Prevagen maker must face FTC, New York claims that memory supplement does not work

NEW YORK (Reuters) - Quincy Bioscience failed to dismiss a lawsuit in which the Federal Trade Commission and New York attorney general said it deceptively marketed the dietary supplement Prevagen by claiming it improved memory despite a lack of scientific evidence.

In a decision released on Thursday, U.S. District Judge Louis Stanton in Manhattan rejected Quincy’s claim that the FTC exceeded its powers in bringing the January 2017 lawsuit because it lacked a quorum of commissioners to decide whether to sue.

Stanton also said he had jurisdiction to hear claims against Quincy’s co-founders and largest shareholders - president Mark Underwood and former president and current chief executive Michael Beaman.

He nonetheless dismissed claims against Beaman, finding a lack of evidence that he knew about or took part in any deception, but said the regulators may yet refile those claims.

Lawyers for Quincy, Underwood and Beaman declined to comment. Neither the FTC nor the office of New York Attorney General Letitia James immediately responded to requests for comment.

The complaint said Quincy based much of its suspect advertising on a single study, which the regulators said failed to show a statistically significant improvement in memory among people given Prevagen over people given a placebo.

According to the complaint, Quincy sold about $165 million worth of Prevagen in the United States from 2007 until the middle of 2015, at prices ranging from $16 to $70 for 30 pills.

Regulators said sales for the Madison, Wisconsin-based company benefited from television ads, including infomercials, as well as radio, newspaper and magazine ads and social media.

Stanton had dismissed the lawsuit in September 2017, but the federal appeals court in Manhattan revived it in February, saying the regulators had plausibly alleged that Quincy made false or materially deceptive claims about Prevagen.

The appeals court also said Stanton had not addressed some of the defendants’ arguments for dismissal. Those arguments were the subject of the decision released on Thursday.

The case is Federal Trade Commission et al v Quincy Bioscience Holdings Co et al, U.S. District Court, Southern District of New York, No. 17-00124.

Reporting by Jonathan Stempel in New York, editing by G Crosse