Bloomberg News: FTC Sues to Unwind Altria’s $12.8 Billion Juul Investment

*April 6 Update* The Federal Trade Commission posted the complaint on their website. You can read the complaint by clicking here.

 

This article appeared on Bloomberg’s Business News webpage on April 2. The original link to the story can be found here

FTC Sues to Unwind Altria’s $12.8 Billion Juul Investment

By: and 

U.S. antitrust officials sued to reverse Altria Group Inc.’s troubled $12.8 billion deal to take a stake in vaping company Juul Labs Inc., saying the companies are competitors who shouldn’t be in business together.

The move further chips away at a much-heralded late 2018 deal that was supposed to combine the marketing might of Marlboro maker Altria with the savvy cool of Silicon Valley startup Juul. Instead, Altria has written down the investment twice, slashing the 35% stake’s value to $4.2 billion in January as health concerns about e-cigarettes led to a regulatory crackdown. Nonetheless, Altria vowed Wednesday to defend the deal.

The Federal Trade Commission’s complaint argues that Altria and Juul were aggressive rivals until Altria decided to end the competition by shutting down its own e-cigarette brands, MarkTen and Green Smoke, before acquiring its stake in Juul.

“Altria and Juul turned from competitors to collaborators by eliminating competition and sharing in Juul’s profits,” Ian Conner, director of the FTC’s Bureau of Competition, said in a statement

The complaint is the latest hurdle for the deal, which gave the largest U.S. cigarette maker a piece of the nation’s largest e-cigarette maker and was criticized from the start. Altria investors bemoaned the price tag and longtime Juul employees said the transaction flew in the face of Juul’s stated mission to rid the world of cigarettes.

The FTC’s challenge could cost Altria its piece of the e-cigarette market, which had appeared to be an avenue for growth as smoking rates decline and the market for tobacco shrinks. At the same time, it could release the company from the troubled investment. Complicating the process for Altria is the fact that Chief Executive Officer Howard Willard has contracted Covid-19 and has taken a medical leave of absence.

Altria shares gained 0.9% to $37.95 in premarket trading Thursday. Through the close of trading Wednesday, the stock had fallen 25% this year, roughly in line with the drop in the broader market caused by the coronavirus crisis.

“We believe that our investment in Juul does not harm competition and that the FTC misunderstood the facts,” Altria General Counsel Murray Garnick said in a statement. Juul declined to comment.

For Juul, it poses yet another hurdle for the embattled company to overcome as it grapples with investigations of its business practices that allegedly helped spark a surge of underage vaping. The company is now a target of federal investigations and lawsuits from parents and school districts. The FTC also has a separate probe into the company’s marketing.

Juul and other e-cigarette makers must soon submit applications to the Food and Drug Administration to continue selling their products in the U.S.

It’s unclear how the investment could be unwound. Juul has spent the bulk of the $12.8 billion to pay out investors and award bonuses to its employees. Other Juul investors include Fidelity Investments and Tiger Global Management. Altria was supposed to gain voting rights and board seats at Juul with antitrust clearance.

Unanimous Vote

The FTC’s five commissioners voted unanimously to file a complaint in its administrative court and a trial has been scheduled to begin on Jan. 5, 2021. The complaint threatens to tie up Altria in litigation for months. The cases are heard by an administrative law judge and then by the full five-member commission. Decisions can be appealed to federal court.

The complaint, which hasn’t been made public, follows a year-long investigation by the FTC into whether Altria’s investment violated antitrust laws.

In October 2018, Altria pulled its pod-based e-cigarette products from the market and sent a letter to Scott Gottlieb, then the commissioner of the Food and Drug Administration, blaming products like Juul’s for fueling a teen vaping epidemic. Two months later, Altria closed its e-cigarette business entirely and then announced its Juul investment.

As part of the deal, Altria gave Juul some of its shelf space and promised its help with an upcoming regulatory application that will determine whether Juul can continue to sell its e-cigarettes in the U.S. In the fall of 2019, a longtime Altria executive who pursued the investment, K.C. Crosthwaite, took over as Juul’s CEO and hired Altria colleague Joe Murillo as Juul’s chief regulatory officer.

Health Scare

Juul, once among the most valuable start-ups in the U.S., saw its fortunes quickly diminish last year. A health scare that was later tied to faulty cannabis vaping products spooked consumers and prompted governors and state regulators to crack down.

The company laid off about 650 people last fall and implemented a $1 billion restructuring plan. A number of executives have left amid the shake up. Co-founder James Monsees and Chief Transformation Officer Guy Cartwright both left within the past month.

Altria has been “highly disappointed” in the investment, CEO Willard said in January. Lawsuits accusing Juul of hooking minors to nicotine have ballooned, including many that name Altria as a co-defendant. The company has since narrowed the terms of its cooperation with Juul away from marketing and solely to gaining regulatory approval.

