Statement for the Record: Ways and Means Hearing on Digital Trade
RE: Statement for the Record: Subcommittee on Trade Hearing on Protecting American Innovation by Establishing and Enforcing Strong Digital Trade Rules
Dear Chairmen Jason Smith and Adrian Smith:
Public Citizen[1] welcomes the opportunity to provide a written statement for the record for the Subcommittee on Trade Hearing on Protecting American Innovation by Establishing and Enforcing Strong Digital Trade Rules.
As technology has grown to play an ever more important part in our societies and economies, a small number of companies (Big Tech) have emerged as the dominant architects of the global digital system, shaping how content is circulated, services are performed, and infrastructures are designed. Having enjoyed the benefits of a lack of oversight and regulation over the past two decades, these companies have created business models based on a system of mass corporate surveillance that invades people’s privacy and have used their economic might to diminish competitors, discriminate (typically unintentionally) against vulnerable populations, and concentrate enormous political and economic power. The rise of Big Tech has inarguably contributed to a surge in wealth and income inequality within and between countries.
The Biden administration and Congress have been grappling with how best to regulate Big Tech to protect consumer privacy, to ensure adequate competition, and to hold companies accountable for discriminatory practice. This has translated into the trade realm as a necessary reversal of previous government policy that sought to push digital trade terms that were favorable to Big Tech companies by limiting the ability of governments to regulate their business practices.[2] These corporate-friendly rules sought to:
- Limit the ability of governments to regulate where Big Tech firms send and store consumer data;
- Undermine investigation of discriminatory source code and algorithms, intrusive surveillance practices, and violent incitement online via prohibitions on technology transfer requirements and “trade secrets” protections;
- Shield online platforms from corporate accountability via overly broad liability waivers similar to the controversial Section 230 of the 1996 Communications Decency Act;[3]
- Manipulate “trade” tools of “market access,” “trade discrimination,” and “conditions for business” to exploit workers in the gig economy; and
- Protect monopolies and promote further consolidation by banning certain pro-competition policies.
These “digital trade” terms are not focused on remedying actual problems related to the online sale of imported goods, such as tariff evasion and product safety, but instead seek to undermine the stronger Big Tech accountability rules of many of our trading partners. In practice, they tie U.S. policymakers’ hands for future regulatory efforts.
In May 2023, Public Citizen joined prominent civil rights organizations such as the Leadership Conference on Civil and Human Rights (LCCHR), the American Civil Liberties Union (ACLU), the Lawyers Committee for Civil Rights Under Law (LCCRUL), and the NAACP to raise concerns about trade provisions that guarantee digital firms new secrecy rights over source code and algorithms. These rules could thwart potential algorithmic impact assessment and audit requirements, such as testing for racial bias or other violations of U.S. law and regulation.[4]
Later that year, we — along with domestic and international consumer protection and digital rights groups as well as a number of small and medium enterprises — were pleased that the Biden administration took these and other consumer concerns into account when the U.S. Trade Representative (USTR) announced it was withdrawing support for controversial digital trade provisions at the World Trade Organisation (WTO) Joint Statement Initiative on E-Commerce (JSI).[5] We also support the forward-thinking vision of digital trade articulated by the USTR, as well as the broad discussions being carried out with multiple stakeholders (including civil rights groups, trade unions, etc.) with respect to framing a new digital trade policy that is grounded in how trade policy affects regular people: consumers, workers, and smaller innovators. We reiterate our willingness to work with the administration to create new digital trade rules that promote worker rights, consumer privacy, civil rights, and data security goals.
Limiting Regulatory Autonomy:
We note that the USTR in its announcement of October 3, 2023, correctly pointed to the need to preserve congressional autonomy to ensure that the digital ecosystem can be regulated in the interests of all stakeholders.
Contrary to what is claimed by many industry lobbyists, extreme digital trade provisions of the kind seen in the U.S.-Mexico-Canada Agreement (USMCA) would significantly limit the ability of domestic lawmakers and regulators to implement consumer protection or other public interest regulation to the digital ecosystem. As aptly described by Mr. Eric Gottwald, Policy Specialist on Trade and Economic Globalization for the AFL-CIO, in his testimony before this Committee, we are not faced with a binary choice between digital authoritarianism and a totally unregulated data marketplace. There is a need for well-tailored regulation, which allows Congress to hold Big Tech companies responsible for unethical data processing and other harmful practices. However, extreme digital trade provisions as seen in the USMCA impose a regulatory straitjacket, restricting the ability of Congress to act in citizens’ interests.
For example, the data flow and localization provisions in the USMCA would limit the ability of lawmakers to appropriately secure their citizens’ data against unauthorized or unlawful exposure or processing, or against cybercrime, accidental loss, destruction, or damage. Under these provisions, consumers would have no guarantee that their data would be sufficiently protected upon export, even if domestic laws require such protections. Further, countries that have superior privacy laws could see their data protection rules undermined. This would significantly limit any U.S. congressional efforts to enact strong privacy rules for Americans.
Steps taken by the administration, such as the recent executive order[6] to limit the export of U.S. data to countries of concern, could be challenged under the most extreme data flow rules. Further, as demonstrated by the European Union’s objections to extreme data flow provisions at international trade fora including the WTO JSI, strong privacy rules cannot coexist with free flow of data provisions as exemplified by the USMCA.
Similarly, USMCA-style provisions that limit the ability of public authorities and independent researchers to access source code of algorithms to instances of known violations of law would affect how congressional committees, scholars, and public investigators could review code and related data to identify discrimination and other malpractices that may be baked into AI systems that are increasingly ubiquitous in both the private and public sectors.
Rather than shield these “trade secrets” from public scrutiny, continuous, independent oversight and transparency is key to ensuring human and civil rights are maintained in the digital age. This has been recognized repeatedly in global fora and by the U.S. government, and it has been demonstrated by recent agreements signed between the U.S. government and the AI companies Anthropic and Open AI. These agreements would allow the U.S. AI Safety Institute access to AI models for safety testing both before and after their public release.[7] While in these cases the companies concerned voluntarily agreed to safety audits, it is not a stretch to imagine the need to implement regulation to require disclosure of AI algorithms (and their source code) in other contexts. Any digital trade provisions that limit such an ability will be detrimental to user safety and the continued development of the AI ecosystem.
Extreme digital trade rules as exemplified by the USMCA would also limit the ability of lawmakers and regulators to implement pro-competition regulation in the digital ecosystem. As seen in the 2020 Report of the House Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law as well as several subsequent bills brought to Congress, there is bipartisan support in the U.S. Congress to combat various anti-competitive business practices of Big Tech companies.
This is not only a domestic issue, as a number of jurisdictions are attempting to implement regulations aimed at creating fairer digital marketplaces globally. Big Tech companies have however sought to stifle any attempts at pro-competition regulation through the (mis)use of “non-discrimination” related digital trade provisions.
U.S. Big Tech companies have argued that other countries’ enforcement of their domestic laws are “discriminatory” if such laws affect U.S. Big Tech companies more than the tech companies from other countries, even if those laws are designed to affect any company with extensive market power. This has been seen, for instance, in the pushback against the EU’s Digital Markets Act, South Korea’s App store-related regulation and, more recently, in criticism of South Korean proposals to implement a Platform Fair Competition Promotion Act. Similar pro-digital competition laws are being debated in several countries across the world, from Brazil to India. More often than not, attempts at addressing market concentration affect U.S. firms disproportionately due to the fact that these firms do indeed monopolize various digital markets, frequently to the detriment of consumers. The U.S. should lead regulatory developments aimed at ensuring a level playing field in the digital economy rather than undermining efforts by other nations.
The U.S. government has a long history of intervening to regulate concentration in markets where this could threaten consumer interests or general economic welfare. Therefore, “digital trade” rules must not include terms that forbid countries from establishing or maintaining policies that limit the size or range of services offered by companies, limit the legal structures under which they may be required to operate, or restrict the regulation or break-up of Big Tech monopolies whether American or foreign. Rather than seeking to misuse trade concepts to enable the continued monopolization of digital marketplaces, Congress should have the ability to learn from the regulatory frameworks being implemented in other jurisdictions so as to take action on the domestic front. We reiterate that targeting policies aimed at ensuring a level playing field in the digital ecosystem does not serve the interests of small and medium American enterprises. A coalition of small businesses have in fact pointed out that “the preservation of fair and competitive markets should play a central role in the United States’ foreign trade goals, law, and policy” and accordingly note that U.S. trade policy must be in harmony with the U.S. government’s domestic work to address the anticompetitive conduct of digital gatekeepers.[8]
While some have argued that public interest regulation can be implemented using the public policy exceptions provided in trade agreements, the use of such exceptions in practice is notoriously difficult. A Public Citizen study found that only two such attempts out of 48 have ever proven successful in defending domestic policies at the WTO.[9] Relying on poorly drafted and legally uncertain exception clauses in trade agreements limits U.S. sovereignty and the ability of our lawmakers to make decisions in the interests of all domestic stakeholders.
As highlighted by Mr. Gottwald, in his testimony before this Committee, digital trade rules have profound implications for the lives of workers in the United States. The changing social and economic dynamics occasioned by the use of emerging technologies implies that it is vital for Congress and regulators to retain the ability to implement public interest regulation. For example, the use of technology has significantly changed the worker-management relationship. Workers are subject to fine-grained surveillance, algorithmic management, and the precariousness occasioned by gig work. There is therefore a need for new regulatory interventions that can re-balance this increasingly skewed relationship between workers and employers. Preserving regulatory autonomy can enable Congress to pass laws to protect workers’ privacy, ensure that algorithmic management systems are designed in accordance with high labor standards, and prevent non-discrimination-related rules from being used to challenge safety and other pro-labor regulation.[10]
Taking the Leadership in Crafting an Inclusive Digital Trade Vision
Rather than abandoning leadership at international trade negotiations, the change in U.S. position has demonstrated that the administration is willing to balance the needs and interests of a diverse group of stakeholders rather than merely adopting the wish list of Big Tech companies. Indeed, the administration has not pulled back from negotiations at various trade fora but has sought to articulate a new vision by enabling the regulation of the digital ecosystem in the public interest, rather than baking in a deregulated ecosystem that could continue to expose Americans to a range of harms. This is also seen in how the 2024 National Trade Estimate (NTE) Report recognizes that countries have a right to implement public interest regulation over the technology ecosystem.
We therefore commend the USTR for taking the leadership to update digital trade rules to provide the policy space necessary for our nation to enact urgently needed policies that Congress and regulators are currently crafting regarding online competition, gig worker rights, online consumer privacy and data security protections, and AI accountability measures.
We also recognize the need for the USTR to build on the improvements made in the 2024 NTE Report (compared to past versions). It is a welcome change that the report is no longer simply a hit list of other countries’ laws and regulations that large U.S. corporations dislike. Now, for the first time in memory, USTR is recognizing that it is not in the U.S. national interest to attack and threaten other nations’ consumer and worker protection measures. As governments around the world, including our own, work to regulate the rapidly changing tech space, it does not make sense to list new public interest regulations as “barriers to trade.”
The Need for Pro-Consumer Rules
There are some legitimate international trade concerns associated with e-commerce and the broader digital economy that should form the bedrock for U.S. policy in any trade negotiations. If digital trade rules are to be included in a trade agreement, they should ensure that goods and services purchased online across borders meet labor, environmental, and consumer safety standards, including by raising de minimis levels so that, for instance, the four million packages arriving from China to the U.S. daily to fulfill online orders can no longer evade U.S. inspection regimes.[11] They should prevent corporate misclassification so that so-called “digital platforms” involved in transportation, hospitality, healthcare, retail, education, and other industries cannot evade labor, consumer, and other regulations imposed on “brick-and-mortar” businesses. We reiterate the comments of Mr. Gottwald to the Committee that the USTR needs to develop clear labor standards and benchmarks for trade deals. Moving forward, all trade agreements must be designed to ensure high labor standards, which would benefit not just workers in the U.S. but also abroad.
To combat the growing high-tech discrimination in artificial intelligence, international trade rules should guarantee access to source codes and algorithms by congressional committees, government agencies, academic scholars, labor unions, and nongovernmental organizations. Any rules should also introduce corporate liability for personal data collected via computers, cell phones, and the “Internet of Things” without consumers’ explicit, informed permission, shared or sold without their permission, and/or stolen.
U.S. leadership could also move the needle on various broader issues that could enhance trust in the digital economy. Building consensus on issues such as access to the internet or preventing internet shutdowns, enabling global cooperation towards fair taxation of the digital economy (thereby avoiding the multiplicity of digital services taxes), amongst other issues could benefit both U.S. companies as well as citizens from around the world.
Transparency and Oversight
While the USTR’s move away from a number of problematic “digital trade” provisions is a welcome change, it will continue to be necessary for Congress and the public to monitor and publicly debate any future textual proposals on digital trade terms in the context of the WTO JSI on E-Commerce, the Indo-Pacific Economic Framework, U.S.-Kenya STIP or other trade negotiations to ensure they do not become tools for weakening, preventing, or dismantling labor, consumer, or other public interest policies in the digital sphere.
In order for Congress to exercise its constitutional authority over the regulation of foreign commerce, Fast Track Trade Promotion Authority (TPA) must not be renewed. TPA is an extreme delegation of Congress’ constitutional trade authority. It empowers a president to choose prospective trade partners, negotiate deals, and sign trade pacts all before Congress has a vote on any element of it. TPA also empowers the executive branch to control Congress’ voting schedule, and both the House and Senate are required to vote on a trade agreement’s implementing legislation within 90 days of the White House submitting it. No floor amendments are allowed, and debate is limited, effectively eliminating the transparency, accountability, and oversight necessary for the far-reaching trade and investment agreements that the administration is negotiating.
Instead, Congress should insist that the USTR and the Department of Commerce replace the past secretive trade negotiation process with an on-the-record public process, including public hearings (advertised sufficiently in advance), to formulate U.S. positions and to obtain comment on draft and final U.S. text proposals. After each negotiating session, U.S.-proposed texts and draft consolidated texts must be made public. Strict conflict of interest rules must be enforced. Only by issuing detailed goals and making draft texts available will the American public know in whose interest the negotiations are being conducted.
Conclusion
As governments worldwide work to address fundamental issues relating to digital governance and build a framework for the future, these important policy debates and decisions that will shape every facet of our lives must not be constrained, undermined, or preempted via trade pacts or policies.
To achieve a worker-centered approach to trade that will complement the administration’s efforts to build a more resilient economy, its “digital trade” agenda must not undermine domestic policy space on critical emerging issues like AI regulation, gig economy worker protections, discrimination and algorithm transparency, corporate liability, and consumer privacy, but instead should be structured to raise the floor to help ensure that human and civil rights are protected at home and around the globe.
The USTR under the Biden administration has taken important steps in the right direction to rebalance the interests of Big Tech companies with important public interest goals, but there is still work to be done to ensure that Big Tech companies do not inappropriately use trade rules to target other countries’ legitimate public policy regulations.
