Embattled e-cigarette maker Juul Labs is reportedly considering bankruptcy on Friday as it asks a federal appeals court to temporarily suspend a Food and Drug Administration ban on the sale of its products.
Juul is working with legal advisers to assess whether it should file for bankruptcy if the courts do not grant its request for a waiver of the FDA ban, the The Wall Street Journal reported, citing sources familiar with the matter. Such a filing would mark a steep drop for a company that already attracted a $38 billion valuation before a series of crackdowns.
Juul officials have asked a federal appeals court in Washington, DC, to issue an emergency stay on the FDA’s order until it can seek a review of the decision. The company argued that it would suffer irreparable harm if a stay was not granted and noted that similar e-cigarette products are still on the market.
“The FDA’s decision is arbitrary and capricious and lacks substantial evidence,” Juul said in the filing, according to the Journal.
The Post has contacted Juul and the FDA for comment.
Juul was considering bankruptcy just a day after the federal government rejected its offer to continue selling certain e-cigarettes and pods. The FDA’s decision follows years of pressure among lawmakers and other public figures for a crackdown on the harmful effects of a youth vaping trend.
Juul’s filing argued that the FDA issued the ban after “tremendous political pressure from Congress once it became politically convenient to blame [Juul] for youth vaping, although several of its competitors now have a larger market share and much higher underage usage rates.
The FDA said its ban applied to the Juul device and “all of their products currently marketed” in the United States, including pods with 5% and 3% nicotine strengths.
The FDA argued that Juul was given the opportunity to provide evidence to support its request to continue selling products, but failed to meet the requirements.
“As with all manufacturers, Juul has had the opportunity to provide evidence demonstrating that the marketing of their products meets these standards,” said Michele Mital, acting director of the FDA’s Center for Tobacco Products.
“However, the company has not provided this evidence and instead left us with important questions. Without the data necessary to determine the relevant health risks, the FDA is issuing these marketing denial orders,” Mital added.
Immediately after the ban, Juul chief regulatory officer Joe Murillo said the company disagreed with the decision and planned to appeal.
“We intend to seek a stay and are exploring all of our options under FDA regulations and the law, including appealing the decision and engaging with our regulator. We remain committed to doing everything in our power to continue to serve the millions of American adult smokers who have successfully used our products to move away from combustible cigarettes, which remain available on market shelves nationwide. “said Murillo.
Juul currently accounts for around 50% of the e-cigarette market. Some consumers reportedly rushed to stock up on products still on the market after the ban was announced.
Juul has faced a regulatory crackdown following allegations that its products were intended for underage users – a claim the company has denied.
In an effort to meet the federal review, Juul had already pulled its flavored e-cigarettes from the market. But Juul has faced numerous lawsuits for marketing its products to teenagers.
As e-cigarettes and other vaping products were touted as a healthier alternative to traditional tobacco products, hundreds of people died or were hospitalized across the country from lung conditions associated with the trend.