Valeant is being sued by the investors who backed 'female Viagra'

The investors behind Sprout Pharmaceuticals, the drugmaker that developed what came to be known as
“female Viagra” are suing Valeant Pharmaceuticals for failing to commercialize the drug.

Valeant acquired Sprout for $1 billion in August 2015. The deal was struck right after Sprout won approval for Addyi, which intends to treat women with chronically low sex drives, a condition called hypoactive sexual desire disorder (HSDD).

But sales of Addyi have not taken off, and in a complaint filed Wednesday in Delaware, former Sprout shareholders claimed that “Valeant has abdicated its duty to use diligent efforts to develop and commercialize Addyi.” The shareholders ague that they had suffered damages because of this.

Valeant was not immediately available for comment.

According to the suit, Valeant was supposed to spend $200 million on marketing, sales, research and development over the nine months following Addyi’s launch. The shareholders also claim that that Valeant raised the price for a month’s prescription from $400 to $800 without conducting market research, which led to less coverage by insurers and pharmacy benefits managers.

The suit also brings up Philidor Rx Services, the secret specialty pharmacy that was selling Valeant products directly to patients. Valeant ended its relationship with Philidor once it was exposed by a short-seller and began to draw government scrutiny, insurance companies, and shareholders.

The Sprout shareholders allege that the loss of the distribution channel — which had at one point accounted for 5% of Valeant’s sales — hurt Addyi sales. With the Valeant-Philidor relationship terminated, the shareholders allege that Valeant didn’t find an alternative to distribute the drug.

To be sure, Addyi is a controversial drug. An April study in JAMA Internal Medicine found that women taking Addyi experienced one more sexually significant event than those on placebo. Almost immediately its effectiveness was questioned and it carries some rather serious warnings. It causes severe side effects like a drop in blood pressure and fainting when consumed with alcohol.

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