[1] Public Citizen is a nonprofit consumer advocacy organization with more than 500,000 members and supporters. A mission of the Global Trade Watch division is to ensure that, in this era of globalization, a majority of people can enjoy economic security; a clean environment; safe food, medicines and products; access to quality affordable services; and the exercise of democratic decision-making about the matters that affect their lives. We have conducted extensive analysis of U.S. trade and investment agreements and their outcomes, starting in 1991 during the initial North American Free Trade Agreement (NAFTA) negotiations. More recently, Public Citizen has been a leader in working to hold Big Tech accountable in the United States by identifying the dangers of so-called “digital trade” rules with respect to efforts to regulate the tech industry around the globe.
[2] Sarah Grace Spurgin, “Public Submissions to U.S. Government Reveal Corporate Wishlist for IPEF: More Power at Our Expense,” Public Citizen, published May 20, 2022, https://www.citizen.org/news/public-submissions-to-u-s-government-reveal-corporate-wishlist-for-ipef-more-power-at-our-expense/
[3] Anna Edgerton, “Tech Liability Shield Has No Place in Trade Deals, Groups Say,” Bloomberg Law, May 27, 2021, https://www.bloomberg.com/news/articles/2021-05-27/tech-liability-shield-has-no-place-in-trade-deals-groups-say
[4] American Civil Liberties Union, Public Citizen, Centre for Democracy and Technology, et al., “Letter to President Biden”, May 23, 2023, https://www.washingtonpost.com/documents/eea26d7a-08ef-4687-a4ba-c26e38ad7ffe.pdf?itid=lk_inline_manual_44
[5] Digital Trade Alliance, “Consumer & Digital Rights Groups Call On Governments to Better Protect People’s Fundamental Rights in Trade Deals,” January 30, 2024, https://dtalliance.org/wp-content/uploads/2024/01/JSI-Civil-Society-Letter-2024.pdf; Citizens Trade Campaign, Accountable Tech, AI Now Institute et al., “Letter thanking president Biden for withdrawing US support for Extreme ‘Digital Trade’ Provisions,” February 2, 2024, https://www.citizenstrade.org/ctc/wp-content/uploads/2024/02/DigitalTradeThankYouLetter_020224.pdf; Coalition for App Fairness, “Letter to President Biden,” November 15, 2023, https://appfairness.org/coalition-for-app-fairness-applauds-biden-harris-administrations-withdrawal-from-digital-trade-negotiations/
[6] The White House, “President Biden Issues Executive Order to Protect Americans’ Sensitive Personal Data,” February 28, 2024, https://www.whitehouse.gov/briefing-room/statements-releases/2024/02/28/fact-sheet-president-biden-issues-sweeping-executive-order-to-protect-americans-sensitive-personal-data/
[7] Lauren Feiner, “OpenAI and Anthropic will share their models with the US government,” August 29, 2024, https://www.theverge.com/2024/8/29/24231395/openai-anthropic-share-models-us-ai-safety-institute
[8] Coalition for App Fairness, “Letter to President Biden,” November 15, 2023, https://appfairness.org/coalition-for-app-fairness-applauds-biden-harris-administrations-withdrawal-from-digital-trade-negotiations/
[9] Daniel Rangel, “WTO General Exceptions: Trade Law’s Faulty Ivory Tower,” Public Citizen, February 4, 2022, https://www.citizen.org/article/wto-general-exceptions-trade-laws-faulty-ivory-tower/
[10] AFL-CIO, “A Worker-Centred Digital Trade Agenda,” February 7, 2023, https://aflcio.org/worker-centered-digital-agenda; Digital Trade Alliance, “A Primer on the Intersection of Labor Rights, Technology and Trade,” October 1, 2024, https://dtalliance.org/2024/10/01/a-primer-on-the-intersection-of-labor-rights-technology-and-trade/
[11] Rep. Earl Blumenaur, Rep. Rosa DeLauro, Rep. Suozzi, “DeLauro, Blumenauer, Suozzi Release Letter Signed by Majority of House Democrats Urging President Biden to Use Executive Authority to End Dangerous De Minimis Trade Loophole,” Press Release, September 11, 2024, https://tinyurl.com/v37sr6am
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Letter to FSOC: AIG Should Be Designated ‘Systemically Important’
Financial Stability Oversight Council
1500 Pennsylvania Avenue
NW, Room 2308, Washington, DC 20220
Dear Members of the Financial Stability Oversight Council (FSOC),
We are writing to urge you to address the growing threats to financial stability present in the insurance sector by using FSOC’s authority to designate key insurers as systemically important nonbanks. The destabilizing effects of the climate crisis on U.S. insurers are a threat to financial stability, and mitigating these risks falls well within FSOC’s mandate. This letter details American International Group, Inc’s (AIG) suitability for designation based on the vulnerabilities outlined in FSOC’s 2023 analytical framework.[i] FSOC should move quickly to evaluate the suitability of AIG and other large U.S. insurers for designation before a financial crisis necessitates substantial federal intervention. Climate-driven instability in the insurance sector has the potential to send a cascade of risks through the financial system and U.S. economy. FSOC must use its full authority to address these risks with the urgency the climate crisis demands.
Introduction
The ability to subject nonbank financial companies to enhanced supervision was born out of the 2008 financial crisis, where large, complex, and interconnected nonbank financial companies, such as AIG, both contributed to the crisis and nearly collapsed as a result of it.[ii] Congress determined that to prevent another financial crisis, insurance companies and other non-bank financial institutions that could threaten financial stability—either through their own material distress or through their activities—need enhanced federal supervision. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) gives FSOC the authority to designate nonbank financial companies for supervision by the Board of Governors of the Federal Reserve System and subject these firms to prudential standards if either material financial distress at the nonbank financial company, or the nature, scope, size, scale, concentration, interconnectedness, or mix of the firm’s activities could pose a threat to financial stability.[iii]
In the years since the financial crisis, the need for FSOC to address financial stability threats in the nonbank financial system has increased. The sector has grown in size—the Financial Stability Board estimates assets of U.S. nonbank financial institutions totaled $19.2 trillion in 2022, growing from $14.2 trillion in 2014.[iv] As financial activity has migrated from banks to nonbanks, so have risks.[v] The nonbank financial sector is increasingly home to liquidity mismatches, high leverage, and complex interconnectivity between institutions.[vi] Although the migration of risks has been well documented by regulators, measures to address these sweeping changes to the financial system have not kept pace. In a 2019 letter to former Treasury Secretary Mnuchin opposing the rollback of FSOC’s previous designation guidance, Chair Yellen, alongside former Federal Reserve Chair Ben Bernanke and former Treasury Secretaries Timothy Geithner and Jacob Lew, highlighted the need to address the migration of risks with regulatory tools:
A fundamental feature of a market oriented, innovative financial system is that—over time—risk will migrate around the prudential constraints that apply to banks, shrinking the effective scope of those defenses, and leaving the overall financial system more fragile. This is what happened in the decade leading up to the crisis, and the failure of prudential regulation to prevent this is a critical reason why the crisis was so severe and challenging to manage.[vii]
On November 17, 2023, FSOC published interpretive guidance describing the process it will take to determine if a nonbank financial company should be designated as systemically important.[viii] This guidance is an important step in bolstering FSOC and the designation tool. However, guidance alone is insufficient. FSOC’s designation authority is useful only if it is actively deployed to address risks before they cause systemic instability. Designations are necessary both to mitigate financial stability threats from firms when they arise as well as deter firms from activities that contribute excess risk to the financial system.
The need for FSOC to address threats to financial stability in the nonbank financial sector is made all the more urgent and essential by the climate crisis. Nonbank financial companies are already facing heightened stress from large and repeated climate-related shocks. Large insurers, asset managers, and private equity firms are also creating significant risks to the financial system through their insured or financed emissions.[ix] As the effects of climate change become more severe, the impacts on financial stability will grow. The increase in frequency and severity of wildfires, floods, hurricanes, and droughts will disrupt supply chains, compress corporate profits, drive up insurance claims, reduce the availability of insurance, and generally limit the ability of affected borrowers to repay debt.[x] Not only are these harms already devastating communities, disproportionately low income communities and communities of color, but credit and market risks related to these impacts will spread through the interconnected financial system.[xi]
U.S. regulators have taken initial steps to address the risks climate change poses to the banking sector. On October 30, 2023 the Federal Reserve Board, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) jointly released Principles for Climate-Related Financial Risk Management for Large Financial Institutions.[xii] The agencies acknowledge that failure to measure and mitigate climate-related financial risks can adversely impact the banks they supervise. The agencies write, “weaknesses in how a financial institution identifies, measures, monitors, and controls the physical and transition risks associated with a changing climate could adversely affect a financial institution’s safety and soundness.”[xiii] The agencies outline the need for banks to consider climate-related financial risks in business strategy, risk management, and strategic planning; incorporate climate-related financial risks when identifying and mitigating credit risk, liquidity risk, operational risk, and other types of financial and nonfinancial risks; and use scenario analysis to assess forward looking impacts on the institution resulting from climate risks. FSOC must acknowledge that the threats climate change poses to the largest banks are also present for the largest nonbank financial companies. Climate risks too “will migrate around the prudential constraints that apply to banks” without equivalent regulatory and supervisory measures for nonbank financial companies. It is imperative that FSOC address the migration of climate risk with its designation authority.
I. Climate change is destabilizing the insurance sector even as that sector is accelerating climate risk to the financial system.
The insurance industry is both exposed to and contributes to significant climate-related risks. The physical effects of climate change, including severe floods, wildfires, hurricanes, and other natural disasters, are straining insurance company balance sheets. Transition risks from underwriting, investment, and financing of fossil fuel projects threaten to leave insurers with stranded assets and financial exposure to declining industries. Despite these risks, insurance companies continue to underwrite projects that will make the climate crisis worse. Climate-related financial risks in the insurance industry also threaten other parts of the financial system, including banks, Government Sponsored Enterprises (GSEs), and investors through interconnected mortgage markets—as detailed in FSOC’s 2023 Annual Report.[xiv] Failure to address these financial stability threats will also spill over into the real economy, collapsing property values, damaging local economies, and harming the economic well being of American families.
The physical effects of climate change on the insurance industry are visible across geographies. In addition to devastating impacts on life, livelihoods, and communities, climate disasters are causing unprecedented property damage. The United States had a record-breaking 23 natural disasters costing $1 billion or more in 2023, totalling over $57 billion in losses.[xv] In response, property insurers are passing along costs to consumers or abandoning them entirely. On average, property insurance rates increased by over 11 percent in 2023.[xvi] In May 2023, State Farm announced that it would stop selling new property insurance policies to home and business owners in California.[xvii] In June 2023, Farmers announced it would stop selling auto, home, and umbrella policies in Florida.[xviii] The same month, AIG announced it would stop selling property insurance in 200 ZIP Codes across the United States, including in New York, Delaware, Florida, Colorado, Montana, Idaho, and Wyoming.[xix] Recent New York Times reporting detailed the financial troubles of insurers across the midwest including years of sustained losses in Iowa, Minnesota, and South Dakota, among other states.[xx] The reporting found that in 2023, insurers lost money on home insurance coverage in 18 states, up from 12 in 2018 and eight in 2013.
The departure of major insurers is pushing homeowners into lower-quality private insurers or state insurance funds. In Florida, the gap left by traditional insurers is being filled by low quality private alternatives.[xxi] These insurers—now serving the most climate-vulnerable communities—have riskier liabilities, operate with higher leverage, and have more vulnerable and concentrated reinsurance relationships. In other states, the gap is being filled by public insurance options, with their own set of challenges and limitations. In Louisiana, the state’s public insurance option, Louisiana Citizens Property Insurance Corporation (Louisiana Citizens), has been forced to fill the gaps left by the departure of traditional insurers. To address growing liabilities from climate disasters, Louisiana Citizens increased premiums by 63 percent in December 2023.[xxii] In March 2024, Louisiana Citizens borrowed $500 million to pay out claims to homeowners left without coverage after their private providers failed. Unlike private insurers, state insurance funds cannot leave climate-vulnerable communities—instead they pass costs along to consumers or turn to taxpayers as a backstop.
In addition to physical risks from climate disasters, insurance companies are exposed to transition risks from their failure to align investment and underwriting practices with the transition to a low-carbon economy. Through their aggregate $8.5 trillion investment portfolios, insurers finance fossil fuel companies and carbon-intensive industries that will be adversely affected by the energy transition.[xxiii] Insurers who fail to transition their portfolios away from these firms will be left with financial exposure to insolvent firms or stranded assets. These investments will affect the ability of insurers to meet their liabilities and, in aggregate, will create a systemically undercapitalized insurance sector.[xxiv] A disorderly transition away from these investments, due to postponing fossil fuel divestment or faulty assumptions that net zero goals can be achieved through carbon offsets and unproven technologies, has the potential to destabilize financial markets beyond insurance company portfolios. For insurers, climate risk acts as a double-edged sword—physical risks increase insurer liabilities, while transition risks reduce the ability of insurers to meet those liabilities.
Despite the risks climate change poses to the business model of insurance firms, insurers continue to underwrite projects and activities that worsen the climate crisis. The Insure Our Future (IOF) coalition estimates that the largest U.S. insurers, including Chubb, W.R. Berkley, and AIG each collect upward of $500 million in annual premiums from fossil fuel companies.[xxv] In many cases, the insurance companies enabling fossil fuel expansion are the same ones raising rates or withdrawing coverage from homeowners. In doing so, insurance firms seek to earn short-term profits in one business line while undermining the long-term viability of numerous other business lines. Beyond the impacts on their own solvency and longevity, insurance company underwriting of fossil fuel projects introduces profound and growing risk into the financial system that other institutions and the economy as a whole will be forced to bear.
II. AIG is a leading candidate for designation as a systemically important nonbank.
Through multiple channels, AIG is creating unsustainable risks for itself and for the financial system. FSOC’s 2023 guidance authorizes designation of a nonbank financial company if material financial distress at the company or the company’s nature, scope, size, scale, concentration, interconnectedness, or mix of activities could pose a threat to financial stability.[xxvi] The corresponding analytical framework details the vulnerabilities FSOC intends to consider when evaluating a firm for designation and the transmission channels through which these vulnerabilities can pose threats to financial stability.[xxvii] This letter examines the following vulnerabilities as they relate to AIG’s suitability for designation: (a) engagement in destabilizing activities; (b) inadequate risk management; (c) financial interconnectedness; (d) liquidity risk and maturity mismatch; and (e) complexity and opacity.
