Bayer's Bitter Pill - Biz Watch - March 2, 2003
Bayer’s Bitter Pill
By: Blaine Greteman and Steve Zwick
March 2, 2003
The share price of German pharmaceuticals titan Bayer AG slid 26% last week at one point touching a 10-year low. The reason: lawyers claimed to produce a 'smoking gun' in their lawsuit against the company's American arm over the cholesterol-lowering drug Lipobay (also known as Baycol). Bayer voluntarily withdrew the drug from the market in August 2001, when it was linked to rhabdomyolysis, a muscle-destroying condition that can be fatal. But attorneys last week produced excerpts from correspondence between executives at Bayer and GlaxoSmithKline from 1997, which warned that 'simple and safe no longer appears to be a viable promotional platform' for the drug. In 1999, U.S. regulators warned that Bayer's marketing of the drug, which was later revised, was 'false, lacking in fair balance or otherwise misleading.' Bayer says the warning was routine and the correspondence was taken out of context. But analysts worry that if the trial proves Bayer knew about the risks associated with Lipobay long before withdrawing the drug, the company could lose its insurance cover on judgments that could cost the company billions. Bayer claims that improper prescriptions caused the condition, in which muscle cells disintegrate and release toxic chemicals into the blood, sometimes leading to liver and kidney failure. It also insists that each case is unique and will have to be dealt with individually. But Munich attorney Michael Witti has already joined Chicago lawyer Kenneth Moll and others in petitioning a U.S. court to let them file a class action lawsuit on behalf of 6,800 people, many from Germany. And even if Bayer fends off the U.S. class-action suit, they may still face legal headaches in Europe: the state prosecutor in Turin, Italy, is pursuing a criminal investigation against the company for marketing and selling flawed medicine.