Fen-phen, Baycol, Rezulin, Vioxx…
The 1990s and 2000s saw a tidal wave of pharmaceutical-related litigation that dominated the agenda of the plaintiffs’ bar. Mass torts over the negative health impacts of these drugs resulted in multibillion-dollar awards and enormous settlements paid for by the drug companies and their insurers and reinsurers.
Executive Summary“Literature pollution exclusions” are one tool insurers can use to underwrite pesticide risk profitably and sustainably, executives of Praedicat suggest in this article predicting a wave of pesticide lawsuits that rivals the litigation against pharmaceutical companies in the 1990s and 2000s. Praedicat’s model puts expected losses for pesticide litigation in the low billions of dollars, but tail losses approach $100 billion, they report.
Explaining how “literature pollution” fueled large verdicts in glyphosate (Roundup) cases, they say that glyphosate changed the rules of the game, as plaintiffs’ lawyers scour the industry for signs that pesticide companies hid dangerous effects of their products, and scientists have renewed their interest in the study of the potential harmful effects of pesticides on humans and the environment.
No other industry has seen the frequency of severe liability losses that the pharmaceutical industry experienced in those years. Until recently, that is. One industry is beginning to see the emergence of a similar pattern: pesticides, which Praedicat forecasts could lead to as much as $100 billion in economic loss.
Pesticide Mass Torts
The recent trend started with the herbicide glyphosate. Monsanto began selling the chemical as a weedkiller in 1974 under the name Roundup. Scientists had long been interested in its impact on human health, but a wave of litigation started in 2015 when the International Agency for Research on Cancer (IARC) classified glyphosate as a “Group 2A carcinogen,” meaning that they assessed it as “probably carcinogenic to humans.” The designation was based on science that suggested exposure at work or in the home had caused non-Hodgkin’s lymphoma.
Even though regulators had approved glyphosate use globally, the IARC 2A determination triggered the start of Roundup lawsuits in the U.S. They have since grown into a multidistrict litigation (MDL) with tens of thousands of cases.
Early bellwether trials saw juries return shockingly large compensatory and punitive awards that far exceeded the expectations of both the defendants and their insurers. A key factor in those verdicts has been the argument by plaintiffs that Monsanto had distorted the science by ghostwriting positive articles or suppressing negative findings. This pollution of the literature has allowed juries to ignore the regulatory approvals and otherwise unanimous findings of global regulators that glyphosate did not pose a cancer risk. While Monsanto (later acquired by Bayer) wins some cases, it has paid roughly $11 billion to settle about 100,000 others and is still fighting about 26,000 active suits, including 4,000 in the MDL.
Bayer/Monsanto have been generally unsuccessful in their efforts to have appellate courts throw out the verdicts with claims that the plaintiffs’ witnesses should not have been allowed to testify about glyphosate’s carcinogenicity. Nor have they prevailed in arguments based on preemption, a constitutional argument that federal laws regulating pesticides render it impossible for pesticide manufacturers to comply with state laws regarding warnings about potential health effects of their products.
The Next Pharma?
Following the success of glyphosate suits, other pesticides are seeing acceleration in litigation. They include the established pesticides dicamba, paraquat and chlorpyrifos.
Dicamba litigation is a bit different than the others we discuss in that plaintiffs allege that pesticide drift was causing crop damage on their property. Similar to the glyphosate litigation, though, plaintiffs have alleged that dicamba’s manufacturer failed to apprise the EPA about the possibility of drift and collateral crop damage and did not correctly explain how to safely use the herbicide.
Before 2021, paraquat litigation was sporadic, with about a dozen cases filed in 2019 and only a handful before that. In all these cases the plaintiffs alleged that exposure to paraquat caused their Parkinson’s disease—a hypothesis that had been investigated for a long time previously but gained larger measures of acceptance in the scientific community in the mid-2010s. Since those first few cases were filed, though, the litigation has grown to include an MDL and nearly 1,500 cases at last count. Cases are in the preliminary stages, and the first bellwether trials are expected to begin late this year.
Chlorpyrifos litigation has a longer history than paraquat. Plaintiffs originally alleged, in a handful of early cases, that high exposure to chlorpyrifos during work led to various bodily injuries. It wasn’t until late 2017 that a plaintiff first alleged that chlorpyrifos exposure in utero caused developmental injuries to a baby. Like with paraquat, these assertions rested on science that had more support behind it than the science behind the glyphosate litigation.
In 2021, the number of chlorpyrifos cases doubled from nine to 18, and the EPA finally banned the pesticide for most uses. The cases include a novel class action alleging that the entire housing stock of California’s Central Valley has been contaminated by chlorpyrifos and needs to be remediated. If successful, pesticide remediation litigation in California could become a new trend.
The striking similarity of both the chlorpyrifos and paraquat litigations tells us that glyphosate changed the rules of the game. Previously, even with strong evidence that pesticide exposure could cause bodily injury, litigation was rare. Now, we see dozens of chlorpyrifos plaintiffs and hundreds of paraquat lawsuits pending in the courts.
Litigation funders and the plaintiffs’ bar have clearly noticed the increased success of existing pesticide-related cases and have been scouring the industry for signs that pesticide companies have hidden the dangerous effects of their products. Meanwhile, scientists—who provide the evidentiary fuel for successful litigation—have renewed their interest in the study of the potential harmful effects of pesticides on humans and the environment. The pairing of scientific discovery with an aggressive plaintiffs’ bar sets the stage for pesticide litigation to expand in the coming years.
The big question in the pesticide litigation environment is what will be next?
Praedicat’s newest model release, Nekomodel X, has detailed risk assessments of bodily injury litigation for many different pesticides. Some, like neonicotinoids and isoxaflutole, present very little risk of bodily injury litigation at this time. Others, like maneb and mancozeb, show an appreciable risk. Still others, including pyrethroids, present a moderate risk of action by the plaintiffs’ bar.
Bodily injury is a key risk, but it is only part of the issue. Scientific attention is also paid to the ways pesticides affect water quality and ecosystems, giving rise to costs related to water remediation litigation, among others. These other types of damages could also fuel litigation.
While the expected losses for pesticide litigation in our model begin in the low billions of dollars, tail losses approach the $100 billion mark. The largest risk for a pesticide not currently in litigation is a 1 percent chance that litigation connected to pyrethroids, a group of synthetic insecticides widely used in agricultural, environmental and residential settings, could exceed $80 billion.
One idea that insurers may consider in the wake of the glyphosate litigation is a “literature pollution exclusion.” If a customer selling pesticides has engaged in actions that distort the scientific literature, such as ghostwriting favorable articles, coverage could be nullified. Insurers, like regulators, need to rely on the scientific literature, and polluting the literature with misleading science will mislead the underwriters, too.
While the frequency of severe litigation may become a repeat of pharmaceuticals, the insurance industry today has more tools to underwrite the risk and manage the aggregations than were available in the heyday of pharma litigation. Armed with literature pollution exclusions, with the best science guiding underwriting, and subject to aggregation controls, pesticide risk should be an opportunity that insurers can underwrite profitably and sustainably.