FTC Scrutiny

The FTC is increasingly questioning deals where upstart competitors are swallowed up by established players. In February, the agency demanded new information about startup acquisitions by Alphabet Inc., Apple Inc., Amazon.com Inc., Facebook Inc. and Microsoft Corp. that had previously flown under its radar to determine whether they should have been blocked. The same month, the FTC sued to block the merger of Edgewell Personal Care Co., the maker of Schick razors, with Harry’s, the shaving-supply company.

The U.S. Securities and Exchange Commission is investigating the Altria-Juul deal, according to a report last month from the Wall Street Journal.

(Updates stock-price information in seventh paragraph. A previous version of this article corrected the date that Altria closed down its e-cigarette business in 14th paragraph.)

Post Bulletin: I’m a smoker … And along comes a pandemic

This article appeared online for the Post Bulletin out of Minnesota. It was published on March 31. The original article can be read by clicking here.

 

I’m a smoker … And along comes a pandemic

Matthew Stolle mstolle@postbulletin.com

Mar 31, 2020 Updated Apr 1, 2020

It’s never been a great time to be a smoker. Now in the midst of a pandemic, it just got riskier for smokers.

Yet smoking is a coping mechanism for many, and pandemics are nothing if not stressful.

Dr. J. Taylor Hays, director of the Mayo Clinic Nicotine Dependence Center, talked with the PB about the heightened risks smokers face and why now might be the time to quit.

PB: Why are smokers at risk for COVID-19?

Hays: Several things are at play. One of the more obvious ones is that smokers have a higher risk for all kinds of conditions that are associated with more risk of complications from COVID-19. So, for example, chronic lung disease, COPD, emphysema. People with chronic lung disease have a higher risk of complications and more serious and critical infections.

More specifically, we know that smoking decreases the ability of the lungs to fight infection. The main thing that smoking does is impede the clearance of mucus from the lungs. We have in our lungs little hairs on the cells called cilia that beat in a coordinated fashion and move the mucus we produce up (towards the throat). That’s how we clear infections.

In smokers, those cilia don’t work. They’re paralyzed.

PB: So if I’m a smoker, I’m more susceptible to COVID-19. And if I get the infection, my symptoms are more likely to be more severe. Is that right?

Hays: More complicated, more severe, longer recovery time. Greater chance of having to go to the hospital, developing lower respiratory infections and pneumonia.

Early data from China suggests that smokers were over-represented among the people who had severe and critical illness, who had higher risk of mortality from the COVID infection.

PB: Here’s a hard-hearted question: Smokers know the risks. Why should I care?

Hays: You’re right. People do make choices in their lives. And some of those choices end up costing them. And in this case, the cost could be dear. But my comeback to that is: Because of the nicotine in tobacco causes addiction, people really lose the ability to choose.

So if a chemical is driving the urge to smoke and causing withdrawal around quitting, those are hallmarks of addiction.

Also, smoking doesn’t just impact you. It impacts people around you. If you’re inside your house, which we all are, and you’re smoking, second-hand smoke exposure is also a risk factor for more serious COVID 19 infection.

PB: Let’s say the pandemic scares me enough to consider stop smoking. If I stopped now, would I get any appreciable benefits?

Hays: The answer to that is an unequivocal yes. We know that within hours of stopping, respiratory symptoms begin to improve. Within days, the clearance of mucus begins to improve.

PB: What is the percentage of people who smoke?

Hays: It’s gotten a lot better in the U.S. We’re now down for all adults to 15 percent to 17 percent in most states. In Minnesota, we’re probably down to 14 percent. That’s the lowest we’ve been since before World War II.

PB: Do the risks you describe also apply to marijuana smokers and people who vape?

Hays: The answer to that is unknown. We presume that if you inhale any combustible product or e-cigarettes, that it can cause some irritation to the lung. That’s probably not a good thing to do. If you’re exposed to COVID and have to fight an infection, we presume it would increase your risk. But there’s no data on that yet.

Those interested in quitting can find more information by calling 1-800-quit-now, a national quit line. You can also access information at becomeanex.org.

 

Forbes: Smokers At Higher Risk Of Severe COVID-19 During Coronavirus Outbreak

This article from Forbes.com was posted on March 23. Link to the article found here

Victoria Forster

Contributor; Healthcare
Cancer research scientist and childhood cancer survivor.

A leading expert has warned that smokers are likely at increased risk of more severe COVID-19, compared to non-smokers, suggesting that now would be a particularly good time to try and quit or cut down.

“There’s not very much data at this point on COVID-19 in smokers, but we do know from reports from China, smokers seem to be over-represented in groups of people who have severe or critical COVID-19,” said J. Taylor Hays, M.D. Director of the Nicotine Dependence center at Mayo Clinic in Rochester, Minnesota and Professor of Medicine, Mayo Clinic College of Medicine.

