FDA — Helping out, or punching down?
A few recent FDA actions have made the headlines in the last week or two. Is FDA a villain here, destroying thousands of jobs and billions of dollars in shareholder value? Or is it a hero, protecting US consumers from companies that put profit over public health?
Let’s start with Juul…
At one time Juul was the the market leader in electronic cigarettes and was valued at as much as $38B in the private market. On June 23, FDA issued a Marketing Denial Order (MDO) to Juul, ordering them to stop selling and distributing all products in the United States. FDA’s explicit reason for the MDO was that “the [marketing] applications lacked sufficient evidence regarding the toxicological profile of the products to demonstrate that marketing of the products would be appropriate for the protection of the public health.”
The first thing that occurred to me is how different the atmosphere and remit of FDA’s regulation of tobacco (via the Center for Tobacco Products) is when compared to the regulation of medical devices (via the Center for Device and Radiological Health) or pharmaceuticals (via the Center for Drug/Biologics Evaluation and Research). For tobacco, the starting premise is that “tobacco kills, so if you make a tobacco product you have to prove that it will reduce cigarette use and otherwise be safer for public health” — akin to “guilty until proven innocent”. For medical devices and pharmaceuticals, the starting premise is that the products will inherently improve public health provided all safety testing meets FDA’s requirements — closer in practice to “innocent until proven guilty.” FDA is often criticized for getting in the way of medical innovation by requiring broad clinical trials or extended review periods for medical devices. The same public criticism does not appear for reviews or approvals of tobacco products.
Supporters of Juul rightfully point out that FDA has approved products with similar technology and safety profiles as Juul’s and accuse the FDA’s decision of being politically motivated. To put some numbers around this: there are currently seven companies that have been approved to market e-cigarettes in the United States, and there are two hundred and sixty-three e-cigarette companies that have received Marketing Denial Orders. In other words, there is a high bar for approval: less than 3% of companies who applied to sell tobacco product have been allowed to do so.
Beyond that objective fact, there is a long history between FDA and Juul. Anyone who was surprised at FDA’s decision must not have been paying attention — or doesn’t appreciate that FDA is indeed a political organization, composed of humans with memories and a dislike of being “worked”.
Juul’s meteoric rise came on the back of a marketing strategy designed specifically to appeal to teenagers. This was shown through reviews of early advertising images, conversations with company executives, and first-hand evidence from “sting operations” conducted by FDA. This is the type of issue which takes some time to prove, but once it “sets in” it is very hard to shake. Although Juul ultimately changed its advertisements and got a new CEO, it had already become the target of FDA’s sweeping anti-vaping campaign and in many ways the writing was already on the wall.
This speaks to the critical nature of a company’s reputation and rapport with regulators. The laws governing FDA’s authority are generally broad and open to interpretation. “Goodwill” goes a long way in shading regulatory approval to favor a company which is perceived to be following both the letter of the law as well as the spirit of the law.
FDA’s decision sends a message that marketing addictive and dangerous products to teenagers will put you out of business. I believe this decision is helping out the public good, not punching down at an innovative tech company.