The drug is the second medication of its kind to win FDA approval, following Sprout Pharmaceuticals' Addyi pill, which was cleared in 2015 and stemmed controversy over whether a reduced sex drive in women is considered a health condition or mental issue.
The newly approved drug, bremelanotide, will be marketed under the name Vyleesi and is an injection meant to increase women's libido. It is developed by Palatin Technologies, which granted exclusive licensing rights to Amag Pharmaceuticals.
Unlike Viagra, which directs blood flow to men's genitals, Palatin said Vyleesi works by activating pathways in the brain that are involved in the body's sexual responses. The drug is self-administered through an auto-injector 45 minutes before having sex.
Palatin is set to receive up to $300 million from its deal with Amag if the drug meets certain sales milestones. Palatin will also collect $60 million now that the FDA approved Vyleesi.
Palatin says Vyleesi has undergone more than 30 clinical trials with over 2,500 people. The company said phase 3 studies "confirm the effectiveness" of the drug as a treatment for pre-menopausal women with hypoactive sexual desire disorder. The full trial results have not been made available.
The disorder is a condition in which women lose interest in sex. Experts estimate one in ten women live with the condition.
Vyleesi will join Addyi in women's small list of drug options that can boost their libido. Though the Addyi pill, which is taken daily, was rejected twice by the FDA before winning approval. Doctors originally prohibited alcohol use with the drug, but the company now says new data shows it's safe to take with alcohol.