Legal Risks

To find out more about the Bayer Group’s legal risks, please see Note 32 to the consolidated financial statements in the Bayer Annual Report 2015, which can be downloaded free of charge at www.bayer.com. Since the Bayer Annual Report 2015, the following significant changes have occurred in respect of the legal risks:

Yasmin™ / YAZ™: As of October 14, 2016, the number of claimants in the pending lawsuits and claims in the United States totaled about 140 (excluding claims already settled). Claimants allege that users have suffered personal injuries, some of them fatal, from the use of Bayer’s drospirenone-containing oral contraceptive products such as Yasmin™ and / or YAZ™ or from the use of Ocella™ and / or Gianvi™, generic versions of Yasmin™ and YAZ™, respectively, marketed by Barr Laboratories, Inc. in the United States.

As of October 14, 2016, Bayer had reached agreements, without admission of liability, to settle approximately 10,600 claims in the United States for venous clot injuries (primarily deep vein thrombosis or pulmonary embolism) for a total amount of about U.S. $2.1 billion. Bayer will continue to consider the option of settling such claims after a case-specific analysis of medical records. At present, about 20 such claims are under review.

In August 2015, Bayer reached an agreement to settle, without admission of liability, lawsuits and claims in which plaintiffs allege an arterial thromboembolic injury (primarily strokes and heart attacks) for a total maximum aggregate amount of U.S. $56.9 million. The participation thresholds have been met (97.5% of those who are eligible, and 96% of those who are eligible and allege death or catastrophic injuries) and the settlement was funded in May 2016. As of October 14, 2016, about five of the 140 above-mentioned claimants alleged arterial thromboembolic injuries.

As of October 14, 2016, 13 lawsuits seeking class action certification had been served upon Bayer in Canada. A class has been certified in two of these lawsuits.

Mirena™: As of October 14, 2016, lawsuits from approximately 2,500 users of Mirena™, an intrauterine system providing long-term contraception, had been served upon Bayer in the United States. Additional lawsuits are anticipated. Plaintiffs allege personal injuries resulting from the use of Mirena™, including perforation of the uterus, ectopic pregnancy or idiopathic intracranial hypertension, and seek compensatory and punitive damages. In July 2016, the multidistrict litigation court granted summary judgment dismissing approximately 1,230 cases pending before that court. Plaintiffs have appealed the decision.

Xarelto™: As of October 14, 2016, U.S. lawsuits from approximately 13,800 recipients of Xarelto™, an oral anticoagulant for the treatment and prevention of blood clots, had been served upon Bayer. Plaintiffs allege that users have suffered personal injuries from the use of Xarelto™, including cerebral, gastrointestinal or other bleeding and death, and seek compensatory and punitive damages. Additional lawsuits are anticipated. As of October 14, 2016, ten Canadian lawsuits relating to Xarelto™ seeking class action certification had been served upon Bayer.

Essure™: As of October 14, 2016, U.S. lawsuits from approximately 3,000 users of Essure™, a medical device offering permanent birth control with a nonsurgical procedure, had been served upon Bayer. Plaintiffs allege personal injuries from the use of Essure™, including hysterectomy, perforation, pain, bleeding, weight gain, nickel sensitivity, depression and unwanted pregnancy. As of October 14, 2016, two Canadian lawsuits relating to Essure™ seeking class action certification had been served upon Bayer. Bayer believes it has meritorious defenses and intends to defend itself vigorously.

Betaferon™ / Betaseron™: Since 2010, Bayer and Biogen Idec have been litigating in U.S. federal court about the validity of a Biogen patent and its alleged infringement by the production and distribution of Betaseron™, Bayer’s drug product for the treatment of multiple sclerosis. In March 2016, the U.S. federal court decided a disputed issue regarding the scope of the patent in Biogen’s favor. Bayer disagrees with the decision, which may be appealed at the conclusion of the proceedings in the U.S. federal court. This development does not change Bayer’s belief that it has meritorious defenses in this dispute and Bayer will continue to defend itself vigorously.

Beyaz™ / Safyral™: In the patent infringement proceedings against Watson Laboratories, Inc., the U.S. Court of Appeals for the Federal Circuit in May 2016 invalidated the patent claims asserted by Bayer and reversed last year’s judgment by a U.S. federal court. Bayer’s petition for rehearing was denied. In October 2016, Bayer petitioned the U.S. Supreme Court to review the decision by the U.S. Court of Appeals for the Federal Circuit. Beyaz™ and Safyral™ are Bayer’s oral contraceptives containing folate. In September 2015, the U.S. federal court ruled in favor of Bayer regarding both the validity of the patent and the infringement thereof by Watson. Watson had filed Abbreviated New Drug Applications with a Paragraph IV certification (“ANDA IV”) seeking approval of generic versions of both Beyaz™ and Safyral™ in the United States and appealed the U.S. federal court decision.

Finacea™: In May 2016, the U.S. Court of Appeals for the Federal Circuit affirmed last year’s decision by a U.S. federal court that Bayer’s patent relating to Finacea™ topical gel is valid and infringed by Glenmark Generics Ltd. Glenmark had filed an ANDA IV seeking approval of a generic version of Finacea™ in the United States and appealed the U.S. federal court decision. The decision is now final.

Staxyn™: In the patent infringement proceedings against Watson Laboratories, Inc., the U.S. federal court ruled in April 2016 that a Bayer patent for the formulation of Staxyn™ is also valid and infringed. In April 2015, the court had already ruled that both of Bayer’s compound patents are valid and infringed. Watson appealed but only against the decision on the validity of the formulation patent. The decision on the compound patents is thus final. Staxyn™ is a Bayer product for erectile dysfunction treatment. It is an orodispersible (orally disintegrating) formulation of Levitra™. Both drug products contain the same active ingredient, which is protected in the United States by two patents expiring in 2018. Bayer believes the risks remaining in this patent dispute are no longer material.

Lower Passaic and Newark Bay Environmental Matters: In the United States, Bayer is one of numerous parties involved in a series of claims brought by federal and state environmental protection agencies. The claims arise from operations by entities which historically were conducted near the Passaic River, Newark Bay or surrounding bodies of water, or which allegedly discharged hazardous waste into these waterways or onto nearby land. Bayer and the other potentially responsible parties are being asked to remediate and contribute to the payment of past and future remediation or restoration costs and damages. In August 2016, Bayer learned that two major potentially responsible parties filed for protection under Chapter 11 of the U.S. Bankruptcy Code. While Bayer remains unable to determine the amount of its liability for these matters, this development is likely to adversely affect the share of costs potentially allocated to Bayer.

Covestro Californian Lawsuit: In September 2016, Covestro LLC – among three other defendants – was served with a lawsuit filed by a law firm in a California federal court. The aim of the lawsuit is to recover financial damages in the form of statutory fines allegedly owed by the defendants to the United States Environmental Protection Agency for the companies’ failure to disclose health risk information associated with the manufacture and handling of TDI, MDI and PMDI. Under the pertinent statute, the U.S. government was afforded an opportunity to intervene and prosecute the claims, but it has declined to do so. Accordingly, the law firm is prosecuting the claims on the government’s behalf. Violations of the Toxic Substances Control Act (“TSCA”) and False Claims Act (“FCA”) are asserted. Covestro will defend itself vigorously and regards the claims asserted against the company as meritless.