In examining AIG’s suitability for designation, FSOC should also consider the risks AIG has taken on in the absence of regulatory scrutiny, following its dedesignation in 2017. FSOC designated AIG in 2013, citing AIG’s “size and interconnectedness, certain characteristics of its liabilities and products, the potential effects of a rapid liquidation of its assets, potential challenges with resolvability, as well as other factors.”[xxviii] In 2017, FSOC rescinded its designation, citing actions AIG took to reduce its risk since 2013, including “reduc[ing] total debt outstanding, short-term debt, derivatives, securities lending, repurchase agreements, and total assets.”[xxix] In addition to examining AIG’s vulnerabilities against the 2023 analytical framework, FSOC should examine AIG against the risk factors it highlighted as justification for its dedesignation. For example, in 2013, AIG had $549 billion in assets compared to $500 billion in assets in 2017.[xxx] As of the end of 2023, AIG’s assets had grown to $539 billion.[xxxi] In 2013, AIG had $215 billion of total derivatives exposure compared to $165 billion in 2017.[xxxii] As of year-end 2023, AIG’s total derivative exposure had grown to $184 billion.[xxxiii] AIG is again adding risk, in some cases, along the very dimensions that necessitated its designation in 2013.
A. Engagement in destabilizing activities
The 2008 financial crisis revealed that AIG was engaged in activities that destabilized itself and the financial system writ large. In the lead up to the crisis, AIG was an active player in credit default swap (CDS) markets, taking large one-way positions on collateralized debt obligations, which left the firm exposed to low-quality residential and commercial mortgages.[xxxiv] AIG was also heavily involved in securities lending—lending out large portions of its portfolio with insufficient liquidity to accommodate counterparty unwinds of these transactions. AIG is no longer imperiled by these particular activities. The financial crisis functionally ended AIG’s Financial Products Corporation subsidiary through which it was actively engaged in CDS markets, and AIG’s securities lending business has shrunk to a fraction of its former size.[xxxv]
But AIG has not abandoned its role as an outsized risk taker. It has simply swapped one set of risky activities for another. Instead of threatening its own financial viability and creating risks to the financial system through CDS exposure and securities lending, AIG is creating risks for its own business model and threatening financial stability through its underwriting and investment in fossil fuel projects and assets. At present, AIG is taking an irrational bet on the future stability of its business by insuring companies that face stranded asset risks, fueling the climate disasters that directly challenge its bottom line and those of other insurers, and investing in emissions-intensive firms and industries through its investment portfolio—creating transition risk for itself and physical risk for financial markets more broadly.
Through its underwriting activities, AIG is facilitating the continued operation and expansion of the fossil fuel industry. IOF estimates that AIG receives approximately $550 million in annual premiums from insuring fossil fuel projects.[xxxvi] AIG is the largest insurer of U.S. coal, the most carbon-intensive source of energy and the largest contributor of carbon dioxide emissions, insuring at least 30 percent of U.S. production.[xxxvii] AIG no longer sells property insurance in the state of Louisiana due to hurricane risk, but AIG subsidiaries underwrite fossil fuel projects in the state, including liquified natural gas terminals built to export gas abroad.[xxxviii] In recent years, AIG has insured some of the most controversial fossil fuel infrastructure projects, including the Trans Mountain Pipeline, which is designed to transport up to 590,000 barrels per day of carbon-intensive tar sands.[xxxix] When Chubb dropped insurance coverage for the Rio Grande LNG project earlier, AIG stepped in to insure the project, despite the project’s climate impacts and organized opposition from community members.[xl]
AIG’s continued underwriting of fossil fuel projects is incompatible with science-backed climate goals. The Intergovernmental Panel on Climate Change (IPCC) warns that maintaining a 1.5°C warming pathway requires a rapid and significant phase down of fossil fuels this decade.[xli] While launching a Senate Budget Committee investigation on insurance company climate risk, Chair Whitehouse wrote,
Any new fossil fuel expansion is incompatible with our climate goals and economic stability. By underwriting and investing in new and expanded fossil fuel projects, U.S. insurers are helping Big Oil bring us closer to the worst runaway climate scenarios, which threaten lives, livelihoods, and the federal budget.[xlii]
AIG is also exacerbating the climate crisis through its investment portfolio. AIG holds an estimated $24.2 billion in fossil fuel assets—investments that facilitate further exploration, extraction, and use of fossil fuels, increasing greenhouse gas emissions and polluting communities.[xliii] According to AIG’s 2023 ESG report, the company’s internally managed corporate bond holdings align to a 2.2°C temperature increase, a warming pathway significantly above the 1.5°C limit on temperature increase needed to meet climate goals.[xliv] The Network for Greening the Financial System (NGFS) has created scenarios to help financial institutions understand their risks in a variety of climate scenarios. The Current Policies scenario, the scenario that incorporates the most physical risk, assumes only 2 degrees of warming by 2050. This scenario predicts a ten percent decline in labor productivity, a near 50 percent increase in hurricane damage in the U.S, and GDP loss due to severe weather events.[xlv] As of its most recent ESG report, AIG’s corporate bond holdings align with a warming pathway even more severe than this NGFS scenario, signaling even more climate harms and adverse economic impacts. Moreover, the corporate bond holdings AIG reports in in its ESG report do not comprise its full corporate bond holdings. Investments managed externally, including by Blackstone and BlackRock, are not included in the emissions contributions of AIG’s investment portfolio.
B. Inadequate risk management
While AIG contributes to the climate crisis through both its underwriting activities and its investments, the company has failed to mitigate the risks the climate crisis will have on its own solvency and long-term viability. To date, AIG has failed to publicly engage in transition planning—charting out a course to move its underwriting activities away from fossil fuels and into business lines aligned with a net-zero economy. Even as AIG has downsized and spun off several of its business lines, it remains committed to fossil fuel underwriting. AIG promotes Energy Property Insurance for oil, petrochemical, power generation, minings, and more as one of its five major corporate specialized risk offerings.[xlvi] Continued engagement in fossil fuel underwriting with no credible plan to move its business model away from these activities exposes the firm to significant transition risk. AIG cannot long expect to continue to generate revenue from underwriting fossil fuel projects in a world moving away from them. Concentrating revenue in sectors that by necessity will shrink in coming years, especially those that inherently increase strain on the company’s finances, is a poor risk management strategy.
Similarly, AIG has failed to engage in credible transition planning to align its investment portfolio with science-based targets and commitments under the Paris Climate Agreement. AIG has failed to address how it will wind down its $24.2 billion of fossil fuel assets without creating market disruptions or taking losses. Investment portfolio transition planning is essential for insurance firms, as they frequently pursue similar investment strategies. Correlated investments can create concentrated losses for the industry as firms rush to unwind fossil fuel portfolios, in turn making portfolios even harder to unwind.[xlvii] In discussions of transition risk, significant attention is paid to stranded asset risk, and for good reason. But assets don’t need to become obsolete to create transition risk for insurance firms. Rating downgrades of fossil fuel assets can create a correlated dash to the exit for insurance firms whose capital adequacy framework strongly incentivizes firms to hold investment grade securities.[xlviii] As such, assumptions that transition risks won’t materialize for years or even decades are misguided. Fossil fuel companies don’t need to be insolvent to threaten insurance company portfolios and insurance firms’ ability to generate sufficient returns to meet liabilities.
To date, AIG’s primary strategy to address the physical risks of climate change has been to transfer them back to the consumer by increasing rates and withdrawing coverage. AIG is not alone in this practice. A reliance on one-year contracts allows insurers to drop customers easily year to year. But this practice has its limits. AIG and other insurers can erode their market share only so much before they sacrifice their long-term viability; destroying and retreating from one’s own markets is an inherently perilous practice. Likewise, fossil fuel insurers who point to one year contracts as the solution to transition risk—citing their ability to drop fossil fuel projects on a dime—replicate the same problem. Ultimately, for insurers, shedding liabilities also means shedding revenue.
Risk transfer strategies also do nothing to reduce climate risk in the financial system. Instead of mitigating risks, insurers are treating climate risks like a game of hot potato, rushing to pass risks back to customers, low quality insurers, or state insurance funds before the next climate disaster. This practice should be a primary concern for FSOC. Attempts by AIG and other insurers to insulate their own balance sheet from climate disasters are not viable strategies to mitigate climate risk to themselves or the financial system.
Insurers also do not transfer risk equally across communities. Bluelining, or the practice of limiting credit creation and investment in climate-vulnerable areas, often leads to financial exclusion for low income communities and communities of color.[xlix] Due to a history of systemic exclusion, including redlining, low income communities and communities of color are overrepresented in climate-vulnerable areas and are disproportionately subjected to risk transfer strategies by insurance companies, including higher premiums or the loss of coverage. Bluelining can exacerbate existing inequalities, creating further financial exclusion for communities that already face systemic barriers to credit access and homeownership.
C. Financial interconnectedness
AIG and other insurance companies are deeply intertwined with other financial institutions. As such, the impacts of climate change on insurance cost, quality, and availability are not confined to insurers and their customers. Banks, GSEs, and other financial institutions are affected by the climate emergency looming in insurance markets due to their interconnectivity with insurance firms and their reliance on insurance to hedge risk. Banks, for example, require mortgage borrowers to purchase homeowners insurance as lack of insurance can impair a borrower’s ability to make mortgage payments in the event of a disaster. The proliferation of low-quality insurers is introducing risk into the system. Although banks continue to originate mortgages to homeowners insured by low-quality providers, banks are increasingly uncomfortable holding this risk on their own balance sheet. In an effort to reduce exposure, banks are selling large portions of their mortgages covered by these insurers to GSEs.[l] GSE’s are, in turn, transferring these risks to other entities.[li] Low-quality credit rating agencies have emerged to rubber stamp these insurers, making the mortgages on homes they insure eligible for purchase by GSEs, who require mortgages be insured by highly rated providers. The lack of insurance availability from traditional providers adds risk to the system, and the ability of banks to originate risk that is distributed throughout the financial system leaves these risks undercounted by regulators.
Climate disasters are the spark that can turn latent insurance-related risks in mortgage markets into full blown crises. Paying out claims after a disaster can put financial strain on insurers and in some cases lead to insolvency. When insurer insolvency reduces or delays claims paid to homeowners, homeowners may be unable to pay their mortgage, increasing defaults for mortgage lenders. For these lenders, climate disasters can also increase losses given default as the disaster has reduced or destroyed the value of the underlying mortgage collateral.[lii] These events can impair the balance sheet of the mortgage lender or the GSE who has purchased the mortgage. As climate disasters become more frequent, more severe, and affect larger geographies, mortgage losses have the potential to affect the solvency of lenders, GSEs, and investors. To manage climate risks, lenders may end mortgage underwriting in climate-vulnerable areas altogether, leaving communities without access to homeownership. As the New York Times summarized in recent reporting on the insurance crisis, “Without insurance, banks won’t issue a mortgage; without a mortgage, most people can’t buy a home. With fewer buyers, real estate values are likely to decline, along with property tax revenues, leaving communities with less money for schools, police and other basic services.”[liii]
D. Liquidity risk and maturity mismatch
Central to the financial viability of insurance firms is asset-liability management. The solvency of insurers rests on the ability to collect more in premiums and investment returns than is required to pay out in claims, and sufficient liquidity is required to meet claims when they arise. Solvency and liquidity are, of course, deeply intertwined. Fire sales from insufficient liquidity can erode the value of insurance company investment portfolios, and the failure to collect sufficient premiums to meet future liabilities can encourage increased risk taking and illiquidity. The climate crisis is creating significant asset-liability management challenges for insurers. Over the last decade, frequent and severe weather events have caused insurers, in aggregate, to pay out more in claims than they received in premiums.[liv] While investment returns have succeeded in plugging this gap for now, it reflects a troubling trend, set to worsen as the costs of climate disasters grow.
The persistent mismatch between premiums and claims creates perverse incentives for insurance companies to take added risk in their investment portfolios, including added liquidity risk. Due to a variety of factors, including an extended period of low interest rates and higher than expected claims, insurance companies are moving large portions of their portfolios from investments in public debt securities to private credit in search of higher returns.[lv] In 2021, AIG entered into a long-term investment management relationship with the private investment giant, Blackstone. In 2021, Blackstone began managing $50 billion of AIG’s investment portfolio, with a commitment to increase that figure to $92.5 billion by the third quarter of 2027.[lvi] AIG’s collective investment in alternative assets—private debt, equity, and hedge funds—totaled $68 billion as of December 31, 2023. AIG acknowledges that these securities are less liquid than others in its portfolio and that “if it became necessary to sell such assets in a stressed market environment, the prices achieved in any sale of such securities may be lower than their carrying value, which could cause a material adverse effect on our business, financial condition, results of operations and cash flows.”[lvii]
While Blackstone manages a primarily investment-grade portfolio for AIG, these private credit holdings carry more risk than their similarly rated public counterparts and have more uncertain return profiles in economic downturns. Unlike corporate bonds, private credit investments typically require long-term capital lockups and constraints on investor redemptions.[lviii] Dean Ungar, a vice president at Moody’s writes, “Although structuring and investing in more senior positions provides protection to creditors, these investments have lower liquidity and transparency than corporate bonds, and some have not been tested in a prolonged economic downturn.”[lix] In moving from public debt securities to private credit, AIG is reducing its liquidity profile at a time it can ill afford to do so. The current pace of climate disasters necessitates insurance companies becoming more liquid, rather than less, to meet customer claims. Nevertheless, in this context AIG is ramping up its exposure to illiquid private investments.
E. Complexity and opacity
At present, fully assessing AIG’s climate-related risk and that of other insurers is challenging due to the opacity of the insurance industry and the decentralized nature of insurance regulation. Designation of AIG and other large U.S. insurers would give the Federal Reserve access to timely and ongoing information about insurance company activities, such as plans to change or discontinue insurance offering in certain geographies or take on new climate-intensive projects. At present, federal regulators are limited to information made public by insurers or collected occasionally by state insurance regulators. This lack of transparency is itself a financial stability risk.
The insurance industry is significantly more opaque than other sectors of the financial system. While federal regulators have access to a timely, national source of transaction-level data on loans and mortgage origination from banks and mortgage lenders, no such mandatory data exists for homeowner insurance providers. This leaves insurers, including the largest and most complex, significantly under-scrutinized by regulators. In the Federal Reserve’s pilot climate scenario analysis, conducted with the largest six U.S. banks, participants highlighted gaps in property insurance data as a major challenge. The Federal Reserve noted that “[a]ll participants reported data gaps related to insurance, including insurance coverage details, replacement cost value, and deductibles.”[lx] Insurers are also not required to disclose the fossil fuel projects they underwrite. AIG, for example, is not required to disclose the numerous LNG terminals it underwrites in the Gulf South, even as those terminals expose investors to transition risk and surrounding communities to pollution and safety events like spills and explosions.
