Health

Bayer to Rethink Roundup Formula for U.S. Consumers

Bayer AG said it will evaluate whether to continue using the active ingredient in its popular Roundup weedkiller in the residential U.S. market, in the wake of a court setback Wednesday in the company’s efforts to limit future liability over whether the product causes cancer.

Bayer has said it would pay up to $9.6 billion to settle existing Roundup cases that tie the glyphosate-based product to non-Hodgkin lymphoma and another $2 billion toward future claims. The German company lost three trials between 2018 and 2019 brought by Roundup users who said the product caused their cancer and is working to resolve around 125,000 similar claims.

The company’s attempt to resolve the future cases came in the form of a novel class-action settlement, which sought to bind people who have used Roundup but aren’t yet sick, as well as Roundup users with cancer who haven’t already sued.

In a six-page Wednesday order, U.S. District Judge

Vince Chhabria

in San Francisco concluded that the proposal would benefit the company much more than Roundup users who blame the product for causing cancer. He pointed to what he called “glaring flaws,” including that it offered few benefits for those who haven’t yet gotten sick while forcing them to give up substantial legal rights down the line.

Hours after the order, Bayer said it would abandon its efforts at a court-approved solution to address its future Roundup liability, which it said would have been the fairest, most-efficient approach.

Instead, the company said it will pursue several avenues, including creating a new website with studies relevant to Roundup’s safety that could also be reflected on its label. Bayer, which stands by the safety of Roundup and its main ingredient, glyphosate, said the website wouldn’t draw any safety conclusions but would help users make their own decisions.

The company also said it would rethink selling glyphosate-based products to the U.S. residential market but not to professional or agricultural users. The bulk of the lawsuits, it said, have come from U.S. residential consumers.

The company could continue selling products under the Roundup brand but without glyphosate.

Elizabeth Cabraser,

a plaintiffs’ lawyer who helped create the proposal, said she was disappointed by the ruling and still believes such a settlement would “provide tremendous financial, health and safety benefits for class members.”

Investors have been keenly awaiting Judge Chhabria’s decision, hoping an approval of the proposal would help break a yearslong downward spiral of the company’s share price, analysts say.

The challenge for Bayer is how to contain liability on a product that it continues to sell without any warning label. The U.S. Environmental Protection Agency has said the product is safe and wouldn’t permit a cancer warning.

At a daylong hearing earlier this month, attorneys pushing the proposal argued that it was intended to benefit migrant farmers and agricultural workers who use Roundup often but haven’t been a huge part of the plaintiff pool in the existing Roundup cases. During the hearing, Judge Chhabria called that reasoning a “straw man” that didn’t make up for its failings.

Bayer and plaintiffs’ lawyers had proposed creating a medical monitoring program to help Roundup users detect cancer early. Non-Hodgkin lymphoma, however, is difficult to detect before symptoms appear, which Judge Chhabria said made the benefits of such a program “far less meaningful than the attorneys suggest.” He also blasted a compensation fund that was only guaranteed to run for around four years, finding that the long latency period of NHL means most people who aren’t yet sick would be unlikely to benefit from it.

Judge Chhabria suggested at the hearing that the company craft a label that doesn’t concede the product causes cancer but explains the contrasting scientific findings of U.S. and international agencies, some of which have suggested a cancer link. Bayer has contended that the EPA would block any such a label.

The judge had said at the hearing he wouldn’t issue a ruling quickly, but noted in his written order that he changed his mind after concluding that “mere tweaks cannot salvage the agreement.” The proposal was Bayer’s second attempt at resolving future claims.

Bayer shareholders have been frustrated with the loss in market value and slow progress in resolving the protracted legal battle. The company inherited the Roundup cases with its 2018 acquisition of Monsanto for $63 billion, and the company’s share price is down more than 40% from pre-acquisition levels.

Negotiations with plaintiffs’ lawyers on settling pending lawsuits have also dragged on for months.

In its first-quarter report on May 7, Bayer said it had resolved roughly 96,000 claims out of a total of 125,000. Earlier this month, Bayer also lost an appeal in one of the three cases to go to trial. The company said Wednesday it will continue appeals in the existing cases and seek a decision by the U.S. Supreme Court.

Write to Sara Randazzo at [email protected] and Ruth Bender at [email protected]

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