Bayer glyphosate dispute: US government recommends Supreme Court dismissal of appeal

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Bayer boss Baumann:

Another defeat in the USA

Photo: WOLFGANG RATTAY/ REUTERS

The agri-pharmaceutical group Bayer has less hope of pursuing its appeal in the US Supreme Court lawsuit over alleged cancer risks of its glyphosate-based weed killer Roundup.

Headwind comes from the US administration of President Joe Biden.

Attorney General Elizabeth Prelogar, representing the government before the Supreme Court, advised the court against accepting Bayer's appeal.

The EPA's approval of the weedkiller without a warning of certain chronic risks "does not in itself eliminate the obligation to provide such warnings," Prelongar wrote in the statement released Tuesday.

The court generally follows the recommendations.

"Monsanto purchase was a mistake - Bayer completely underestimated the risks"

"This is a major setback for Bayer," said Markus Manns, portfolio manager at Union Investments.

"In 90 percent of the cases, the Supreme Court follows the recommendations of the Attorney General. Bayer has made substantial provisions for the 30,000 cases that are still open and for future cases, but the uncertainty has increased significantly."

It is now likely that new cases will accumulate in the next few years and that Bayer will again be confronted with lawsuits, lost processes and damages payments in the USA.

"Despite commercial logic, the purchase of Monsanto was a mistake. Bayer completely underestimated the risks. Bayer could have used the money from the provisions for acquisitions in the pharmaceutical sector or to finance the Asundexian studies (Xarelto successor)," says Manns.

Bayer shares lost around nine percent at times.

"With that, the scenario that would end all Roundup lawsuits is probably off the table," said one trader.

The company said it "remains convinced that there is good legal reason for the Supreme Court to review the Hardeman case and reverse the verdict, as supported by the numerous opinions that have been filed."

The EPA has repeatedly stated that glyphosate-based weed killers are safe to use and non-carcinogenic.

"Therefore, a cancer warning on these products would be false and misleading and is barred by relevant federal law."

The decision is now in the hands of the Supreme Court.

Bayer has already prepared for defeat

In the event that the court does not accept the case or rule in the interests of the plaintiffs, Bayer had already made provisions a year ago and created additional provisions of 4.5 billion dollars and launched a comprehensive plan to settle the lawsuits.

CEO Werner Baumann saw good reasons for the court's decision in favor of Bayer, since the EPA itself has banned warnings about possible cancer risks.

Baumann believes that a Supreme Court decision in Bayer's favor would effectively end potential future litigation.

But the chances of that now look slim.

The wave of lawsuits in the US brought Bayer into the house with the multi-billion dollar takeover of glyphosate and Roundup developer Monsanto.

To date, Bayer has lost three court cases involving millions in damages and has suffered defeats in all previous appeals.

In one such case - that of plaintiff Edwin Hardeman, who attributed his cancer to Roundup use - the Leverkusen-based company went to the US Supreme Court and filed an appeal last August.

In 2021, Bayer also won two glyphosate cases before juries for the first time, which did not see the herbicide as the cause of the plaintiffs' cancer.

Bayer has always denied the allegations against glyphosate.

Authorities worldwide have classified the drug as non-carcinogenic.

Only the cancer research agency IARC rated the active substance as "probably carcinogenic" in 2015.

The plaintiffs relied on this assessment.

In the summer of 2020, Bayer announced a $11.6 billion settlement plan to get the wave of lawsuits off the table.

Most recently, agreements were still pending for around 31,000 of the 138,000 pending lawsuits that had been filed.

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