To address the climate data gaps in property insurance markets, the Federal Insurance Office (FIO) and the National Association of Insurance Commissioners (NAIC) are pursuing a Climate-Related Financial Risk Data Collection effort from large writers of homeowners insurance.[lxi] FSOC has highlighted this data collection as a priority to inform its work addressing the growing risks at the nexus of climate change, property insurance, and housing. In its 2023 Annual Report, FSOC recommends, “state and federal agencies continue to coordinate to identify, prioritize, and procure data necessary for monitoring climate-related financial risks” including through FIO’s proposed data collection.[lxii] These data collection efforts are essential to address opacity in the insurance industry, but their voluntary nature for states limits their usefulness to FSOC and financial regulators. To date, ten states have opted out of FIO’s data collection in full or in part, including several states at the center of the insurance crisis such as Louisiana.[lxiii] These opt-outs limit the ability of FSOC to fully assess the financial stability threats present in the insurance industry and mitigate these risks.
As FSOC considers the risks AIG and other insurers pose to financial stability, it must consider the complexity of measuring and managing risk due to insurance company dependence on reinsurance and the vulnerabilities reinsurers have to the climate crisis. In its 2023 Annual Report, AIG cited “increases in costs associated with third-party reinsurance, or decreased ability to obtain reinsurance on acceptable terms” as a key market condition affecting profitability, liquidity, and business operations.[lxiv] The Annual Report also highlighted that “reinsurance is typically more difficult or costly to obtain after a year or consecutive years with a large number of major catastrophes, the likelihood of which may be exacerbated by climate change.”[lxv] Reinsurers too are facing losses as a result of physical climate risk, paying out claims to primary companies after climate disasters. In response, reinsurers are raising rates, limiting coverage, and exiting some markets entirely to improve profitability.[lxvi] AIG and other insurers can no longer depend as heavily on the availability and affordability of reinsurance to hedge their risks. Unexpected reinsurance price increases or the loss of reinsurance altogether creates added financial vulnerabilities for insurers.
Conclusion
To fulfill its vital mandate, FSOC must use its full authority to address the growing financial stability threats present in the insurance industry, including by moving to designate AIG and other large U.S. insurers contributing to and impacted by the climate crisis as systemically important. Failure to address climate-related risks in the insurance industry will threaten numerous financial sectors and markets, creating a cascade of risks that will negatively impact property values, tax revenues, and local economies. The harshest of these impacts will fall disproportionately on the most vulnerable, including low income communities and communities of color. As a critical first step in meeting the emerging challenges in the insurance sector, FSOC should examine AIG’s financial vulnerabilities, including its engagement in destabilizing activities, inadequate risk management, interconnectedness with other financial institutions, liquidity risk, and the risks created by its complexity and opacity to determine suitability for designation. Inaction today will become increasingly unjustifiable in years to come. We urge you to act decisively now with your existing authorities to safeguard the stability of our financial system.
Thank you for your attention to this important matter. For questions, please contact Elyse Schupak at eschupak@citizen.org.
Sincerely,
Public Citizen
[i] Analytic Framework for Financial Stability Risk Identification, Assessment, and Response 88 FR 78026, https://www.govinfo.gov/content/pkg/FR-2023-11-14/pdf/2023-25055.pdf.
[ii] The Financial Crisis Inquiry Report, Financial Crisis Inquiry Commission, (January 2011), https://fcic-static.law.stanford.edu/cdn_media/fcic-reports/fcic_final_report_full.pdf.
[iii] Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, § 113, 124 Stat. 1376, 1398 (2010).
[iv] Global Monitoring Report on Non-Bank Financial Intermediation, Financial Stability Board, (December 18, 2023), https://www.fsb.org/wp-content/uploads/P181223.pdf;
Global Shadow Banking Monitoring Report 2015, Financial Stability Board, (November 12, 2015), https://www.fsb.org/wp-content/uploads/global-shadow-banking-monitoring-report-2015.pdf.
[v] Antonio Garcia Pascual et al., Nonbank Financial Sector Vulnerabilities Surface as Financial Conditions Tighten, International Monetary Fund, (April 4, 2023), https://www.imf.org/en/Blogs/Articles/2023/04/04/nonbank-financial-sector-vulnerabilities-surface-as-financial-conditions-tighten; Global Shadow Banking Growth Increases Systemic Risks, Fitch Ratings, (May 21, 2019), https://www.fitchratings.com/research/non-bank-financial-institutions/global-shadow-banking-growth-increases-systemic-risks-21-05-2019.
[vi] Martin J. Gruenberg, Remarks by FDIC Chairman Martin J. Gruenberg at the Exchequer Club on the Financial Stability Risks of Nonbank Financial Institutions, Washington, DC (September 20, 2023), https://www.fdic.gov/news/speeches/2023/spsept2023.html.
[vii] Timothy Geithner et al., Letter to Secretary Steven T. Mnuchin and Chairman Jerome H. Powell (May 13, 2019), Re: Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies (RIN 4030-ZA00),
[viii] Guidance on Nonbank Financial Company Determinations 12 CFR 1310, https://www.govinfo.gov/content/pkg/FR-2023-11-17/pdf/2023-25053.pdf.
[ix] Graham Steele, “Confronting the ‘Climate Lehman Moment’: The Case for Macroprudential Climate Regulation,” 30 Cornell J.L.& Pub. Pol’y 109 (2020), https://ssrn.com/abstract=3542840.
[x] Patrick Bolton et al., The green swan: Central banking and financial stability in the age of climate change, Bank for International Settlements, (January 2020), https://www.bis.org/publ/othp31.pdf.
[xi] Brooklyn Montgomery and Monica Palmeira, Bluelining: Climate Financial
Discrimination on the Horizon, The Greenlining Institute, (August 2023), https://greenlining.org/wp-content/uploads/2023/08/FINAL-GLI_Bluelining_report_2023.pdf; id.
[xii] Principles for Climate-Related Financial Risk Management for Large Financial Institutions 88 FR 74183, https://www.govinfo.gov/content/pkg/FR-2023-10-30/pdf/2023-23844.pdf.
[xiii] Id at 74186.
[xiv] Annual Report 2023, Financial Stability Oversight Council, (December 14, 2023), https://home.treasury.gov/system/files/261/FSOC2023AnnualReport.pdf.
[xv] U.S. Billion-Dollar Weather and Climate Disasters, NOAA National Centers for Environmental Information, (2024), https://www.ncei.noaa.gov/access/billions/.
[xvi] Jason Woleben, US homeowners insurance rates jump by double digits in 2023, S&P Global, (January 25, 2024), https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/us-homeowners-insurance-rates-jump-by-double-digits-in-2023-80057804.
[xvii] Michael R. Blood, California insurance market rattled by withdrawal of major companies, AP, (June 5, 2023), https://apnews.com/article/california-wildfire-insurance-e31bef0ed7eeddcde096a5b8f2c1768f.
[xviii] Brendan Farrington, Farmers pulls out of Florida property insurance despite efforts to stabilize the market, AP, (July 11, 2023), https://apnews.com/article/insurance-florida-business-desantis-a6c3a8e6127ecbf270099e87238ed47e.
[xix] Jean Eaglesham, Home Insurers Curb New Policies in Risky Areas Nationally, The Wall Street Journal (June 8, 2023). https://www.wsj.com/articles/home-insurers-curb-new-policies-in-risky-areas-nationally-c93abac0.
[xx] Christopher Flavelle, As Insurers Around the U.S. Bleed Cash From Climate Shocks, Homeowners Lose, The New York Times, (May 13, 2024), https://www.nytimes.com/interactive/2024/05/13/climate/insurance-homes-climate-change-weather.html.
[xxi] Parinitha Sastry et al., “When Insurers Exit: Climate Losses, Fragile Insurers, and Mortgage Markets,” (2023), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4674279.
[xxii] Christopher Flavelle et al., Climate Shocks Are Making Parts of America Uninsurable. It Just Got Worse., The New York Times, (May 31, 2023), https://www.nytimes.com/2023/05/31/climate/climate-change-insurance-wildfires-california.html.
[xxiii] Michele Wong, U.S. Insurance Industry’s Cash and Invested Assets Rise to $8.5 Trillion at Year-End 2023, National Association of Insurance Commissioners, (May 8, 2024), https://content.naic.org/sites/default/files/capital-markets-special-reports-asset-mix-ye2023.pdf.
[xxiv] Hyeyoon Jung et al., Measuring the Climate Risk Exposure of Insurers, Federal Reserve Bank of New York, (July 2023), https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr1066.pdf.
[xxv] Insure our Future, Insurers withdraw cover for climate risks while backing increased fossil fuel production, industry must act to support 1.5°C climate target after 50 years of failure, (November 9, 2023), https://global.insure-our-future.com/scorecard-2023/.
[xxvi] Guidance on Nonbank Financial Company Determinations 12 CFR 1310.
[xxvii] Analytic Framework for Financial Stability Risk Identification, Assessment, and Response 88 FR 78026.
[xxviii] Basis of the Financial Stability Oversight Council’s Final Determination Regarding American International Group, Inc., Financial Stability Oversight Council, (July 8, 2013), https://home.treasury.gov/system/files/261/American%20International%20Group%2C%20Inc.pdf.
[xxix] Notice and Explanation of the Basis for the Financial Stability Oversight Council’s Rescission of Its Determination Regarding American International Group, Inc. (AIG), Financial Stability Oversight Council, (September 29, 2017), https://home.treasury.gov/system/files/261/American%20International%20Group%2C%20Inc.%20%28Rescission%29.pdf.
[xxx] Gregg Gelzinis, Deregulating AIG Was a Mistake, Center for American Progress, (October 11, 2017), https://www.americanprogress.org/article/deregulating-aig-mistake/.
[xxxi] American International Group, Inc., Annual Report (2023),
[xxxii] Gregg Gelzinis, Deregulating AIG Was a Mistake, Center for American Progress, (October 11, 2017), https://www.americanprogress.org/article/deregulating-aig-mistake/.
[xxxiii] American International Group, Inc., Annual Report (2023),
[xxxiv] Robert McDonald and Anna Paulson, What Went Wrong at AIG?, Kellogg School of Management, (August 3, 2015), https://insight.kellogg.northwestern.edu/article/what-went-wrong-at-aig.
[xxxv] Id; American International Group, Inc., Annual Report (2023),
[xxxvi] Insure our Future, Insurers withdraw cover for climate risks while backing increased fossil fuel production, industry must act to support 1.5°C climate target after 50 years of failure, (November 9, 2023), https://global.insure-our-future.com/scorecard-2023/.
[xxxvii] Covering Coal: The Top Insurers of U.S. Coal Mining, Public Citizen and Insure our Future, (September 28, 2023), https://www.citizen.org/article/covering-coal/.
[xxxviii] Michael Finch II, Here are the Louisiana insurers that have gone broke or left the state amid deepening crisis, The Times-Picayune, (September 222, 2022), https://www.nola.com/news/business/here-are-the-louisiana-insurers-that-have-gone-broke-or-left-the-state-amid-deepening/article_c7f077b4-3e98-11ed-86c9-f7f11037202f.html; Risk Exposure: The Insurers Secretly Backing the Methane Gas Boom in the US Gulf South, Public Citizen, (February 21, 2024), https://www.citizen.org/article/insurers-secretly-back-lng-boom-in-the-gulf-coast/.
[xxxix] Public Citizen, Groups Call on AIG to Cut Ties with Trans Mountain Pipeline, (April 28, 2022),
https://www.citizen.org/news/groups-call-on-aig-to-cut-ties-with-trans-mountain-pipeline/.
[xl] Chubb Drops Rio Grande LNG Insurance, Insure Our Future, (August 6, 2024), https://us.insure-our-future.com/chubb-drops-rio-grande-lng-insurance/.
[xli] Hoesung Lee et al., Climate Change 2023 Synthesis Report: Summary for Policymakers, Intergovernmental Panel on Climate Change, (March 20, 2023), https://www.ipcc.ch/report/ar6/syr/downloads/report/IPCC_AR6_SYR_SPM.pdf.
[xlii] United States Senate Committe on the Budget, Budget Committee Launches Investigation into Major Insurance Companies’ Climate Risk Evaluation, Fossil Fuel Support, (June 9, 2023), https://www.budget.senate.gov/chairman/newsroom/press/budget-committee-launches-investigation-into-major-insurance-companies-climate-risk-evaluation-fossil-fuel-support-.
[xliii] Insurance Giant AIG Continues Underwriting and Investment in Fossil Fuels at Alarming Rates, Public Citizen, (November 10, 2023), https://www.citizen.org/news/aig-2023-fossil-fuel-scorecard/.
[xliv] 2023 Sustainability Report, American International Group, Inc., (date), https://www.aig.com/content/dam/aig/america-canada/us/documents/about-us/report/aig-sustainability-report-2023.pdf.
[xlv] Scenarios Portal, Network for Greening the Financial System, https://www.ngfs.net/ngfs-scenarios-portal/explore.
[xlvi] Energy Property Insurance, AIG, https://www.aig.com/home/risk-solutions/business/specialty-risks/energy/energy-property.
[xlvii] Natahn Foley-Fisher et al, Assessing the size of the risks posed by life insurers’ nontraditional liabilities, Federal Reserve Board, (May 21, 2019), https://www.federalreserve.gov/econres/notes/feds-notes/assessing-the-size-of-the-risks-posed-by-life-insurers-nontraditional-liabilities-20190521.html.
[xlviii] Vikram Nanda et al., Investment Commonality across Insurance Companies: Fire Sale
Risk and Corporate Yield Spreads, Board of Governors of the Federal Reserve System, (2017),
https://www.federalreserve.gov/econres/feds/files/2017069pap.pdf.
[xlix] Brooklyn Montgomery and Monica Palmeira, Bluelining: Climate Financial Discrimination on the Horizon, The Greenlining Institute, (August 2023), https://greenlining.org/wp-content/uploads/2023/08/FINAL-GLI_Bluelining_report_2023.pdf.
[l] Parinitha Sastry et al., “When Insurers Exit: Climate Losses, Fragile Insurers, and Mortgage Markets,” (2023), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4674279.
[li] Pedro Gete et al., “Climate risk in mortgage markets: Evidence from Hurricanes Harvey and Irma,” 52 Real Estate Economics 660, (2024), https://doi.org/10.1111/1540-6229.12477.
[lii] Parinitha Sastry et al., “When Insurers Exit: Climate Losses, Fragile Insurers, and Mortgage Markets,” (2023), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4674279.
[liii] Christopher Flavelle, As Insurers Around the U.S. Bleed Cash From Climate Shocks, Homeowners Lose, The New York Times, (May 13, 2024), https://www.nytimes.com/interactive/2024/05/13/climate/insurance-homes-climate-change-weather.html.
[liv] Christopher Flavelle, As Insurers Around the U.S. Bleed Cash From Climate Shocks, Homeowners Lose, The New York Times, (May 13, 2024), https://www.nytimes.com/interactive/2024/05/13/climate/insurance-homes-climate-change-weather.html.
[lv] John Foley, Private-asset binge exposes insurance to new risks, Reuters, (December 1, 2023), https://www.reuters.com/breakingviews/private-asset-binge-exposes-insurance-new-risks-2023-11-30/.
[lvi] American International Group, Inc., Annual Report (2023),
[lvii] id at 25.
