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Bloomberg Businessweek July 27, 2020communicatedinperson.Executivesparticipatedin
practice sessions on how to interact with federal officials
and respond to their questions, according to three people
familiar with the discussions.
More than a dozen Juul employees were schooled using a
technique called “hats on-hats off,” according to one of those
people. During hats on, a designated person would play the
role of an FDA inspector, asking probing questions. That was
followed by hats off, in which the person evaluated the per-
formance of the employee and offered tips on doing better.
Employees were coached on specific FDA techniques they
were told might be used to try to get them to talk more than
they should. In at least one coaching session that included
Juul’s chief quality officer, Joanna Engelke, employees were
instructed on how to respond to questions about device mod-
ifications. If asked, acknowledge the changes, they were told.
But don’t volunteer any information.
“Like other companies regulated by the FDA, Juul Labs
undertook thorough preparations for an FDA inspection,”
wrote the Juul spokesman. “Those preparations included
identifying subject matter experts in areas of potential FDA
inquiry and explaining to Juul Labs employees what an
inspection would entail, as well as the need at all times to be
cooperative, truthful, and accurate.”One morning in September 2018, a team of federal agents filed
into Juul’s building in San Francisco’s Dogpatch neighbor-
hood. Their presence cast a pall over what had been, all
things considered, a pretty sunny workplace. Some people
had come to the company excited over its potential to end
the scourge of cigarette smoking, according to interviews
with more than a dozen current and former Juul employees.
Others wanted big tech-startup paychecks. Plenty dreamed
of both. Now they were being led into hastily arranged inter-
view rooms and grilled by the feds.
Over the course of four days, the inspectors camped in a
conference room. A Juul executive was always in the room
with them. As stenographers took notes, employees were
brought in to answer questions. When the inspectors wanted
a document, someone would message people in a pair of
rooms that had been set up with computers and printers,
and it would be delivered. The environment was sometimes
tense, according to people present for some interviews, with
occasional small talk about the weather. Everyone was polite.
The inspectors already knew something about Juul’s
product modifications. Four months earlier, while inspect-
ing one of the company’s pod-filling contractors in North
Carolina, they found evidence that Juul had tweaked the
design of its pods to address the leaking problem. That
change hadn’t been previously disclosed to the agency,
according to the FDA inspection report from the facility,
which was reviewed by Bloomberg Businessweek. In a later
interview with FDA inspectors, a Juul executive acknowl-
edged that the company had made changes to its pods and
that FDA rules prevented it from making any more withoutsubmittinga newrequesttotheagency,accordingtoa
separate report from the 2018 Juul inspection.
The agency ultimately opted not to take action in that
instance. “The FDA makes determinations of whether or not
to enforce against a specific violation at a specific time on a
case-by-case basis,” Hunt, the agency spokeswoman, said in
a written statement. “In this case, we considered the magni-
tude of change to the products, the impact the change had
on the performance of the product, public health questions
and if the change made to the product addressed a product
safety concern or adverse event related to product design.
The FDA concluded that the change here addressed a prod-
uct safety concern.”
The FDA never learned, however, about other changes to
the device—the new sensor and circuit board and the revised
firmware. “We gave the company every opportunity to dis-
close information about all modifications,” Hunt said.
The inspectors might not have asked the exact right ques-
tion, or pulled on the exact right thread, says one person
present for the inspection. And therefore, Juul executives
and employees, per the company’s coaching, didn’t volun-
teer anything.
While the deeming rule was meant to bring order to the
e-cigarette industry, it left manufacturers in what many
experts describe as a legal gray zone. Companies are often
unsure about what is and is not allowed under the new
regime, says Azim Chowdhury, a regulatory attorney who
represents other e-cigarette companies at law firm Keller
Heckman in Washington. “The FDA’s deeming rule is anti-
quated,” he says. “It wasn’t structured in a way that made
it easy for companies to make changes that resulted in safer
products, or fixing a product that was otherwise dangerous.”
In November 2019 the agency attempted to provide some
clarity, saying it didn’t intend to enforce the modification ban
in two instances: Companies could change their devices’ bat-
teries to comply with a new industry safety standard. And
they could update the design of their liquid containers to pre-
vent accidental nicotine poisoning. In most other instances,
Chowdhury says, if a company is contemplating even minor
changestoimprovea product’sreliabilityorsafety,“we’dhave
toadviseclientsthatFDAmayviewthatasa newproduct.”
OtherexpertssaytheFDA’sdeemingruleisunambiguous.
“Any modification is a modification,” says David Ashley, who
helped draft the FDA’s tobacco rules as director of the Office
of Science at the agency’s Center for Tobacco Products.
“Companies can’t say, ‘We’re going to change that,’ and put
it back on the market. They have to come to the FDA first and
put in a new application.” Nevertheless, Ashley, now a profes-
sor in the School of Public Health at Georgia State University,
says decisions about whether to bring an enforcement action
against a company are largely up to the agency.
When Bloomberg Businessweek told former FDA
Commissioner Gottlieb about Juul’s device modifications, he
was taken aback that such information was surfacing only
now, months after the agency tried to pin the company down.