Increasing evidence is suggesting that smokers are at higher risk of severe COVID-19 than those who don’t smoke. One study published in the New England Journal of Medicine in February looked at 1,099 patients in China with COVID-19, showing that of 173 patients who had severe symptoms, 16.9% of them were current smokers and 5.2% had previously smoked. Among the patients with less-severe symptoms, 11.8% were current smokers and 1.3% former smokers.

More worryingly, the study showed that in a group of patients that either needed mechanical ventilation, admission to an intensive care unit, or ultimately died, 25.5% were current smokers, which was more than twice the rate of current smokers in a group of patients that did not have these severe adverse outcomes.

“These observations about more severe illness in smokers vs people who have never smoked seems to parallel what is seen in respiratory viruses such as respiratory syncytial virus and seasonal influenza, where smokers tend to do worse than non-smokers,” said Hays, also mentioning that no data is currently available on people who vape or use e-cigarettes. “We know that inhalation of combustible tobacco of any sort seems to be associated with more severe disease from respiratory viruses,” he added.

Studying other coronavirus outbreaks provides further suggestions that smokers may fare worse with these types of viral infections than non-smokers. In a study of a small number of patients with Middle-East Respiratory Syndrome (MERS) in South Korea, patients who smoked were less likely to survive than those who did not. There was also some evidence that smokers had higher levels of a protein called DPP4, a receptor which allows the MERS coronavirus to enter cells in the lung, which could make their lung cells more susceptible to attack from the virus. SARS-CoV2, the coronavirus responsible for the current outbreak, uses a different receptor to gain access to lung cells called ACE2. However, the news here isn’t any better for smokers either.

“The ACE2 receptor is up-regulated in the respiratory cells of smokers. This might be a mechanism by which it is more likely to cause severe illness,” said Hays.

There are also other, well-proven reasons for smokers to be concerned about their risk of severe or fatal COVID-19.

“There is a long history of smokers having more severe respiratory illness in general and this is for a few well-established reasons. They clear mucus less efficiently, the cilia which get infectious particles and secretions out of the lungs, work less efficiently. Smoking also causes inflammation in the airways, which is made worse with respiratory illnesses,” said Hays.

So if you are reading this and you smoke or know someone who does, is it too late now to stop or cut down?

“People who quit for even a short time see an improvement in lung health quite quickly. For most smokers who don’t already have serious lung injury, they will see immediate improvements in their health, and less opportunity for severe diseases including COVID-19,” said Hays.

In 2015, the CDC reported that almost 7 out of 10 adult smokers wanted to try and quit, with over half of all of them trying to quit at least once in that year, but the large majority not succeeding. Is it likely that people will try to quit, and succeed, especially at such a stressful time for many?

“I understand people turn to things because it’s a coping mechanism, especially at stressful times. I would say to them – try and flex other coping muscles, there is a real opportunity to break routines – even a short period of abstinence from smoking improves lung function,” said Hays.

“People could look at this as an opportunity – a time of crisis is a time of opportunity. If you’ve been looking for an opportunity to quit, this is it,” he added.

Could Your E-Cig Disrupt Your Pacemaker?

March 16, 2020, at 9:00 a.m.

U.S. News & World Report

By Rich Holmes
HealthDay Reporter

(HEALTHDAY)

MONDAY, March 16, 2020 (HealthDay News) — The magnets in vaping devices might be able to wreak havoc on heart pacemakers and defibrillators, a new case report suggests.

By placing a Juul in his shirt pocket, a heart patient caused his implanted pacemaker and defibrillator to malfunction, his health care providers said.

“To our knowledge, this is the first time it’s been reported,” said report author Julie Shea, nurse practitioner at the Cardiovascular Arrhythmia Service at Brigham and Women’s Hospital in Boston.

The 48-year-old male patient had a history of irregular heartbeats, or arrhythmia. A magnet in the e-cigarette kept his implanted cardioverter-defibrillator (ICD) from detecting and correcting episodes of arrhythmia, Shea said.

Fortunately, the man experienced no deadly episodes of arrhythmia before the problem was discovered and resolved, his doctors said.

Heart patients are warned to keep devices or objects that contain magnets or create a magnetic field away from their implanted pacemakers and defibrillators, Shea said. These include power tools, bank cards and name tags with magnetic strips, and cellphones. “Never store them in a shirt or jacket pocket,” she said.

But a warning about vaping devices has not been made until now, Shea said.

The U.S. Food and Drug Administration says research doesn’t indicate cellphones pose a significant risk to pacemaker operation, but recommends not storing it in a pocket directly over the pacemaker. The American Heart Association gives similar advice, suggesting cellphones and devices containing magnets be kept 6 inches away from pacemakers and defibrillators.