[lviii] Charles Cohen et al. Fast-Growing $2 Trillion Private Credit Market Warrants Closer Watch, International Monetary Fund, (April 8, 2024), https://www.imf.org/en/Blogs/Articles/2024/04/08/fast-growing-USD2-trillion-private-credit-market-warrants-closer-watch.
[lix] Michael Thrasher, Insurance Companies Binged on Private Credit. Moody’s Is a Little Worried About It., Institutional Investor, (October 5, 2023), https://www.institutionalinvestor.com/article/2ca5eps7dgt2eeurp6gw0/portfolio/insurance-companies-binged-on-private-credit-moodys-is-a-little-worried-about-it.
[lx] Pilot Climate Scenario Analysis Exercise, Board of Governors of the Federal Reserve System, (May 2024), https://www.federalreserve.gov/publications/files/csa-exercise-summary-20240509.pdf.
[lxi] Insurance Office Climate-Related Financial Risk Data Collection for U.S. Homeowners Multi-Peril Underwriting Data 88 FR 75380
[lxii] Annual Report 2023, Financial Stability Oversight Council, (December 14, 2023), https://home.treasury.gov/system/files/261/FSOC2023AnnualReport.pdf.
[lxiii] Emily Flitter, National Plan to Look Into Homeowners Insurers Hits a Hurdle, The New York Times, (March 21, 2024), https://www.nytimes.com/2024/03/21/business/naic-homeowners-insurers-states-hurdle.html.
[lxiv] American International Group, Inc., Annual Report (2023),
[lxv] Id at 20.
[lxvi] Reinsurers defend against rising tide of natural catastrophe losses, for now, Moody’s, (January 10, 2023), https://www.moodys.com/web/en/us/about/insights/data-stories/reinsurers-mitigate-lower-profits.html.
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Automated Worker Surveillance Creates a Harmful Work Environment
Public Citizen Comment – RFI Automated Worker Surveillance and Management 6.29.2023
On June 29, 2023, Public Citizen submitted comments to the White House Office of Science and Technology — Automated Worker Surveillance Creates a Harmful Work Environment. Click on the link above to see the full comment.
There is an important distinction between supervising effective performance of workers and abuse of technology to patrol all employee activities.
It is impossible to live a life in the modern world free from commercial surveillance. The connected world has brought benefits, but those benefits have come with costs. We commend the Office on starting the valuable process of categorizing the harms of surveillance in the workplace, and even more importantly beginning to rebalance power in favor of workers rather employers who seek to use surveillance that endangers the health and safety of workers.
Workers Need Protections Against the Abuse of Surveillance by Employers
Oversight of employee performance is an integral aspect of managing a productive workforce. However, there is an important distinction between supervising effective performance of workers and abuse of technology to patrol all employee activities. Data collection tactics developed in the consumer realm are now being used by employers to assert control over the workplace and, in turn, control over workers.[1] Unfortunately, the adoption of invasive and exploitative workplace surveillance is being normalized, with eight out of 10 of the largest employers in the U.S. digitally monitoring their employees.[2] It’s a practice that degrades the rights, privacy, health and safety of workers.
Employees may not know how they are being tracked and what information is being collected about them. It can include sensitive information and a security breach that reveals the worker data raises the same privacy concerns and damage risk as a security breach of customer information.[3] Additionally, some employers use information acquired from data brokers to make hiring decisions, yet “[a]lgorithmic decisions made based on these data points can easily become proxies for discrimination and bias.”[4] Others employ surveillance to chill worker collective organizing.[5]
Invasive surveillance systems create a harmful work environment. The lack of transparency in data collection also puts workers at an extreme informational disadvantage, increasing corporate power and decreasing the bargaining power of the labor force.[6] The imbalance gives employers the control to exploit workers, particularly vulnerable and marginalized populations,[7] even using opaque data collection to engage in wage theft.[8] Workers must submit to unfair and deleterious workplace practices in order to put food on their tables.
Surveillance of Workers Has Increased Dramatically
There is a long history of aggressive scrutiny of workers, and even the use of investigative services to gather information on employees.[9] However, that level of surveillance was used sparingly because it is both expensive and time consuming.[10]
As technology has quickly advanced, so have the options for monitoring the actions of employees both inside and outside the workplace.[11] The use of closed-circuit television cameras and key cards that track employee entrance and exit from the workplace have graduated to body cameras and GPS trackers. A Wisconsin tech company started an optional program that implants microchips in employees.[12] Despite dubious scientific validity and racial and sexist bias,[13] facial tracking and voice recognition software is being used to scrutinize public-facing workers to ensure they are using appropriate facial expressions and vocal tone with customers.[14] Bio-tracking, though still in early development, can be a useful worker protection tool to identify dangerous changes in heart rate, body temperature, kidney function and other physiological factors. However, employers are also spuriously attempting to use it to measure worker emotion and mood, a presumptive proxy for worker productivity.[15]
An explosion of digital monitoring unfolded as more of the workforce began working from home. Use of surveillance software dramatically increased with the COVID-19 pandemic.[16] Technological systems available to employers include software giving employers access to private worker messages on Slack, “attention tracking” on Zoom videoconferencing,[17] random screenshots of an employee’s computer, and recordings of every keystroke an employee makes.[18] Microsoft Office 365 software allows employers to track worker activity in great detail without notifying a worker that they are being tracked.[19] In a recent survey, 78% of employers acknowledged the use of monitoring software to track employees and 73% reported evaluating employee performance and/or making decisions to terminate employees using stored worker emails, calls and videos.[20] Yet, 83% of employers in the same survey admitted that this type of data collection is ethically questionable.[21]
Worker Surveillance Offers Limited Benefit to Employers
Surveillance technologies can be useful in guarding against theft, unsafe work practices and workplace violence. While these purposes are often cited by employers, concerns about productivity are the primary reason given for use of most technological surveillance systems. However, many types of surveillance and the manner in which they are used belie this rationale. For example, many employers utilize technology to furtively monitor and record workers without notifying workers that they are doing so. In these cases, decisions about the worker — including salary, promotions, discipline and termination — are made based on information the worker did not know was being collected or used. By failing to use collected data to provide workers with appropriate feedback, there is no opportunity to improve job performance or increase their productivity.
Surveillance may reduce worker performance by increasing mistakes.
Even when workers are aware of surveillance by the employer, workplace productivity may not improve. In fact, it may reduce worker performance by increasing mistakes and causing workers focus on quantified behavioral metrics that may not reflect tasks necessary for successful completion of job goals.[22] Surveillance also creates an environment of distrust between workers and management, causing a disconnect that hampers worker loyalty and accountability. Research has shown that, in some cases, monitored workers may be more likely to disregard instructions, work at a slower pace, and even steal from the company.[23] Creating zones of privacy for workers, on the other hand, has been shown to increase performance.[24]
The newfound ease of inexpensively collecting information on employees has led many employers to engage in intensive oversight through surveillance of almost every aspect of a worker’s activities.[25] This level of data collection is impossible for employers to analyze. Therefore, they turn to algorithms that fail to effectively capture worker performance — focusing on specific actions rather than outcomes.[26] By relying on these algorithms to determine worker pay or direct disciplinary actions,[27] employers betray the rights of employees and make arbitrary, unprofitable business decisions.[28]
Intense Scrutiny is a Weapon to Control Workers
Unfortunately, the adoption of invasive and exploitative workplace surveillance is being normalized and employers are increasingly operating with a “Big Brother” mentality.
Amazon warehouses, for example, use sensors and tablets to monitor workers’ movements, tracking how many boxes they’ve filled.[29] Amazon uses its package scanners not only to track packages, but also to measure the number of seconds between each scan made by a worker.[30] One worker reported that the established quota required her to scan one item every 11 seconds (300 items per hour).[31] Workers who fail to reach their quotas may be reprimanded or fired.[32] The breakneck pace of the work can cause repetitive stress injuries.[33] Also, workers feel pressured to ignore safety precautions in order to keep up, increasing the chances of workplace accidents.[34] Indeed, inspectors with the Washington Department of Labor and Industries cited a direct connection between the pressure to work at high speed and worker injuries at an Amazon delivery station.[35]
A report on Amazon’s use of surveillance described the relationship between the company and its employees as one of “control, humiliation and unabating anxiety.”
Sometimes the procedures for monitoring can be the direct cause of an injury. FedEx workers have experienced intense, persistent pain from the repetitive stress of moving boxes with a heavy package scanner strapped to their forearm.[36]
As part of its Global Smart Logistics Network,[37] UPS trucks have become a rolling computer filled with hundreds of sensors that track every aspect of the worker and truck movements, such as when the engine is turned on, if the truck is backing up, when the door is open, and whether a seat belt is buckled.[38] The handheld computer used to gather customer signatures is also a GPS monitor.[39] It prescribes turn-by-turn directions and tracks when delivery drivers exceed time limits for each package delivery.[40] UPS guidance, sometimes called “The 340 Methods,” includes everything from which shirt pocket to stow their pen to how to occupy their time on an elevator.[41]
Surveillance practices that monitor workers every minute place intense scrutiny on any time not being used to accomplish work tasks. Workers feel forced to work through pain and injuries.[42] The system pressures workers to limit rest and bathroom breaks.[43] UPS drivers, for example, have to account for Stops Per On-Road Hour, forcing them to justify bathroom breaks.[44] Not surprisingly, UPS drivers and workers at other companies that enforce minute-by-minute accountability report limiting their bathroom breaks.[45] This puts the health of the worker at risk and can increase workplace accidents due to worker distraction. Additionally, rest breaks are essential to avoid health risks to workers, including heat-related illness.[46]
Worker Surveillance Damages the Mental Health of Workers
The stress of constant surveillance creates a serious problem for the mental health of workers. Often the perception of workers is that they are under coercive surveillance[47] with an eye toward finding people to fire.[48] In a study of TSA agents under surveillance using closed circuit television, one officer described the surveillance system as managers “looking for excuses to slap you on the hand.”[49] A UPS driver said, “It’s like you’re fighting for your job every day.”[50] And a report on Amazon’s use of surveillance described the relationship between the company and its employees as one of “control, humiliation and unabating anxiety.”[51]
Michael Childers, the director of the University of Wisconsin’s School for Workers called this type of surveillance activity “management by stress.”[52] He described the anxiety and exhaustion of workers at a call center where every conversation and keystroke was monitored, “You had 20-year employees quitting, people throwing up in the parking lot.”[53] Such surveillance can create a “constant low-grade panic” that seeps into a worker’s private time and even invades their sleep.[54] The deterioration of mental and physical health caused by this stress is compounded by the increased risk of injury as a worker’s ability to function is compromised.
Workers Risk Losing Their Jobs for Reporting Dangerous Employee Practices
Employers often retaliate against workers who report improper employer practices through discipline, demotions, reduced hours, termination and interference with attempts to gain alternative employment. The fear of retaliation is a powerful deterrent for employees who cannot afford to lose their livelihood, leaving the door open for unrestrained exploitation of workers. Any attempts to hold employers accountable for abusive and dangerous surveillance practices are undermined if those in a position to identify it are unable to come forward.
It is only through effective protection of employees from retaliation that abusive worker surveillance practices can be identified and stopped. Such protection includes education of employees on their rights and easy access to a responsive complaint system. Importantly, the employee must be able to access relief swiftly. Delays leave workers suffering emotionally and financially while they wait for agency action. In addition, slow investigations allow employers to continue unacceptable employment practices, leading to the continued harm of workers. Any policy placing limits on the use of surveillance practices must, of necessity, include whistleblower protections for workers.
The White House Office of Science and Technology Should Work with the Occupational Safety and Health Administration (OSHA) to Implement Rules to Protect Workers From Exploitative Surveillance
Concentrated markets and the growing dominance of large employers have seen wages of the average worker stagnate while the salaries of top executive soar.[55] The imbalance has allowed employers to capitalize on the absence of regulations on the use of surveillance technologies to exploit workers at the expense of worker rights, privacy, safety and health.[56] With worker power eroded, it is necessary for OSHA to step in and provide oversight protection to workers.
For the reasons outlined above, a rule limiting the use of surveillance practices must include the following protections for workers:
1) Employers should be prohibited from invasive surveillance of workers, including the capture and/or use of information without a clear and valid business purpose that outweighs the privacy and safety risks to employees.
2) Employers should be prohibited from selling, sharing or transferring any surveillance data collected on employees to third parties and limitations should be placed on the length of time data can be stored.
3) Employers should be required to disclose surveillance practices to workers, including what information is collected, how it is collected, how long it will be retained, who has access to it, and how it will be used.
4) The Office should work in concert with OSHA to protect workers from surveillance practices that expose workers to a risk of physical of psychological harm.
5) An OSHA rule should delineate strong, unambiguous protections of workers from retaliation by employers for reporting abusive or dangerous surveillance practices or violations of consumer privacy. The anti-retaliation protections must include a clear enforcement mechanism through the OSHA Whistleblower Office[57] and the option to seek redress in the courts if worker claims cannot be investigated in a timely manner.
Workers rights are human rights. And in the corporate surveillance economy, they are violated every day.
The erosion of our autonomy through invasion of our privacy in and out of the workplace is not minor or imaginary, nor is privacy correctly imagined as lurking under some kind of nebulous constitutional shadow.[58] The rights, and the harms, are concrete. Privacy rights are civil rights.[59] They are human rights.[60] Workers rights are human rights.[61] And in the corporate surveillance economy, they are violated every day.
The White House Office of Science and Technology has a chance to take a decisive step toward rebalancing power in favor of workers and to ensure they do not have to trade their health and safety for their livelihoods. We applaud the Office for doing this important work, and look forward to engaging further as the process goes forward.
Thank you for the opportunity to comment on this significant worker health and safety issue. For questions, please contact Juley Fulcher, worker health and safety advocate in Public Citizen’s Congress Watch division, at jfulcher@citizen.org.
[1] Sam Adler-Bell and Michelle Miller, How Surveillance and Capitalism Are Shaping Workers Future Without Their Knowledge, The Century Foundation (December 19, 2018), https://bit.ly/3E8IP8y [hereinafter Adler-Bell and Miller, How Surveillance and Capitalism Are Shaping Workers Future.].
[2] Jodi Kantor and Arya Sundaram, The Rise of the Worker Productivity Score, New York Times (August 14, 2022), http://bit.ly/3AnOV3U [hereinafter Kantor and Sundaram, The Rise of the Worker Productivity Score.].
[3] Andrea Miller, More Companies Are Using Technology to Monitor Employees, Sparking Privacy Concerns, ABC News (March 10, 2018), http://bit.ly/3GlEBNq [hereinafter Miller, More Companies Are Using Technology to Monitor Employees.].
[4] Adler-Bell and Miller, How Surveillance and Capitalism Are Shaping Workers Future.
