Lights Out for Bayer’s YAZ?

Bayer AG, Germany’s largest drugmaker, blinked and swallowed hard, at the end of December, when it begged the Court overseeing the YAZ litigation.

Bayer managed to avoid the first trial which was set to start January 9th, over claims its birth-control pills caused blood clots after Judge Hearndon appointed a mediator in hopes of settling the cases. The plaintiffs were opposed to the setting of a mediator and wanted their day in court.

Mediation Ordered

U.S. District Judge David Herndon in Illinois postponed the January 9th trial of a lawsuit which alleged that Bayer mislead women about the health risks of its Yasmin family of birth-control pills. The case was the first of more than 10,500 suits filed in federal court (10,702 as of January 6, 2011) over injuries allegedly caused by the drugs, which include the Yaz contraceptive.

Herndon ordered Bayer (read the order here) and the plaintiffs suing the company to meet with mediator Stephen Saltzburg, a George Washington University law professor, to explore the possibility of “settlements in this litigation,” the judge said in a December 31st order.

Bayer’s contraceptives generated $1.58 billion in sales in 2010, making them the Leverkusen, Germany-based company’s 2nd biggest-selling drugs. The contraceptives, which contain the synthetic progestin hormone drospirenone, have been under intense scrutiny of federal regulators who question their safety.

FDA Scrutiny and Pressure

Last year, the U.S. Food and Drug Administration warned that women taking the pills were 74 percent more likely to suffer blood clots than women on other low-estrogen contraceptives. The FDA examined data on more than 835,000 women who took pills containing drospirenone, including Bayer’s Yasmin line of birth-control pills, according to the FDA report.

Bayer’s Yasmin was the No. 4 oral contraceptive in the U.S. last year with 4.6 percent of the market as of September, according to data from IMS Health.

Since 2009, the German drugmaker has faced a wave of suits in courts across the U.S. alleging the birth-control pills caused sometimes fatal blood clots. Lawyers suing the drugmaker cited FDA reports of at least 50 deaths tied to the pills from 2004 to 2008.

The cases filed in federal courts were consolidated before Herndon in East St. Louis, Illinois, for pretrial information exchanges.

Bellwether Trials

Herndon scheduled a series of trials (bellwether trials) for January, April and June of 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 risk of clots.

According to the lawyers who were to try the first case, “Bayer didn’t want to go to trial and the judge decided to see whether they wanted to seek a solution outside the courtroom.”

Saltzburg's history with AstraZeneca Mediation

Starting in 2010, Saltzburg served as a mediator in suits against London-based drugmaker AstraZeneca Plc over its Seroquel antipsychotic medicine. The company later set aside more than $600 million to resolve more than 26,000 claims and Saltzburg won praise for his work in that litigation.

According to lawyers who have worked with Saltzburg, the law professor “has a strong sense of right and wrong and he works to come up with a fair valuation on the cases that everyone can live with.”

Bayer also was slated to face Yaz trials in state court in Philadelphia this month. A judge put the first case on hold while the Pennsylvania Supreme Court decides whether to hear a procedural issue.

What does this all mean?

Now that Bayer has blinked and dodged the first trial, it creates an opening to try to settle all of these cases in a global settlement forum.

Once the first case is mediated and settled, then dollar values can be allocated for the gallbladder injuries, the strokes, heart attacks, blood clots, venous thrombo-embolsim, deep vein thrombosis and pulmonary embolism injuries. A discreet dollar amount can be allocated to these injuries by consensus and the slow process of settling the over 20,000 injury cases can begin.

This type of settlement is also known as a "Pancake" settlement, with most of the settlement money going to the folks who were killed or severly injured and have residual damages from the birth control pill, likewise folks who did not have any injuries or made a full recovery, who get the least.

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).

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