Bayer denies it knew of drug risk before withdrawal

German health care and pharmaceuticals group Bayer yesterday hit back at reports that executives may have known about problems with its anti-cholestrol drug, Baycol, before it was withdrawn.

Philip Beck, a lawyer acting for Bayer in the US, said he was confident that the company had acted properly.

"We think we acted responsibly in the development and marketing of the medicine as well as in our efforts to keep the medical community informed of areas where they should be cautious," he said.

Baycol, also known as Lipobay, was withdrawn from the market in August 2001 when it emerged that it was linked with the potentially deadly muscle condition known as rhabdomyolysis.

Withdrawal of the drug cost Bayer £600m and left it facing thousands of lawsuits. Bayer shares have plunged by a fifth in value since the New York Times cited company documents indicating Bayer executives may have known about problems with Baycol some time before it was withdrawn.

Investors are concerned that if it is shown that executives did know about the problems well ahead of the decision to withdraw the drug it could affect Bayer's insurance cover against claims, escalating the potential liabilities facing the group. Yesterday the shares fell almost €2 to €12.32.

In total Bayer is facing some 7,800 claims. It has reached out of court settlements with 450 claimants and, according to Mr Beck, is in active discussions with lawyers acting for another 500.

He said the vast majority of claims did not come from people who had actually experienced side-effects.

"A very small percentage involve people who actually suffered side-effects from the medicine. But the very large percentage of claims involve people who did not suffer any side-effects and for whom the medicine worked safely and effectively." Bayer will continue to resist claims where there is no evidence of side-effects.

Lawyers acting for claimants in the Texas trial are seeking to win class action status for their case. A decision is expected in the next two weeks.

· Shire Pharmaceuticals said yesterday it was suing rival US drug maker Barr in an attempt to block a cheap copycat version of its top-selling Adderall XR, used in the treatment of hyperactivity. The UK group said the action could delay US regulators' approval of Barr's version for up to 30 months.