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Bayer Yaz and Yasmin Lawsuit Settlements Climb to $142 Million

Published April 26, 2012 by

Bayer AG (BAYN) said settlements of U.S. lawsuits claiming that its Yasmin line of birth-control pills caused blood clots in women have increased to $142 million.

Bayer, based in Leverkusen, Germany, has resolved 651 cases alleging its Yasmin and Yaz contraceptives caused sometimes- fatal clots that can lead to heart attacks and strokes, the company said today in its Stockholders’ Newsletter for the first quarter. The company said it paid $142 million in the settlements, for an average of about $218,000 a case.

“This company wants to avoid the possibility of a large jury award in these clot cases,” Carl Tobias, who teaches product-liability law at the University of Richmond in Virginia, said in a phone interview. “Settlements provide predictability when it comes to the cost of resolving these cases.”

Bayer’s update comes less than two weeks after Richard Vosser, a JPMorgan Chase & Co. analyst, said the drugmaker may have to pay more than 2 billion euros ($2.65 billion) to resolve all the cases over the contraceptives.

Bloomberg News reported April 13 that Bayer agreed to pay about $110 million to settle the first 500 U.S. suits over Yasmin, according to people familiar with the accords.

The U.S. Food and Drug Administration April 10 ordered Bayer and other contraceptive makers to strengthen blood-clot warnings on their products.

Triple Risk

Pills like Bayer’s Yasmin, which contain a synthetic hormone called drospirenone, will have warning labels saying researchers have found they may triple the risk for clots.

The FDA examined data on more than 835,000 women who took pills containing drospirenone, including Bayer’s Yasmin line, according to the FDA report. Yasmin was the No. 4 oral contraceptive in the U.S. in 2011, with 4.6 percent of the market as of September, according to data from IMS Health.

Bayer’s contraceptives generated $1.58 billion in sales in 2010, making them the drugmaker’s biggest-selling drugs after Betaseron, a multiple sclerosis medication.

“Bayer is only settling claims in the U.S. for venous clot injuries (deep vein thrombosis or pulmonary embolism) after a case specific analysis of medical records,” the company said in the report.

11,900 Suits

Fewer than half of the cases brought over the contraceptives so far include those injuries, Bayer said. As of April 18, Bayer faced 11,900 lawsuits over Yaz and Yasmin in the U.S. involving about 14,000 plaintiffs, the company said.

Bayer’s American depositary receipts, each representing one ordinary share, rose 2.2 percent to $69.78 in over-the counter trading today. Shares in Germany climbed 2.6 percent to 54.44 euros.

Bayer officials said they were “increasingly confident” about the drugmaker’s outlook for the year after reporting sales and profits in the first quarter that beat analysts’ estimates.

Earnings before interest, tax, depreciation, amortization and special items rose 9.4 percent to 2.44 billion euros, the company said in a statement. That beat the average analyst estimate of 2.24 billion euros compiled by Bloomberg.

In the newsletter, Bayer officials said they weren’t admitting wrongdoing in any of the settlements. Bayer’s available insurance for product-liability claims may not be enough to “cover all expenses and potential liability” from the litigation, according to the newsletter.

Gallbladder Cases

Michael Burg, one of the leaders of a group of plaintiffs’ lawyers that is overseeing the progress of Yasmin cases consolidated before a federal judge in Illinois, said Bayer is pressing ahead with settlement talks about clot cases.

The drugmaker is rejecting women’s claims that the contraceptives damaged their gallbladders or caused them to suffer from gallstones, Burg, who is based in Colorado, said in a telephone interview.

“At this point, they’ve said they don’t anticipate settling any of the gallbladder cases,” he said.

Since 2009, the German drugmaker has faced a wave of litigation over the birth-control pills. Lawyers suing the drugmaker cited FDA reports of at least 50 deaths tied to the pills from 2004 to 2008. Plaintiffs’ lawyers contend in court filings that Bayer officials marketed the contraceptives for unapproved uses and misled women about the drugs’ risks.

Trials on Hold

The cases filed in federal courts were consolidated before U.S. District Judge David Herndon in East St. Louis, Illinois, for pretrial proceedings.

Herndon scheduled a series of trials for early this year so juries could begin weighing claims that Bayer and its units marketed Yaz and other contraceptives as safer than rivals’ products while knowing they posed a higher clot risk.

At Bayer’s suggestion, Herndon called in Stephen Saltzburg, a George Washington University law professor, to serve as a mediator. Saltzburg’s job was to explore the possibility of “settlements in this litigation,” Herndon said in a December order.

The judge put the trial schedule on hold while Saltzburg met with lawyers for the drugmakers and former Yaz users. “I don’t anticipate seeing any trials this year,” Burg said today.

The case is In re Yasmin and Yaz (Drospirenone) Marketing, Sales Practices and Product Liability Litigation, 09-md-02100, U.S. District Court, Southern District of Illinois (East St. Louis).