FRANKFURT/NEW YORK: Bayer AG, after more than a year of talks, agreed to pay as much as US$10.9 bil (RM46.6 bil) to settle close to 100,000 US lawsuits claiming that its widely-used weedkiller Roundup caused cancer, resolving litigation that has pummelled the company’s share price.
The German drugs and pesticides maker has come to terms with about 75% of the 125,000 filed and unfiled claims overall, it said in a statement on the deal to end legal disputes it inherited with its US$63 bil takeover of Monsanto in 2018.
The settled cases over Roundup and other glyphosate-based weedkillers account for about 95% of those currently set for trial, it added.
“The Roundup settlement is the right action at the right time for Bayer to bring a long period of uncertainty to an end,” Bayer Chief Executive Werner Baumann said. “Unfortunately, we have to pay an awful lot of money for a product which is perfectly regulated.”
The company said it will make a payment of US$8.8 bil to US$9.6 bil to resolve the current Roundup litigation – including an allowance expected to cover unresolved claims – and US$1.25 bil to support a separate class agreement to address potential future litigation.
Bayer did not admit liability or wrongdoing.
“Bayer is not getting complete relief, but trying to do as much as it can to calm uncertainty,” said Adam Zimmerman, a law professor at Loyola Law School who has followed the litigation.
The deal dwarfs previous out-of-court product liability settlements, such as Merck & Co’s US$5 bil deal to end litigation over its withdrawn painkiller Vioxx, and Bayer deals worth US$2 bil to settle claims of harm caused by its Yasmin and Yaz birth control pills.
Ken Feinberg, who was appointed settlement mediator by a federal judge more than a year ago, said that while nearly 25,000 claims remained unsettled there will be no more trials as cases settle in the coming months.
“Bayer wisely decided to settle the litigation rather than roll the dice in an American court,” said Feinberg, who has mediated other high-profile disputes, including over the Sept 11 Victim Compensation Fund, the BP Deepwater Horizon disaster and Volkswagen’s diesel emissions scandal.
The three cases that have gone to trial will continue through the appeals process and are not covered by the settlement, Bayer said.
A US federal appeals court on Monday permanently blocked California from requiring a cancer warning on glyphosate-based Roundup. That ruling is separate from the wider litigation over whether Roundup causes a type of blood cancer.
The company, whose management in April regained shareholder support for its handling of the litigation, has denied claims that Roundup or its active ingredient glyphosate causes cancer, saying decades of independent studies have shown the product is safe for human use.
Bayer said it expects to maintain its investment-grade credit ratings and intends to keep its dividend policy.
The prospect of a surge in fresh lawsuits, fighting more than 20 trials a year and the accompanying unfavorable media coverage swayed Bayer to come to terms with claimants.
“We are well aware of the negative impact high profile trials already have had on our business and reputation,” Baumann said.
Bayer shares are down 29% since it closed the Monsanto deal in June 2018. At one point last year as juries ruled against the company, Bayer’s market value had fallen below what it paid for Monsanto.
Bayer will continue to sell Roundup, which Monsanto first brought to the market in 1974. It will not add a cancer warning label to the product, a company spokesman said.
Bayer has repeatedly said Roundup is safe and important to farmers who use the herbicide in combination with the company’s genetically modified seeds.
Seeking to forestall further claims, Bayer is taking a risky bet that an independent scientific review will ultimately show that its widely used weed killer Roundup does not cause cancer, legal experts said.
But Bayer had to find a separate solution to mitigate the risk of future claims without pulling the product off the shelves. The company decided to make a calculated gamble on the scientific evidence which so far has overwhelmingly supported its claim that glyphosate, the active ingredient in Roundup, is safe for agricultural use.
Regulators worldwide, including the US Environmental Protection Agency and the European Chemicals Agency, have determined glyphosate to be non-carcinogenic.
But the World Health Organisation’s cancer research arm determined the herbicide to be a “probable carcinogen” in 2015 and since 2018, three consecutive US juries, who listened to scientific evidence from both sides during trial, found that Roundup causes cancer.
“Bayer is taking a huge risk by doing this and it’s a bet that time can show that the science underlying the plaintiffs’ claims is bad,” said David Noll, a law professor at Rutgers University.
While many details of the proposal have yet to be released by Bayer and approved by a federal judge, the plan calls for an independent panel of scientific experts, who will likely be chosen and agreed upon by both sides.
The company will pay US$1.25 bil to support the panel’s research, an amount that does not include any payouts to settle future lawsuits.
The scientific review process is expected to take at least four years, and findings by the panel would be binding on Bayer and anyone who has used Roundup before Wednesday but not developed cancer. If the panel finds glyphosate to be non-carcinogenic, those users could not sue.
If the panel determines glyphosate causes cancer, however, Bayer could face a flood of new lawsuits, with potential damages determined at a later stage. Bayer on Wednesday said the lead plaintiffs’ lawyers have agreed to its plans.
Lawyers for Roundup cancer claimants in the past have alleged that Bayer manipulated scientific studies and deceived the scientific community, claims Bayer denies. – June 25, 2020, Reuters
