashes. Some of whom were in the audience. That's it for The Daily. I'm Michael Barbaro. See you tomorrow.