The Birth Control Market Is Broken

Neglect from investors and insurers is making life next to impossible for contraceptive startups.

- MARIA ASPAN

VALENTINE'S DAY in San Diego this year dawned cold and grim for Saundra Pelletier. It should have been a day of celebration-or at least marketing synergy-for the CEO of Evofem Biosciences, a women's health company with an unapologetically sex-positive mission. Its first and only product is a contraceptive gel called Phexxi, which Evofem markets to the millions of women eager for a birth control option without hormones. More than 100,000 people have gotten a prescription for Phexxi since it launched in late 2020; millions more have watched its $30 million viral commercial, starring Schitt's Creek comedian Annie Murphy.

But the past few years have stretched Pelletier's company to its limits. Evofem more than tripled its sales last year, to $16.7 million in the first nine months of 2022-but it lost $68.4 million over that same period and is carrying $84 million of debt. A crucial clinical trial failed in October, dooming Pelletier's efforts to expand Phexxi's market. Now some patients are casting doubt on Phexxi's basic effectiveness, claiming in online reviews that they have gotten pregnant while using the gel.

Some of these problems are of Evofem's own making. But the worst body blows-to Evofem, and to the other companies trying to serve the 47 million U.S. women who use contraception-have come from the broken health care system. Investors and large pharma companies have largely abandoned the women's health field, leaving the development of new contraceptives to small, scrappy specialists like Evofem, Agile Therapeutics, and TherapeuticsMD. But companies that have won approval for their products have quickly discovered that most big insurance companies would not pay for them, despite a federal law requiring them to do so.