The U.S. Food and Drug Administration said the pink pill, to be sold under the brand name Addyi and made by privately held Sprout Pharmaceuticals, will only be available through certified and specially trained health care professionals and pharmacies due to its safety issues.
Addyi, whose chemical name is flibanserin, is designed for premenopausal women whose lack of sexual desire causes distress. The condition is formally known as hypoactive sexual desire disorder, or HSDD. The drug needs to be taken daily.
Addyi has been nicknamed the "female Viagra" even though it does not work like Pfizer Inc's blockbuster Viagra pill for men that in 1998 became the first approved drug for erectile dysfunction.
"This is the biggest breakthrough in women's sexual health since the advent of 'the Pill'" for contraception, The National Consumers League said in a statement.
"It validates (and) legitimizes female sexuality as an important component of health."
But Public Citizen, a consumer watchdog group that testified against the drug earlier this year, predicted that Addyi will be pulled from the market within a few years because of "serious dangers to women, with little benefit" to them.
"Unfortunately, we haven't heard the last of this drug."
The FDA had twice rejected the Raleigh, North Carolina-based firm's drug. But the latest decision comes after an advisory panel concluded in June it should be approved with strict measures in place to ensure patients are fully aware of the risks.
Sprout officials could not immediately be reached for comment.
The news sent shares of Palatin Technologies, which is creating a rival drug for HSDD, up about 30 percent to $1.21 in extended trade.
Palatin's experimental treatment called bremelanotide is now in late-stage trials and works differently from Addyi. It attempts to activate certain brain pathways.
Palatin in a statement late Tuesday said its drug, if approved, would only be taken as needed, not on a daily basis like Addyi, thereby providing women "greater control and flexibility in their treatment."
Unlike Viagra, which affects blood flow to the genitals, Addyi is meant to activate sexual impulses in the brain. It is similar to a class of other drugs known as selective serotonin reuptake inhibitors, or SSRI's, that include antidepressants such as Prozac.
Women who took Addyi in a clinical study had an increase of about one sexually satisfying event per month compared with those taking a placebo. Advocates claim that increase is meaningful. Critics say the small benefit is outweighed by the drug's risks.
SEVERE SIDE EFFECTS
Addyi will come with a prominent "boxed warning" about side effects, including among people with liver impairment or who take Addyi with alcohol or with medicines known as CYP3A4 inhibitors that include certain steroids.
Originally developed by Germany's Boehringer Ingelheim under its chemical name flibanserin, it was first rejected by the FDA in 2010 after an advisory panel said the benefits did not outweigh the risks. Sprout acquired the drug, conducted additional studies and resubmitted the application. In 2013, the FDA rejected it again.
The rejection sparked a lobbying campaign by Sprout, aided by some women's groups who accused the FDA of gender bias because it had approved Viagra for men - a charge the FDA vigorously rejected.
The FDA approved Addyi despite a rocky relationship in recent years with the founders of Sprout.
The chief executive of Sprout, Cindy Whitehead, co-founded the company with her husband Robert Whitehead in 2011 after selling another small drugmaker they had founded called Slate Pharmaceuticals which had received repeated warnings from the FDA about its marketing tactics.
Slate marketed an implantable testosterone pellet for men with low levels of the male sexual hormone, called Testopel.
In one FDA warning letter, issued on March 24, 2010, the FDA said Slate had improperly inferred on its Testopel website and in a video that the testosterone product could help patients with depression, erectile dysfunction, diabetes and HIV.
The Whiteheads could not be reached for comment late on Tuesday about Addyi's approval and their earlier encounters with the FDA.