[5] See, e.g., Jo Constantz, ‘They Were Spying On Us’: Amazon, Walmart, Use Surveillance Technology To Bust Unions, Newsweek (December 13, 2021), http://bit.ly/3EGjEf7; Daniel A. Hanley and Sally Hubbard, Amazon’s Surveillance Infrastructure and Revitalizing Worker Power, Open Markets Institute, (September 1, 2020), http://bit.ly/3EeukA2 [hereinafter Hanley and Hubbard, Amazon’s Surveillance Structure.].
[6] Adler-Bell and Miller, How Surveillance and Capitalism Are Shaping Workers Future.
[7] Id.
[8] Kathryn Zickuhr, Workplace Surveillance is Becoming the New Normal for U.S. Workers, Washington Center For Equitable Growth (August 18, 2021), http://bit.ly/3Ak4FVA. [hereinafter Zickuhr, Workplace Surveillance is Becoming the New Normal.]
[9] Zickuhr, Workplace Surveillance is Becoming the New Normal.
[10] Id.
[11] This includes surveillance of contract workers, as well as surveillance of franchise workers by corporate headquarters. Id.
[12] Miller, More Companies Are Using Technology to Monitor Employees.
[13] Kate Crawford, Artificial Intelligence is Misreading Human Emotion, The Atlantic (April 27, 2021), http://bit.ly/3GDLOsH.
[14] See, e.g., Zickuhr, Workplace Surveillance is Becoming the New Normal.
[15] Emine Saner, Employers Are Monitoring Computers, Toilet Breaks – Even Emotions. Is Your Boss Watching You?, The Guardian (May 14, 2018), http://bit.ly/3EA6xMe.
[16] Jennifer Alsever, Your Company Could Be Spying On You: Surveillance Software Use Up Over 50% Since Pandemic Started, Fortune (September 1, 2021), http://bit.ly/3OcqzQc.
[17] Public outcry against the ZOOM’s monitoring software caused the company to disable the feature. See, Eric S. Yuan, A Message to Our Users, ZOOM Blog (April 1, 2020 ), http://bit.ly/3E9UNyI.
[18] Sara Morrison, Just Because You’re Working From Home Doesn’t Mean Your Boss Isn’t Watching You, Vox (April 2, 2020), http://bit.ly/3UDkYVu [hereinafter Morrison, Just Because You’re Working From Home Doesn’t Mean Your Boss Isn’t Watching You]; Zickuhr, Workplace Surveillance is Becoming the New Normal.
[19] Rachel Sandler, Microsoft’s New Productivity Score Lets Your Boss Monitor How Often You Use Email and Attend Video Meetings, Forbes (November 25, 2020), http://bit.ly/3UK80Wb. Though Microsoft modified the software to aggregate worker data in response to public pushback, research shows that the program continues to allow employers to collect extensive data on individual workers. Bill Goodwin, Microsoft Office 365 Has Ability To Spy On Workers, Computer Weekly (June 21, 2022), http://bit.ly/3Gv3yGe.
[20] Mark C. Perna, Why 78% Of Employers Are Sacrificing Employee Trust By Spying On Them, Forbes (March 15, 2022), http://bit.ly/3txeZG1.
[21] Id.
[22] Zickuhr, Workplace Surveillance is Becoming the New Normal; Kantor and Sundaram, The Rise of the Worker Productivity Score.
[23] Chase Thiel, Julena M. Bonner, John Bush, David Welsh and Niharika Garud, Monitoring Employees Makes Them More Likely To Break Rules, Harvard Business Review (June 27, 2022), http://bit.ly/3V5jUcH.
[24] Ethan S. Bernstein, The Transparency Paradox: A Role For Privacy In Organizational Learning And Operational Control, 57 (2) Administrative Science Quarterly (2012) 181-216, https://doi.org/10.1177/0001839212453028.
[25] Michel Anteby and Curtis K. Chan, Why Monitoring Employees’ Behavior Can Backfire, Harvard Business Review (April 25, 2018), https://hbr.org/2018/04/why-monitoring-your-employees-behavior-can-backfire [hereinafter Anteby and Chan, Why Monitoring Employees’ Behavior Can Backfire.]
[26] Zickuhr, Workplace Surveillance is Becoming the New Normal.
[27] Employers are increasingly using quantitative surveillance data algorithms for semi- or fully- automated management that makes decisions for employer action. Id. For example, Amazon has used automated management systems that can terminate an employee or contract driver without the input of a human supervisor. See, e.g., Colin Lecher, How Amazon Automatically Tracks And Fire‘s Warehouse Workers For ‘Productivity’, The Verge (April 25, 2019), http://bit.ly/3OdWOi7; Spencer Soper, Fired By a Bot At Amazon: ‘It’s You Against The Machine’, Bloomberg (June 28, 2021), http://bit.ly/3AosHPo.
[28] Zickuhr, Workplace Surveillance is Becoming the New Normal.
[29] Id.
[30] Hanley and Hubbard, Amazon’s Surveillance Structure.
[31] Will Evans, Ruthless Quotas at Amazon Are Maiming Employees, The Atlantic (November 25, 2019), http://bit.ly/3gc8QvS [hereinafter Evans, Ruthless Quotas at Amazon.]
[32] Id.
[33] Id.
[34] Id.
[35] Will Evans, Amazon’s Warehouse Quotas Have Been Injuring Workers for Years. Now Officials Are Taking Action, Reveal (May 15, 2022), http://bit.ly/3OkEzaH.
[36] Jessica Bruder, These Workers Have a New Demand: Stop Watching Us, the nation (May 27, 2015), http://bit.ly/3hOjGbA [hereinafter Bruder, Stop Watching Us.].
[37] See, UPS Deploys Purpose-Built Navigation For UPS Service Personnel, UPS (December 4, 2018), http://bit.ly/3UJRWn6.
[38] Andrea Miller, More Companies Are Using Technology to Monitor Employees, Sparking Privacy Concerns, ABC News (March 10, 2018), http://bit.ly/3GlEBNq; Jacob Goldstein, To Increase Productivity, UPS Monitors Drivers Every Move, NPR (April 17, 2014), http://bit.ly/3TI4Il1; Jacob Goldstein and Zoe Chase, The Future of Work Looks Like a UPS Truck, Planet Money, NPR (May 2, 2014), http://bit.ly/3hM3jfM [hereinafter Goldstein and Chase, The Future of Work.].
[39] Goldstein and Chase, The Future of Work.
[40] Id.: UPS Deploys Purpose-Built Navigation For UPS Service Personnel, UPS (December 4, 2018), http://bit.ly/3UJRWn6.
[41] Bruder, Stop Watching Us.
[42] Evans, Ruthless Quotas at Amazon.
[43] See, e.g., Zickuhr, Workplace Surveillance is Becoming the New Normal; Evans, Ruthless Quotas at Amazon; Conley, Strict Rules; Hanley and Hubbard, Amazon’s Surveillance Structure.
[44] Bruder, Stop Watching Us.
[45] See, e.g., Zickuhr, Workplace Surveillance is Becoming the New Normal; Evans, Ruthless Quotas at Amazon; Bruder, Stop Watching Us; Emine Saner, Employers Are Monitoring Computers, Toilet Breaks – Even Emotions. Is Your Boss Watching You?, The Guardian (May 14, 2018), http://bit.ly/3EA6xMe.
[46] See, e.g., Juley Fulcher, Boiling Point: OSHA Must Act Immediately to Protect Workers from Deadly Temperatures, Public Citizen (June 2022), https://www.citizen.org/article/boiling-point/.
[47] Anteby and Chan, Why Monitoring Employees’ Behavior Can Backfire.
[48] Morrison, Just Because You’re Working From Home Doesn’t Mean Your Boss Isn’t Watching You
[49] Anteby and Chan, Why Monitoring Employees’ Behavior Can Backfire.
[50] Bruder, Stop Watching Us.
[51] Hanley and Hubbard, Amazon’s Surveillance Structure.
[52] Bruder, Stop Watching Us.
[53] Id.
[54] See, e.g., Hanley and Hubbard, Amazon’s Surveillance Structure.
[55] Id.
[56] Id.
[57] The OSHA Whistleblower Office enforces 25 whistleblower statutes. See, https://www.whistleblowers.gov.
[58] Griswold v. Connecticut, 381 U.S. 479 (1965) at 481-86.
[59] See, e.g., Leadership Conference on Civil and Human Rights, Support a Comprehensive Consumer Privacy Law that Safeguards Civil Rights Online, https://bit.ly/3hR5a2U.
[60] United Nations, Universal Declaration of Human Rights, Article 12. https://bit.ly/3Xl3GOM.
[61] United Nations, Universal Declaration of Human Rights, Articles 23 and 24 (1948), https://bit.ly/46uoF69; international covenant on economic, social and cultural rights (1966), https://bit.ly/3CQPC6q.
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Public Citizen Testimony on Managing Texas Sized Growth & Innovative Power Generation
To: Chairman Schwertner and the Members of the Senate Committee on Business & Commerce
CC: Sen. Phil King, Sen. Brian Birdwell, Sen. Donna Campbell, Sen. Brandon Creighton, Sen. Nathan Johnson, Sen. Lois W. Kolkhorst, Sen. José Menéndez, Sen. Mayes Middleton, Sen. Robert Nichols, Sen. Judith Zaffirini
Via hand delivery and by email.
From: Kamil Cook and Tom “Smitty” Smith with Public Citizen
Re: Managing Texas Sized Growth & Innovative Power Generation
Dear Chairman Schwertner and Members of the Committee:
Public Citizen appreciates the opportunity to offer this testimony. If you wish to discuss our comments further, we can be reached by contacting Adrian Shelley at ashelley@citizen.org, 512-477-1155.
Our recommendations for implementation of the Texas Energy Fund are as follows:
- Prioritize microgrids for backup power.
- Prioritize zero emissions sources of backup power.
- Increase stakeholder input in the implementation of TEF funds.
Texas Proposition 7, also known as the Texas Energy Fund (TEF), allocated up to $10 billion towards the building of new dispatchable generation facilities and new backup power sources. Up to $1.8 billion of this allocation is intended to build backup power such as microgrids. Even though different backup power systems, like microgrids, have proven useful to the ERCOT grid, there has been little information released about the actual allocation of funds towards backup sources or implementation of this portion of the TEF. This is markedly different than how the process has gone to fund new natural gas facilities—their selection process is already complete.
The Texas Energy Fund should prioritize microgrids for backup power.
Public Citizen believes that this backup power must be prioritized with haste. The sooner backup power can come online to support critical facilities, the sooner Texans can benefit from greater grid reliability and resilience. Additionally, the backup power sources take much less time to come onto the grid than large, centralized natural gas power plants. While some natural gas plants that were selected for funding were hopeful to come online as early as 2026, a microgrid could come online as early as next year.
Backup power such as microgrids give Texans the energy independence that they appreciate and provides safety to a community in an otherwise dangerous emergency. Even though it is labeled as backup power, it provides benefits to the grid during normal times of operation in addition to during emergencies. Beyond an emergency, sources like microgrids give customers the opportunity to save money on energy bills since these backup sources often consist of a mix of solar, battery, and demand response measures that work during normal grid operations.
Additionally, backup power sources can come online very quickly, much quicker than a natural gas turbine. Chairman Gleeson himself has talked about how microgrids can provide real benefits to the grid much faster than natural gas power plants. Microgrids that are started now can be finished next year. Some of the earliest dispatchable generation units that are allocated funding by the TEF won’t come online until 2026, 2027, or 2028.
Prioritize zero emissions power sources.
Public Citizen also advocates for backup power that is zero-emissions. These include batteries, solar, demand response, energy efficiency improvements, and hydrogen fuel cells fueled by green hydrogen.
Zero-emissions backup power provides a plethora of benefits to the hosting entity. Zero-emissions power also offers advantages to the community by eliminating air pollution emissions that harm public health and contribute to climate change.
Zero-emissions backup power sources do not contribute to local air pollution. This is valuable for many critical facilities (like nursing homes, hospitals, homeless shelters, and hospitals) that may house vulnerable populations during times of emergency.
More stakeholder input is needed.
Lastly, there should be more stakeholder input in how these funds will be implemented. There is little public information available about the process to allocate funding. By opening this process up, funds can be more effectively and efficiently used.
Proposition 7 passed last year and 10,000 MW of natural gas power plants have already been selected to receive funding. We are just barely out of the planning stages for the backup power and there is little publicly available information about it. There should be much greater stakeholder input in the planning of and implementation of this plan. Industry stakeholders, advocacy groups, and solar and battery companies should all be involved in this process. This will likely ensure that there is flexibility in the ways that these backup power funds can be distributed, which would be more efficient than prescribing how to distribute this money without input from the entities that are seeking this backup power.
In conclusion, Public Citizen supports this implementation with haste. Backup generation has not been prioritized in the rollout of the Texas Energy Fund, as can be seen by almost all of the $5 billion already being allocated to natural gas plants. We urge all $1.8 billion of money to be allocated to backup sources and for there to be thorough stakeholder input in crafting the implementation process. Public Citizen also urges the use of zero-emissions backup power sources, especially for microgrids, as they offer key air quality benefits to the places in which they would be situated. Lastly, we urge you to implement these changes quickly as backup sources of generation like microgrids can provide resiliency and reliability benefits to the grid much faster than natural gas plants can.
Testimony of Tom “Smitty” Smith
Retired Director of Public Citizen’s Texas Office
on
Advanced Nuclear Reactors
Before the Senate Business and Commerce Committee
October 1, 2024
Texas’ push for “accelerating” the development of small modular nuclear power plants could be too costly, too risky, take too long and rely on failed technologies. Building nuclear power plants cost the state billions in excess electricity costs over the last 40 years. The Senate should consider adding “brakes” onto this vehicle by putting protections put in place before investing in this technology.
“Those who cannot remember the past are condemned to repeat it. “
–George Santayana 1905
40 years ago, when I first began working at Public Citizen, we published a report called Too Costly to Continue, about the cost overruns that were continually happening for the South Texas and Comanche Peak nuclear plants that were under construction in the 1980’s. The study pointed out that building new coal or natural gas plants would be significantly less expensive than new nuclear plants and would be completed more rapidly. Our estimates of how much those nuclear plants were going to cost were far too conservative. And the time it took to build them was also far longer than we had predicted.
I’ve had a front row seat to how costly nuclear energy has been to Texas. Here are several observations.
The previous drive to build new nuclear plants in Texas came as a result of supply interruptions in the natural gas sector due to winter storms, a series of hurricane related gas supply disruptions in the late 70’s and federal policies that discouraged the use of natural gas. The original cost estimates for building four units at two plants in Texas sites were far too low.
