Bayer is estimating its Baycol liability to be approximately $1.6 bil.

Bayer expects its insurance coverage for Baycol to total $1.2 bil. On top of the liability insurance policy, the company took a €300 mil. ($370 mil.) charge to earnings in the fourth quarter.

The fourth quarter charge - Bayer's first in relation to potential Baycol liability - is based on the insurance agreement and "in consideration of further expected settlements and further defense costs," CEO Werner Wenning told investors March 18.

The $1.6 bil. figure is Bayer's first public estimation of the potential liability associated with Baycol. The company withdrew the statin in August 2001 due to reports of rhabdomyolysis, including deaths (¹ Also see "Baycol Withdrawal Gives Boost To Pravachol; Will Crestor NDA Be Affected?" - Pink Sheet, 13 August, 2001., p. 4).

The estimate suggests that Bayer believes it has paid out just over half of the expected settlements.

As of March 5, total settlement payments were approximately $842 mil. Bayer has settled 2,224 Baycol cases in the U.S., including 82 involving deaths. There are 9,948 cases pending.

Wenning acknowledged that Bayer may need to take additional charges related to Baycol liability.

"Due to the considerable uncertainty associated with these proceedings, it is currently not possible to more accurately estimate the potential liability," he said.

By one measure, Bayer's expected liability for Baycol is quite small. The amount is roughly one-tenth the size of Wyeth's $16.6 bil. cost estimate related to the Redux diet drug litigation (² Also see "AHP Sets Redux Liability Cost At $12 Bil.: 25% More Than Price Of Cyanamid" - Pink Sheet, 29 January, 2001., p. 18).

To date, Bayer has won verdicts in all three U.S. cases that have gone to trial, including those in Jackson, Miss. and Corpus Christi, Tex. A Minneapolis federal court denied a motion for class action certification in September (³ 'The Pink Sheet' Sept. 22, 2003, In Brief).

Bayer Baycol Liability Estimated At $1.6 Bil.; 2,224 Cases Settled

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