Valeant Pharmaceuticals International has been sued on behalf of former investors in Sprout Pharmaceuticals Inc., which it bought last year for $1 billion, over its alleged failure to successfully market the female libido pill Addyi (flibanserin), according to Reuters.
The complaint states that Valeant neglected its contractual obligations to market Addyi, sometimes called “the female Viagra,” and priced it at $800 per month––twice as high as the market could bear. This led to poor sales, partly because insurers and pharmacy benefit managers refused to cover the pill at the “inflated” price, and made Addyi unaffordable for millions of women facing an “unmet medical need.”
The Sprout investors are seeking unspecified damages and a requirement that Valeant live up to the merger agreement by hiring a 150-member sales force for Addyi and by spending at least $200 million on marketing, research, and development.
Valeant’s stock has plunged 92% since August 2015 amid criticism of its pricing and business practices, and probes by U.S. regulators and Congress, according to Reuters.
Late last month, U.S. prosecutors announced that they were looking into potential accounting fraud charges against Philidor Rx Services LLC, a specialty pharmacy company secretly controlled by Valeant. Federal prosecutors in Manhattan and agents at the Federal Bureau of Investigation in New York said they had been investigating the company for at least a year.
According to the new complaint, Valeant shut down Philidor, which it had intended to use to distribute Addyi. With its launch plans thwarted, Valeant “jettisoned” Sprout’s preparatory work and cut ties with its leadership, despite having no marketing plan of its own, the complaint charged.
Addyi was approved by the FDA in August 2015 under pressure from patient advocacy groups. The drug’s labeling includes a warning that it can cause fainting and hypotension, and that it should not be used with alcohol.