When construction of the nuclear plants was finally completed, and the bills came due, nuclear power costs were so high1 that they pushed Texas’ power costs above other industrial states. As a result, there was a move toward market-based competition, or “deregulation of generation,” led primarily by Governor Bush. The “dereg” bill was opposed by the big nuclear utilities because they couldn’t be competitive if they continued to carry the debt for the nuclear power plants. As a result, when SB 7 passed in1999, the “electric deregulation bill,” it allowed for the “securitization” or the spreading out of debt, and the collection of these excess costs for nuclear power plants as “stranded costs” to reduce the debts owed by power companies. According to a testimony by Clarence Johnson, former energy economist for the Office of Public Counsel, NRG and ratepayers are paying off over $5 billion (in stranded costs) for 44% of the South Texas Nuclear Project. TXU securitized $1.3 billion in regulatory assets as a result of this settlement2 to pay for stranded costs for Comanche Peak nuclear plant. These costs are collected monthly from all of their customers.
Deregulation was remarkably successful because it chose the lowest cost power supplies to provide electricity to Texas. It lowered energy costs and led to a massive building boom in wind, solar, energy storage and new far more efficient natural gas plants. This boom in new energy resources has created tens of thousands of jobs in manufacturing, exploration, and energy production, particularly in rural areas and West Texas. It demonstrates the success that comes from opening the market to energy competition and basing it on lowest cost principles.
No energy source operates without significant government subsidies. Natural gas gets significant depletion allowances and favorable environmental treatment for their wastes. Renewable energy gets production tax credits and nuclear energy has been heavily subsidized. Now small modular nuclear reactor advocates are asking for about a dozen new state programs and incentives from the state to “accelerate” the building of new types of nuclear reactors. (The final report of the PUC’s Advanced Nuclear Task force was not available on 9/28/24)
It would be wise for the Senate to look at the costs and risks of new nuclear technologies and put in place some “brakes” to slow down or stop this development if costs and risks go out of control.
A recent study by IEEFA, SMRs: Still Too Expensive, Too Slow and Too Risky,3 presents the cost overruns of current advanced nuclear reactors.
It examines data from the four SMR’s currently in operation or under construction, as well as projected costs from leading SMR developers. The results show that little has changed from the previous nuclear track record. SMRs still are too expensive, too slow to build, and too risky to play a significant role in transitioning from fossil fuels in the coming 10 to 15 years.
Source: IEEFA calculations based on public data for each of the projects converted to 2023-year U.S. dollars. For example, see the GE Hitachi website, Four reactors could cost Saskatchewan $12 to $20 billion,, X-Energy and ARES Acquisition Corporation Announce Strategic Update, Georgia Power Company’s monthly and Quarterly Reports to the Georgia Public Service Commission on construction of the Vogtle Nuclear Project and IEEFA reports on NuScale.
IEEFA believes these findings should serve as a cautionary flag for all energy industry participants. In particular, they recommend that:
- Regulators who will decide on whether to approve utility or developer-backed SMR proposals should craft restrictions to prevent delays and cost increases from being pushed onto ratepayers.
- Utilities that are considering SMRs should be required to compare the technology’s uncertain costs and completion dates with the known costs and construction timetables of renewable alternatives. Utilities that still opt for the SMR option should be required to put shareholder funds at risk if costs and construction times exceed utility estimates.
- Investors and bankers weighing any SMR proposal should carefully conduct their due diligence. Things will go wrong, imperiling the chances for full recovery of any invested funds.
- State and federal governments should require that estimated SMR construction costs and schedules be publicly available so that utility ratepayers, taxpayers and investors are better.
- Assess the magnitude of the SMR-related financial risks that ratepayers may be forced to bear.
- Finally, it is vital that this debate considers the opportunity costs associated with the SMR push. The dollars invested in SMRs will not be available for use in building out a wind, solar and battery storage resource base. These carbon-free and lower-cost technologies are available today and can push the transition from fossil fuels forward significantly in the coming 10 years, during which time SMRs will still be looking for license approvals and construction funding.
Texas should:
- Require all new reactors to set aside an adequate decommissioning fund to remove and dispose of the waste and contaminated reactor vessels. Texas created one for existing reactors in 1987.
- Don’t permit any additional nuclear plants to operate without an adequately isolated underground permanent national waste repository in place that meets Department of Energy standards.
- Assure that local first responders are adequately trained, funded, and equipped to respond to an “out of control” nuclear scenario. Waiting for a team to be dispatched from Houston to Seadrift or from Dallas to Abilene could make it impossible to timely contain an accident. While containment vessels aren’t currently required for new small modular reactors, they should be.
- Learn from the past and make nuclear power compete in the open energy market. Don’t repeat the multi-billion-dollar mistakes of the past by allowing the PUC to fund incentives for nuclear projects that aren’t on time and on budget. Set up bi-annual PUC reviews and don’t be afraid to pull the plug on faltering projects.
If you’d like to discuss this further, please reach out to me.
Tom “Smitty” Smith
1 Costs of Current and Planned Nuclear Power Plants in Texas, A Consumer Perspective, Author: Clarence Johnson, Prepared for Public Citizen’s Texas office, PUC docket 38339_367_670210 pg 114 )
2 Costs of Current and Planned Nuclear Power Plants in Texas, A Consumer Perspective, Author: Clarence Johnson, Prepared for Public Citizen’s Texas office, PUC docket 38339_367_670210 pg 109)
3 SMRs: Still Too Expensive, Too Slow and Too Risky, David Schlissel and Dennis Wamsted, IEEFA, https://ieefa.org/SMR
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Report: Ranking of the Rate of State Medical Boards’ Serious Disciplinary Actions, 2021-2023
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This report examines the performance of state medical boards in protecting the public from dangerous physicians by disciplining doctor misconduct. Using state-level data on serious disciplinary actions from the National Practitioner Data Bank’s Public Use Data File, the report compares the performance of the state medical boards based on the number of serious disciplinary actions taken by the boards during the 2021-2023 period.
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Mpox Vaccine Access
Executive Summary
The world is reckoning with the second World Health Organization emergency declaration for mpox in as many years. A key tool to combat the virus, the MVA-BN mpox vaccine, owes its existence to two decades and billions of dollars worth of U.S. government investment. Despite profound public support, the vaccine’s manufacturer, Bavarian Nordic, remains the sole supplier of MVA-BN and has done far too little to enable access to its vaccine outside of wealthy countries. The company has been reluctant to share its technology to expand global production and has kept its prices confidential. This report details U.S. support for MVA-BN and provides insight into the seemingly unique price offered to the U.S. government. Additionally, we identify global manufacturers that may be good candidates for technology transfer to produce MVA-BN globally.
The U.S. government pays an estimated price of $55.35 per dose of MVA-BN. It therefore appears that the U.S. government pays less for MVA-BN than those purchasing the vaccine to serve the dire need in countries responding to mpox outbreaks. For example, publicly reported prices for the mpox response are as high as $100 to $141 per dose[1]—amounting to between 1.8 and 2.5 times more than the estimated U.S. government price. Even the recently announced UNICEF price of up to $65 per dose is higher than the estimated U.S. price.[2]
Bavarian Nordic should not charge poorer countries more than it charges rich countries. Moreover, the company should make its vaccine easily affordable for the global response, using cost-plus pricing. Bringing down prices would save millions of dollars that could be spent on other critical areas of the mpox response. Furthermore, secretive pricing hinders a coordinated response and gives no assurances that prices are fair. Bavarian Nordic must publicly justify its pricing and disclose its costs.
Further, Bavarian Nordic can license relevant technologies and work with manufacturers in LMICs, including in Africa, to enable sustainable access to MVA-BN. Nine global manufacturers, six of which are located in LMICs, may be plausible candidates for technology transfer (based on their familiarity with production processes similar to those used by Bavarian Nordic to produce MVA-BN). All six LMIC manufacturers sold vaccines using similar processes as Bavarian Nordic for less than $5 per dose—a fraction of Bavarian Nordic’s mpox vaccine price.
The U.S. government has a long-standing relationship with Bavarian Nordic. The U.S. government has provided over $2.3 billion to Bavarian Nordic to support the development, licensure, and procurement of MVA-BN. The government provided additional support for clinical trials and funding to establish U.S.-based fill-finish capacity. The U.S. should leverage its position with Bavarian Nordic to push the company to lower prices, share technology, and adopt a more transparent and public health-oriented approach.
Introduction
A key tool to contain mpox outbreaks exists because of U.S. government investment. The MVA-BN vaccine, manufactured by Bavarian Nordic as Jynneos, Imvamune, or Imvanex for the prevention of mpox and smallpox, has benefitted from decades of public support.
“The world has Jynneos because we invested in it,” U.S. Assistant Secretary for Preparedness and Response (ASPR), Dawn O’Connell, said in 2022.[3] However, the vaccine remains inaccessible to much of the world. Despite substantial public support, Bavarian Nordic has done little to ensure affordability and access for communities where mpox is endemic or to contain new outbreaks in low- and middle-income countries (LMICs).
In August 2024, the Africa Centres for Disease Control and Prevention (Africa CDC) and the World Health Organization (WHO) declared mpox a public health emergency of continental security (PHEC) and a public health emergency of international concern (PHEIC), respectively.[4] This is the second mpox-related PHEIC in two years. In July 2022, the WHO declared a PHEIC for mpox for a different outbreak that was spreading globally.[5]
During the global outbreak, no vaccines were available in Africa outside of a select few clinical trials. This was in part due to regulatory complexities and barriers to delivery. However, the 2022–3 response was also marked by inequity as wealthy countries purchased scarce vaccine supplies.[6] At the time, advocates called on the Biden administration to develop a global plan to prevent the spread of mpox—urging the administration to heed lessons from Covid-19 and to prioritize equitable distribution of vaccines, tests, and treatments to countries experiencing outbreaks.[7] Notably, in 2022, the manufacturer of the only FDA-approved mpox vaccine at the time, Bavarian Nordic, had closed its factory to expand its capacity to produce other vaccines, during which time no new drug substance was produced—a reason in itself to enlist additional suppliers for the vaccine.[8]
While Bavarian Nordic’s factory is now functioning, and the WHO recently prequalified MVA-BN—a move that will help facilitate broader regulatory approval and accelerate procurement[9]—Bavarian Nordic remains the sole supplier of MVA-BN. The company has also kept its prices confidential and declined to discuss them in detail.[10] In August 2024, Bavarian Nordic dismissed the suggestion that African governments might purchase vaccines at lower prices: “It’s very unlikely that any African country will ever be responsible for buying vaccines,” the company’s vice president of investor relations said, “[v]accines to Africa will come from donations from organizations and countries.”[11] Additionally, the company reportedly maintained that manufacturers in Africa would not be likely candidates to produce the vaccine.[12] A position that the company reversed just days later when it announced plans to work with the Africa CDC to partner with African manufacturers.[13]
Transparent communication about vaccine availability—through clear assurances of affordability and supply—is critically important during an emergency response. The WHO’s global mpox response plan highlights the urgent need to increase access to and delivery of mpox vaccines.[14] The plan urges countries with vaccine stockpiles to make doses available and recommends that manufacturers review access and pricing policies to ensure vaccines are affordable and accessible in LMICs.[15] The WHO also established an access and allocation mechanism to maximize use of scarce vaccine supplies and other medical tools through transparency and collaboration.[16]
A just mpox response demands that secret or unfair prices are not permitted to cause artificial scarcity. Bavarian Nordic has been far from transparent. The paucity of information around the company’s pricing policies—such as the mention of a tiered pricing model, but with no specific details shared—provides little support to the WHO’s vision for a coordinated emergency response.[17]
In September, the Biden-Harris administration committed one million mpox vaccines and $500 million to assist mpox response efforts, a critically important contribution.[18] The White House announcement again nodded to the U.S. government’s essential role in bringing the MVA-BN vaccine to licensure and the importance of supporting local production.[19] Yet despite substantial investments into MVA-BN, the U.S. government failed to secure contract terms that would enable reasonable pricing for LMICs or help facilitate sharing of technology with global manufacturers to expand supply. The U.S. government remains well-positioned to leverage its long-standing relationship with Bavarian Nordic to help ensure a more equitable mpox response.
In this report, we detail vaccine supply considerations, U.S. support for MVA-BN, and estimate the price offered to the U.S. government. Additionally, we identify global manufacturers that may be good candidates for technology transfer based on their use of similar production processes as Bavarian Nordic.
New Mpox Outbreaks, Continued Inequity
The world is reckoning with a second mpox PHEIC, this time sparked by the concerning upsurge in cases in the Democratic Republic of the Congo (DRC) and a growing number of countries in Africa, as well as the emergence of a new subtype of the virus that is spreading person-to-person, including through sexual networks.[20] In 2024, 31,427 total suspected mpox cases have been reported in Africa, with the large majority located in the DRC.[21] Among these cases, 844 deaths were reported.[22] Due to testing constraints, the subset of suspected cases that are confirmed to be mpox is lower (6,603).[23]
As part of the mpox response, the WHO has estimated that, over six months, four million vaccine doses are needed for health workers and contacts of suspected cases.[24] The Africa CDC set a target to vaccinate 10 million people over six months.[25]
African countries, including the DRC and Nigeria, have thus far received doses via donations from countries with stockpiles intended to prepare for smallpox threats or left over from the 2022–3 global mpox outbreak. About 275,460 MVA-BN doses have arrived in Africa.[26] This is less than 7% of the WHO’s estimated dose requirement and between 1.4–2.8% of the Africa CDC’s target (depending on whether one or two doses are used per person).[27] While the U.S., Japan, Canada, and several European countries have pledged to donate over four million additional vaccine doses, some donations remain uncertain and secured supply may still be less than what is needed to appropriately respond to the outbreaks in Africa.[28]
In addition to donations from government smallpox and mpox stockpiles, Bavarian Nordic has stated that it could produce 2 million doses in 2024 and another 11 million by the end of 2025, provided orders are placed.[29] However, Bavarian Nordic’s prices—reportedly set as high as $100 to $141 per dose[30]—threaten to keep available supplies out of reach in LMICs and deplete limited funds needed for broader mpox response.[31]
Vaccine orders have been placed by UNICEF, which issued a tender for the procurement of mpox vaccines, and Gavi, the Vaccine Alliance (Gavi), which reportedly has up to $500 million to put towards the mpox response, including to fund vaccine purchases.[32][33] UNICEF announced that, building off discussions from Gavi’s advance purchase agreement, it secured a price of up to $65 per dose in its supply agreement for MVA-BN vaccines.[34] UNICEF’s disclosure of the per dose price is notable. Bavarian Nordic has shown a concerning unwillingness to discuss its prices or pricing policies—tending to note only that price is dependent on volume and long-term commitment.[35] While the company has stated that it would be open to using tiered pricing, it has shared no details publicly on how prices would be set.[36]
Bavarian Nordic’s approach to access and pricing for its vaccine is concerning for a few key reasons.
First, public funding undergirds the MVA-BN vaccine. Since 2003, the U.S. government, primarily via the National Institutes of Health (NIH) and the Biomedical Advanced Research and Development Authority (BARDA), within the Health and Human Services’ (HHS’) Administration of Strategic Preparedness and Response (ASPR), has committed over $2.3 billion to support the development, licensure, and purchase of Bavarian Nordic’s smallpox/mpox vaccine. Despite critical investments from the U.S., Bavarian Nordic retained sole control over the vaccine’s production, supply, and price.