Shea and co-author Dr. Usha Tedrow, director of the Clinical Cardiac Electrophysiology Program at the Cardiovascular Arrhythmia Service at Brigham and Women’s, were first tipped off to the problem when the patient told them his combination pacemaker/ICD had emitted a warning tone several times. However, remote monitoring showed his heart device was working normally. He also complained of no ill symptoms and said he hadn’t had any magnetic devices near his chest.

But when they checked with the devices’ manufacturer for further information, data showed magnetic interaction had occurred at four times when the man had heard the tone.

“I actually saw that device” when the patient visited the office, Shea said. “I asked him, ‘What is that in your pocket?'”

The man then said the Juul had been in his chest pocket when his cardiac device had sounded the tone.

The findings were published March 16 in the journal HeartRhythm Case Reports.

The case study is a warning, Shea said, but the authors cannot extend it to all brands and models of vaping devices, as they only studied the Juul.

“Our intent is educational for providers and patients,” she noted. “We want our colleagues to be aware.”

Tedrow said heart patients who use Juuls could continue to use them “with adequate education.”

According to Juul Labs’ website, a Juul uses magnets to secure it to its USB charging dock. The company suggests keeping Juuls away from items with magnetic strips, such as credit cards, and cautions that the magnets may trigger a laptop to switch into sleep mode when using a computer’s USB port to charge. The website also says its products meet international safety standards for electromagnetic compatibility. The company did not respond to requests for comment.

Dr. Dhanunjaya Lakkireddy, executive medical director of electrophysiology at the Kansas City Heart Rhythm Institute, said e-cigarettes should not be kept in chest pockets. He said older pacemakers and combination pacemaker/ICDs would be more vulnerable to magnets in vaping devices, as newer models are now shielded.

Still, Lakkireddy, who wasn’t part of the study, cautioned that if a Juul’s magnets can cause a laptop to go into sleep mode, they might well cause a pacemaker/ICD to malfunction.

“The FDA needs to go back and look at these,” said Lakkireddy.

More information

To learn more about keeping pacemakers and ICDs safe from magnetic fields, go to the American Heart Association.

Copyright © 2020 HealthDay. All rights reserved.

TFND Now Taking Submissions for Third Annual Video Essay Scholarship Contest

Tobacco Free North Dakota Holds Video Essay Scholarship Contest

TFND announces the third annual Video Essay Scholarship Contest for all ND high school seniors.

TFND is a statewide non-profit that advocates for policies to prevent youth initiation to tobacco and nicotine products with the goal of creating North Dakota’s first tobacco free generation.

North Dakota high school seniors will have the opportunity to compete for a $1000 college scholarship. To participate students must submit a 1-3 minute video based on topics chosen by TFND. The contest is open to all high school seniors.

This year’s topics are:

  • Raising the Price of Tobacco to Prevent Youth/Young Adult Use
  • The Dangers of JUUL and/or Vaping
  • Why I stay Tobacco/Nicotine/Vape Free!
  • North Dakota has one of the BEST smoke-free air laws in the country! Let’s keep it that way.

TFND will take in video entries till the submission deadline which is 11:59pm on March 27, 2020. A committee will select the top five videos, which will then be displayed at www.tfnd.org and voted on by the public March 30-April 12, 2020. The winner will receive a $1,000 college scholarship! TFND will present the prize and take photos with the winner prior to April 30, 2020 if possible.

Full details can be found in the Video Essay Scholarship forms attached to this release, along with TFND’s website.

If you have any questions or concerns, email Andrew Horn, TFND’s Coalition Program Director, at andrew@tfnd.org

For more information about Tobacco Free North Dakota follow us on Facebook and Twitter.

A link to all necessary forms and information: 2020 Video Essay Scholarship Press Packet

The mission of Tobacco Free North Dakota is to improve and protect the public health of all North Dakotans by reducing the serious health and economic consequences of tobacco use, the state’s number one cause of preventable disease and death.

 

TFND Hires New Staff

Tobacco Prevention Youth Summit

130 students from across North Dakota gathered at the Best Western Ramkota Hotel in Bismarck to learn about tobacco prevention and to express their support. On cards they listed why they are not going to be a replacement customer for Tobacco Companies. #NotAReplacement

 

Tobacco Free Day at the Capitol

Heather Austin, Executive Director of TFND, spoke to students about tobacco prevention and the various speakers welcomed the students to the Capitol. Students had the opportunity to eat lunch and speak to legislators.

Tobacco Free Day

The American Cancer Society coordinated with Tobacco Free North Dakota to plan an event for North Dakotan Students on Tobacco Free Day. Students from all across North Dakota gathered to meet with their legislators to talk about tobacco free policies. Here are the students listening to a presentation by Heather Austin, TFND Executive Director, before they head over to the Capitol building! #NDTobaccoFreeDay #ndleg

TFND Banquet 2019