Quincy Bioscience, a Madison biotech company that has struck gold in the dietary supplement business, is facing a potentially ruinous lawsuit filed by government regulators.
The Federal Trade Commission in conjunction with the New York state attorney general is seeking to shut down sales of Prevagen, which is a costly over-the-counter supplement the company says improves brain function, including memory.
The supplement's key ingredient is a synthetic version of a jellyfish protein called aequorin. Quincy has patented it and promoted aequorin as supporting a sharper mind and clearer thinking.
"A clear-cut fraud" is how New York Attorney General Eric Schneiderman described the supplement in a press release. Through its advertising and TV infomercials, Quincy was preying on vulnerable senior citizens, he said, adding: Prevagen is a product "that costs more than a week's groceries, but provides none of the health benefits that it claims.”
The FTC and Schneiderman want the court to issue a permanent injunction against the sale of Prevagen — which is Quincy's core product — and to order the company to refund more than $165 million in Prevagen sales to consumers.
Quincy has firmly pushed back in what stacks up as a life-or-death battle in New York's southern district federal court. “Prevagen is safe. Neither the FTC nor the New York attorney general has alleged that Prevagen can cause or has caused harm to anyone," the company said in a statement posted on its website. "And hundreds of thousands [of] people tell us it works and improves their lives."
The company argues it has "gold standard" research supporting its advertising — an assertion that the complaint appears to seriously undermine — and that politics is the source of its FTC problems. Namely, that only two commission members — both Democrats — voted to authorize the legal action, while a third member, a Republican, recused herself, and two commission seats remain unfilled.
"We vehemently disagree with these allegations made by only two FTC commissioners," Quincy said in its statement. "This case is another example of government overreach and regulators extinguishing innovation by imposing arbitrary new rules on small businesses like ours."
Jenna Greene, a legal observer writing in The Litigation Daily, called it a "post-truth" defense "that may have particular resonance at the dawn of the Trump administration."
Meanwhile, Quincy’s claims are rejected by the research community, which notes that any protein taken by mouth will be broken down into amino acids in the stomach and won't reach the brain in its original form.
Quincy's claims "have no legitimate reality based on the real facts of science, nutrition and memory," says David Mead, a molecular biologist and cofounder of Varigen Biosciences in Madison.
"It's quackery. I can't think of anything better to say," says Baron Chanda, an associate professor in the UW-Madison Department of Neuroscience.
"I second the ‘quackery,'" says Chanda's neuroscience colleague, professor Edwin Chapman. "This is downright silly — no other word for it."
Quincy was founded in Madison in 2004 by Mark Underwood, Quincy's president, and Michael Beaman, its chief executive officer. The company raised $1.5 million in venture funding, including $250,000 from the Dane Vest Tech Fund and $59,750 in state-administered investor tax credits. Formerly headquartered at University Research Park, Quincy is now at 726 Heartland Trail on the far west side.
For three years in a row, Quincy was identified as one of the fastest-growing small companies in America by Inc. magazine. Indeed, Quincy boasts that Prevagen is "the #1 selling memory supplement in drugstores," including outlets like Walgreens and CVS. Drug Store News reports that Prevagen sales nearly doubled in 2016. Another industry tracker cites the "staggeringly high growth rate” of brain-health items like Prevagen.
But Quincy's ascent has been troubled.
In 2010, 40 neuroscience faculty at UW-Madison and UW-Milwaukee, responding to a news story about Quincy's plans to market Prevagen, sent a letter to the Wisconsin State Journal stating they were "deeply disturbed" by Quincy's claims of it functioning as a memory aid.
They suggested that anyone worried about memory loss would be better off concentrating "on worthwhile activities that are known to slow the loss of memory, such as regular physical exercise, a healthy diet and vigorous daily mental activity."
In 2012, Quincy ran afoul of the Food and Drug Administration. The agency warned Quincy that it was selling "unapproved new drugs" — not dietary supplements — based on unverified health claims of "miraculous" cures of memory loss, including from Alzheimer's and dementia.
This is a huge distinction. Supplements are treated as a food item and are lightly regulated. Drugs, in contrast, are tightly reviewed for their safety and efficacy through rigorous testing. Only 22 new drugs were FDA-approved in 2016, notes Edmund Elder, a UW-Madison School of Pharmacy expert in drug development. The average cost for bringing those new drugs to market? Elder says $2.1 billion and 10 years or more of rigorous testing.
Supplement makers, he says, try to find "this fine line" between saying what is good about the supplement and making a medical claim. "This is where the interpretation comes in from the FDA and the FTC."
In 2013, Underwood told Isthmus "we're in a fine place with the FDA” and "we've been able to satisfy all of their requests." Yet three years later, the FDA website says the case has yet to be closed. (The agency did not respond to a reporter's request for clarification. Quincy also declined to speak, citing the FTC/New York litigation.)
Federal Trade Commission attorney Michelle Rusk says her legal action is unconnected to the FDA investigation. "Our suit is part of a larger effort to stop companies that are preying on an aging population and its fear of memory decline and dementia. We have made that an enforcement priority."
At the heart of the Prevagen case is Quincy's forthright assertion that the supplement "significantly improved learning and word recall" in a randomized, double-blind, placebo-controlled study. Such research, as the company boasts, is the gold standard of science.
In this case, 218 subjects were periodically tested on nine computerized cognitive tasks over 90 days. Prevagen's packaging prominently displays a chart tracking improved memory at 8, 30 and 90 days for the subjects. The problem, says the advocacy group Truth in Advertising, is that Quincy did the study in-house and the results were not peer-reviewed by outside scientists.
More to the point, regulators say that Quincy's own research revealed that Prevagen was actually ineffective: "The study failed to show a statistically significant improvement in the treatment group over the placebo group on any of the nine computerized cognitive tasks."
Quincy researchers subsequently sliced and diced the results more than 30 different ways until it found positive results for subgroups, according to the government complaint. "This methodology greatly increases the probability that some statistically significant differences would occur by chance alone," the complaint says. "Even so, the vast majority of these post-hoc comparisons failed to show statistical significance...."
Michelle Rusk, the FTC attorney, points out that the Prevagen packaging does not chart the "sugar pill" group's results. "That completely hides the fact that Prevagen didn't do better than the placebo," she says. Also uncharted are the "day 60" results, which showed the Prevagen-takers' memory-recall had actually declined from "day 30," according to the complaint.
Quincy in its statement tries to downplay this, saying, "Their experts simply disagree with ours over how to interpret the study results. The FTC should not be the arbiter in matters of scientific debate."
Whether this argument holds up in federal court will be interesting to see.
Elder, the UW drug test expert, says the consequences of a negative verdict could range anywhere from a change in Quincy's marketing to its bankruptcy.