Valeant’s $1bn bill to eat a Sprout


The only thing more implausible than the FDA’s approval of a female sexual desire drug with modest efficacy and serious side effects is the $1bn cheque Valeant was willing to write for it.

Valeant at least had the good sense to roll the dice only once the approval came through and not find itself hung with the burden of another round of clinical trials – something Boehringer Ingelheim was not willing to do on Addyi’s first rejection five years ago. But the Canadian group is still betting big that it can make something of the free advertising it received with approval and a strong physician education campaign (Sprout snatches victory – but will good times last?, August 19, 2015).

Another Xifaxan?

If any company can do it, of course, Valeant would seem to be a good candidate. It has no products that reach the blockbuster threshold and only got its first one when it acquired Xifaxan 550 with Salix Pharmaceuticals earlier this year. It does quite well in selling products that bring in $20-$200m, however, and Addyi looks destined for that cohort. But the field is certainly tilted against a quick sales ramp.

For one thing, Sprout had agreed to refrain from direct to consumer advertising for the first 18 months, potentially dampening the demand for a drug that will rely largely on patients seeking it from physicians. By abiding to this agreement Valeant must rely on a physician education programme that will require it to expose the rather modest efficacy data to questions.

For another, the low blood pressure and fainting side effects when the pill is combined with alcohol have necessitated a fairly stringent risk evaluation and mitigation strategy that will require prescribers to be trained and certified, and for prescriptions to be dispensed only from certified pharmacies. Patients will be specifically counselled not to drink alcohol while using Addyi, which must be taken once daily.

Who will buy it?

Valeant says it will devote 150-200 sales representatives to the pill, and will assist physicians in obtaining the certification. It has suggested a price of $400-500 per patient per year, similar to that for erectile dysfunction drugs, which tend to be taken on an as-needed basis.

How insurers will cover this is another question. Erectile dysfunction drugs have made it onto the higher tiers of coverage, which entail greater enrolee cost-sharing. However, the modest efficacy of increasing on average 0.5 to 1 satisfying sexual events per month from a baseline of two to three will not appeal to pharmacy benefit managers, along with the side effect profile.

On the other hand, Sprout's investors can count themselves very lucky indeed. The private North Carolina-based company did not disclose much about its internal functions, but its 2012 series A raised about $5m from 61 investors. Information about further rounds is not available, but presumably they were a small fraction of what Valeant was willing to pay.

Valeant executives believe they can achieve a Xifaxan-style sales launch. Investors appear to be awaiting proof – shares fell 4% to $234.51 in early trading today.

To contact the writer of this story email Jonathan Gardner in London at or follow @ByJonGardner on Twitter

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