Lawsuit: Valeant is letting 'female Viagra' sales sag
Have you heard of Addyi, the first and only drug approved to help women with low sexual desire?
If not, you are definitely not alone.
That's the heart of a new battle over $800-a-month Addyi, often called "the female Viagra" because developers hoped for the same kind of blockbuster sales that erectile dysfunction drugs have seen.
Valeant Pharmaceuticals International is being sued by former investors for failing to market the female libido pills successfully. The suit claims that Addyi may generate less than $10 million this year, which would be far less than what the parties hoped for, and would shortchange the former investors by millions in anticipated profits.
Those investors backed Sprout Pharmaceuticals, which developed the female libido pill. Valeant merged with Sprout and bought Addyi for $1 billion right after the U.S. Food and Drug Administration's controversial 2015 approval of a drug many believe has more risks than benefits.
"Simply put, Addyi is languishing because of Valeant's operational ineptitude and breach of its obligations under the merger agreement," says the complaint filed last month in Delaware Chancery Court by Shareholder Representative Services.
In a response filed this week, Valeant, which has U.S. headquarters in Bridgewater, N.J., denies it has done anything wrong regarding Addyi.
The merger agreement "certainly does not require Valeant to follow Sprout's business plan" and "entitles Valeant to use its own discretion in marketing and commercializing Addyi," the response says. "Valeant's $1 billion investment in Addyi provides it with more than sufficient incentive to make the drug successful."
Addyi may be the least of Valeant's worries. The company's stock value has plunged 97 percent since the peak in August 2015 — the month it bought Addyi — amid probes of its pricing and business practices by U.S. regulators and Congress.
Addyi (generic name flibanserin) has its own bumpy history. Originally studied by a German company as an antidepressant, the drug was twice rejected as a libido-booster by the FDA over concerns about serious risks versus modest benefits. Sprout, the tiny Raleigh, N.C., firm that acquired the drug, marshaled sex therapists and other allies to pressure the FDA. Their "Even the Score" campaign accused the agency of sexism for approving a raft of sex drugs for men but none for women.
When Addyi was finally green-lighted, the FDA added so many safety precautions that analysts predicted it would dampen demand. Prescribing doctors have to be trained in Addyi's risks, and the drug is approved only for premenopausal women, who must swear off alcohol to avoid blood pressure drops that can cause fainting. Addyi is not covered by insurers, costs $800 a month, and must be taken daily, unlike use-when-needed erectile dysfunction medications.
The former shareholders' lawsuit alleges that when Valeant officially launched Addyi in October 2015, it overpriced the drug, prompting insurers to balk at coverage and putting the product out of financial reach of women facing an "unmet medical need."
Before that launch, the complaint says, Sprout had set up a supply chain, worked with insurers to get coverage, prepared marketing and educational materials, and hired a sales force.
"Once Valeant acquired Sprout," the complaint says, "it jettisoned all of Sprout's preparatory work" and fired Sprout's CEO.
The complaint seeks unspecified damages, plus a requirement that Valeant hire a 150-member sales force and spend at least $200 million on marketing.
In its response, the company says the lawsuit "does not (and cannot) explain why Valeant, which stands to make 60 percent of any profit from all sales of Addyi and alone bears the risk of its $1 billion purchase, would seek to limit Addyi's success. Such an inference is simply not reasonable."