Bayer has embarked on a lobbying effort to persuade US states to pass legislation that would cut billions of dollars in liabilities and reduce the legal threat the German company faces from an allegedly carcinogenic weedkiller.
Since 2018, Bayer has been ensnared in a complex and costly US legal battle over the weedkiller Roundup, whose active ingredient glyphosate has been blamed by tens of thousands of Americans for giving them cancer.
The German conglomerate maintains that the product is safe and says scientific research supports that view. Despite that, the company has taken steps to end the protracted crisis over Roundup, which Bayer acquired as part of its ill-fated $63bn acquisition of US crop sciences business Monsanto in 2016.
In 2020, Bayer reached a $10.9bn settlement over claims and set aside another $4.5bn a year later. The strategy Bayer embarked on this year has targeted Idaho, Iowa and Missouri, states where it has significant business operations.
Bayer lobbyists are pushing for local legislatures to pass bills that would affirm the primacy of federal laws on the labelling of Roundup, a key point of contention in the cases that have been fought across the US.
In a series of courtroom victories, lawyers for plaintiffs have argued that Roundup’s warning labels failed to meet state requirements and these are not pre-empted by federal law, helping them win billions of dollars.
Bayer has previously pointed to the fact that the US Environmental Protection Agency, which regulates weedkillers and their labelling, has ruled that Roundup is safe and approved its labelling.
The legal quagmire is one of multiple challenges facing Bayer chief executive Bill Anderson, who joined from Swiss drugmaker Roche last year and has vowed to restore the fortunes of one of Germany’s best-known companies.
Last month, Bayer said it would slash its dividend by 95 per cent this year and pay a minimal amount for the next two in bid to conserve cash. Anderson has also raised the prospect of splitting up the group to reverse the 50 per cent drop in Bayer shares over the past 12 months.
Anderson is likely to be quizzed on a potential overhaul of the company, as well its legal strategy on Roundup, when he delivers a long-awaited strategy update alongside the group’s results on March 5.
Although Bayer has won many of the Roundup cases, including one in Arkansas last week, it has also lost several.
In January, a jury in Philadelphia awarded damages of $2.2bn to a plaintiff, and while the size of awards are typically reduced by a judge, the scale of the ongoing legal fight Bayer faces in the US has worried investors. About 50,000 cases filed over Roundup remain unresolved.
Nora Freeman Engstrom, a professor at Stanford Law School, said that the chief failing of Bayer’s legal strategy was “quite simply, it didn’t reach a global [comprehensive] settlement”, referring to the 2020 settlement. “It left some cases outstanding.”
US trial attorneys are eager to keep fighting Bayer in court. They have spent more than $1mn between November and January on Roundup television ads, according to X Ante, a firm that tracks spending on legal advertising.
Compared with all other consumer products — such as drugs and medical devices — Roundup has been the most targeted TV advertising since August, the firm said.
According to a person familiar with Bayer’s strategy, its lobbying was not making radical demands as the federal legislation that regulates pesticide “was always taken to be the law of the land for 50 states” for decades.
That principle had been attacked by “the litigation industry” in recent years, that person claimed, adding that Bayer was calling on state lawmakers to “reconfirm that the EPA [rather than an individual state] has authority over the label of pesticides”.
Lawmakers in Iowa say the lobbying effort could be broadened across the country. This state-by-state strategy had previously been attempted by tobacco and asbestos companies when facing a wave of lawsuits, said Daniel Hinkle, senior state affairs counsel for the American Association for Justice, which represents trial lawyers.
“They [companies] go state-by-state to carve out and eliminate as many cases as they can that way,” he said.
But as Bayer’s fight over Roundup goes on, it is unclear whether its lobbying of state legislatures will pay off. In Idaho, for example, Republicans joined with Democrats to torpedo the legislation that Bayer was seeking.
Bayer said that proposed legislation at state level “would ensure any pesticide evaluated and registered with the Environmental Protection Agency — and sold under a label consistent with the EPA’s own scientific determinations — is sufficient to satisfy any requirements for health and safety warnings”.
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