Second, without clear access and affordability assurances, demand may be artificially restricted. As case detection efforts improve and response efforts develop, the amount of vaccines needed over the first six months and through 2025 may increase. To realistically plan the mpox response, national governments, the Africa CDC, the WHO, and others making vaccination plans need a clear picture of the vaccine supply available to them. Although Bavarian Nordic has indicated it can supply 13 million doses through 2025, the high price of the vaccine may prevent purchasers from procuring sufficient quantities. Clear access and affordability assurances from Bavarian Nordic can provide greater certainty about supply availability, in turn helping governments and organizations plan accordingly and continue to invest in the capacity to deploy vaccines as needed.
Third, considering the continued spread of mpox, the world cannot rely on a single supplier for a key vaccine. Bavarian Nordic must share its technology to ensure equitable and sustainable access. Although MVA-BN was first approved for mpox in 2019, it was not until recently that Bavarian Nordic appeared to consider how to enable supply for outbreaks in LMICs or in countries where mpox has been endemic for decades.[37] Bavarian Nordic should share technology and know-how with manufacturers in LMICs. Doing so can help scale up low-cost production for current and future outbreaks.
U.S. Support for MVA-BN
Bavarian Nordic’s smallpox/mpox vaccine can trace its origins to a vaccine developed by German public scientists more than half a century ago. [38] Public science and public funding in Germany and the U.S. undergirded the development of the vaccine now under Bavarian Nordic’s sole control.[39]
The U.S. first invested in Bavarian Nordic’s smallpox vaccine in the wake of the September 11th and anthrax attacks. As described by Rizvi (2022):
The September 11 and anthrax attacks led to a new sense of urgency. The U.S. was gripped by fears about bioterrorism. Topping the list was the release of the smallpox virus—one of the deadliest pathogens in human history. Shortly after 9/11, Anthony Fauci and the NIH met with Bavarian Nordic. The NIH sponsored a regulatory application with Bavarian Nordic and, in 2003, the agency formally began bankrolling the development of MVA-BN for smallpox. Once again, it was public money pushing this work forward—though through a private intermediary.
…
The U.S. government—primarily through the NIH and Biomedical Advanced Research and Development Authority (BARDA)—funded clinical studies, dose purchases, new formulation development, and even the qualification of a new production facility.[40]
Public records show that the U.S. has awarded more than $2.3 billion to Bavarian Nordic to support MVA-BN. [Table 1]
Table 1. U.S. Government Support for MVA-BN (Jynneos/Imvamune/Imvanex)
| Agency | Contract Number | Scope | Years | Amount[41] |
| NIH | 00266200302D266030016 | Development & testing (preclinical work, clinical trials).[42] | 2003-2009 | $10,860,308.00 |
| HHSN266200400072C | Production & testing (Clinical trials; 500,000 doses; Validation of animal models).[43] | 2004-2015 | $115,773,474.42 | |
| BARDA/ASPR | HHSO100200700034C | Procurement of 28M doses for the stockpile; Clinical trials; Production of bulk vaccine.[44] | 2007-2017 | $1,010,761,647.00 |
| HHSO100201000011C | Development of freeze-dried formulation; Validation of freeze-dried production process.[45] | 2009-2017 | $75,033,696.00 | |
| HHSO100201700019C | Clinical trial; Production of bulk vaccine; Procurement for the stockpile and mpox outbreak; Qualification of new fill/finish facility.[46] | 2017-2027 | $1,023,713,981.00 | |
| FDA | N/A | Priority Review Voucher upon approval of Jynneos, later sold by the company.[47] | 2019 | $95,000,000 |
| Total | $2,331,143,106.42 |
Additional Support
Rivzi (2022) noted that, in addition to direct support provided to Bavarian Nordic, “[m]illions more was likely spent supporting independent clinical studies run by the NIH and CDC,” and characterized further support:
Aside from financing, the U.S. government has carried out its own research directly. In 2015, Army scientists, subsidized indirectly by BARDA, ran a pivotal clinical trial comparing the immune response from Jynneos to a traditional smallpox vaccine in U.S. service members stationed in South Korea. It was also U.S. officials who first raised the possibility of getting Jynneos authorized for monkeypox, because the two viruses are similar. Bavarian Nordic did not initially request such regulatory authorization.[48]
The U.S. government has most recently sponsored clinical trials to evaluate dose-sparing strategies and use of MVA-BN in adolescents—the data from the latter Bavarian Nordic recently submitted to the European Medicines Agency to extend the vaccine’s use to broader populations.[49] [Table 2]
Table 2. Indirect Support via Clinical Trials
| Agency | Clinical Trial Number | Scope | Years |
| NIH | NCT00082446 | Phase 1 evaluating safety & immunogenicity. | 2004-2007 |
| NCT00189904 | Phase 1/2 evaluating safety & immunogenicity in patients with HIV. | 2005-2007 | |
| NCT00437021 | Phase 2 evaluating safety & immunogenicity. | 2007-2009 | |
| NCT00879762 | Phase 2 to evaluate high dose. | 2009–2011 | |
| NCT00914732 | Phase 2 to evaluate freeze-dried formulation. | 2010–2011 | |
| NCT01827371 | Phase 2 to evaluate immunization schedules, modes of delivery. | 2013–2015 | |
| NCT05512949 | Phase 2 to evaluate intradermal delivery to expand vaccine supply. | 2022–2023 | |
| NCT05740982 | Phase 2 to evaluate use in adolescents. | 2023–2024 | |
| NCT05734508 | Phase 4 study in the DRC. | 2023–2024 | |
| U.S. Army Medical Research Institute of Infectious Diseases (USAMRIID) | NCT01913353 | Phase III trial in South Korea. | 2015–2017 |
| CDC | NCT02977715 | Phase III trial in the DRC. | 2017–2025 |
Additionally, the U.S. government provided support to establish U.S.-based fill-finish capacity for MVA-BN. In 2022, when Bavarian Nordic’s supply capacity was limited, HHS facilitated an agreement between Bavarian Nordic and a U.S.-based contract manufacturer.[50] HHS further contributed $11 million to the contract manufacturer to accelerate the tech transfer process.[51] This contribution of federal funds helped set up domestic capacity in four months, instead of the nine-month timeline typical of such processes.[52]
This facility appears to make up a portion of Bavarian Nordic’s current overall capacity.[53]
MVA-BN Commercial Launch
During the 2022–3 global outbreak, the MVA-BN mpox vaccine was deployed in the U.S. from supplies in the Strategic National Stockpile. While the mpox emergency declaration in the U.S. ended in 2023, the vaccine is now recommended by the U.S. CDC Advisory Committee on Immunization Practices (ACIP) for routine use (as opposed to use only during outbreak response) for those 18 years or older at risk of mpox.[54] ACIP’s recommendation, along with a new-found market for mpox vaccines, paved the way for Bavarian Nordic to launch MVA-BN on the commercial market.[55] As an ACIP-recommended vaccination, the vaccine is covered for routine use in at-risk adults under Medicare and Medicaid and available to uninsured and underinsured at-risk adults through certain publicly supported programs.[56] Under CDC contracts with Bavarian Nordic, the vaccine costs $229.50 per dose.[57] The private sector list price is $270 per dose.[58] The price under CDC contracts is therefore around four times more than the price that BARDA pays to stockpile MVA-BN.
The BARDA Price
BARDA appears to pay a unique price for MVA-BN. In 2016, Bavarian Nordic wrote in a filing to the U.S. Securities and Exchange Commission that BARDA paid $29 per dose[59]—notably lower than the current prices reportedly ranging from $65 to $100-plus per dose. Due to a lack of transparency, the current price paid by BARDA is unknown.
To estimate more recent pricing offered to BARDA, we reviewed publicly available information on vaccine procurement, including contract award details disclosed online and news releases from U.S. government agencies and Bavarian Nordic.
During the 2022–3 global mpox outbreak, the U.S. purchased liquid-frozen doses of MVA-BN. However, these doses were filled using government-owned bulk vaccine stored at Bavarian Nordic’s facility until filling and delivery.[60] As information from the 2022 outbreak only discloses the amount paid for finished doses but not for government-owned bulk, we cannot directly estimate a total per-dose price.
To help estimate the per dose price, we aggregated the total cost of: (1) filling and finishing each dose with (2) prior government-owned bulk, presented as a per dose price (this was estimated by converting the number of approximate dose equivalents per batch of bulk vaccine). We used publicly available information on orders for filled doses placed in 2022, as well as information regarding the purchase of bulk drug substance (BDS) batches, to estimate the total price that BARDA pays for each vaccine dose.
We estimate that BARDA pays about $55.35 per dose of liquid-frozen MVA-BN. This estimate is based on the finding that in 2022, the U.S. paid about $31.64 per dose filled from government-owned bulk, combined with the estimate that the U.S. pays $23.71 per dose equivalent of bulk. [Table 3]
Table 3. Estimated BARDA Price Per Dose
| Vaccine Form | Number of Bulk Drug Substance (BDS) Batches | Amount Paid | Number of Doses | Price Per Dose (or per dose equivalent of bulk) |
| Bulk Vaccine | 35 | $83,000,000[61] | 3,500,000[62] | $23.71 |
| Filled Dose | N/A | $174,000,000[63] | 5,500,000 | $31.64 |
| Total | $55.35* |
*This estimate is limited by a lack of transparency. The precise amount paid and number of dose-equivalents per BDS batch are not known; therefore, all numbers used in our estimate are approximate. Additionally, we could not ascertain whether the amount paid for bulk vaccine includes payment for storage at Bavarian Nordic’s facility, in which case, the amount paid per dose equivalent of bulk would be lower. Finally, it is possible that costs are not aggregated in this way for the purchase of bulk and finished doses. Noting the limitations of this estimate, the U.S. government should disclose the price it pays for MVA-BN to confirm that LMICs and those purchasing on their behalf are not asked to pay more than the U.S.
At the $100–$141 per dose prices circulating in public reports, Bavarian Nordic would be charging between 1.8 and 2.5 times more than it charges the U.S. government. The $65 per dose price disclosed by UNICEF is much closer to the estimated BARDA price, though it is still notably higher. Offering MVA-BN at the BARDA price or lower would therefore save millions of dollars that could be spent on other critical areas of the mpox response. [Table 4]
Table 4. Cost by Doses Purchased
|
Per Dose Price |
Cost by Doses Purchased | |||||
| 500,000 | 1 million | 2 million | 3 million | 4 million | 5 million | |
| $31.64 (BARDA filled dose price) | $15.82 million | $31.64 million | $63.28 million | $94.92 million | $126.56 million | $158.2 million |
| $55.35 (Est. total BARDA price) | $27.675 million | $55.35 million | $110.7 million | $166.05 million | $221.4 million | $276.75 million |
| $65 | $32.5 million | $65 million | $130 million | $195 million | $260 million | $325 million |
| $100 | $50 million | $100 million | $200 million | $300 million | $400 million | $500 million |
| $141 | $70.5 million | $141 million | $282 million | $423 million | $564 million | $705 million |
Moreover, as UNICEF announced that it had negotiated a price of “up to” $65 per dose, it therefore appears that the final price could be lower.
Bavarian Nordic should not charge poorer countries more than it charges rich countries. Moreover, the company should make its vaccine easily affordable for the global response, using cost-plus pricing. To ensure a fair price, Bavarian Nordic must publicly justify its pricing and disclose its costs.
Further, increased revenues and long-term contracts for government stockpiles should give the company more flexibility to provide lower prices for LMICs. In 2023, Bavarian Nordic’s revenue from MVA-BN increased 190% compared to the previous year.[64]BARDA and the Public Health Agency of Canada—both long-term stockpiling customers[65]—made up over 45% of Bavarian Nordic’s total revenue that year.[66]
Global Manufacturing
After prompting from the Africa CDC and others, Bavarian Nordic has finally begun discussions with a manufacturer in Africa to establish fill-finish capacity in the region.[67] While this can help to increase supply and lower prices, it may not be sufficient to meet local needs or support self-sufficient local manufacturing. Doing so would require Bavarian Nordic to share technology, including biological resources, know-how, and patents.[68] To adequately facilitate expanded production of MVA-BN, Bavarian Nordic should publicly disclose patent claims relevant to MVA-BN’s production and should license relevant patents.
In 2022, Public Citizen published an analysis of global vaccine manufacturers with experience in production processes similar to that used by Bavarian Nordic to produce MVA-BN (i.e. products using chick embryo fibroblast, or CEF, cells central to Jynneos production).[69] The purpose of this analysis was to identify manufacturers that could be suitable candidates for technology and know-how transfer to increase production of the MVA-BN mpox vaccine.
The report concluded that the manufacturers identified likely possess knowledge that would allow them to learn how to produce the vaccine faster than other manufacturers. They may also have established supply chains for key materials, like specific pathogen-free eggs, that could be drawn upon to expand production. Additionally, LMIC manufacturers have a different cost structure, including for raw materials and labor, that could help lower the price of vaccines, increasing demand and making doses more accessible.
Considering the current mpox PHEIC, we updated this analysis. We systematically reviewed regulatory records for vaccines approved by the FDA and vaccines prequalified by the WHO since 2022 to find any new products that used chick embryo fibroblast cell cultures. We found none. We conducted additional searches using “chick embryo fibroblast” AND “vaccine” in Google and PubMed, which yielded two CEF-based vaccines.
The first is a measles vaccine from Beijing Minhai Biotechnology Co, Ltd. and the National Institute of Health in Islamabad, Pakistan.[70] The Institute states the vaccine fulfills WHO requirements for Measles Vaccine (Live), but we were unable to locate any other information from WHO records. Without additional verification, we refrained from including it in our update. The second vaccine treats Kyasanur Forest Disease and was produced by the Government of Karnataka in India, but is no longer licensed for use and was excluded on that basis.[71] Additionally, we excluded one candidate that has not yet completed phase 3 trials but has validated a CEF-based manufacturing process.[72]
In sum, the nine manufacturers identified by Public Citizen in 2022 remain the most plausible candidates (based on their familiarity with CEF production processes) to receive technology transfer from Bavarian Nordic in order to scale up global supply of mpox vaccines. Six of those manufacturers are in LMICs, all of which sell vaccines for less than $5 per dose. [Table 5]
Table 5. Manufacturers with CEF Experience
| Manufacturer | Location | CEF-Based Product | FDA Approval or WHO PQ | Public Prices |
| GlaxoSmithKline (GSK) | Belgium | Measles and mumps virus used in Measles, Mumps, Rubella (MMR) vaccine (Priorix)[73] | Y | $4.47[74] (UNICEF) |
| Bio-Manguinhos/Fiocruz | Brazil | Measles and mumps virus used in MMR vaccine[75] | N[76] | – |
| Chiron Behring Vaccines (Bharat Biotech) | India | Rabies virus used in vaccine (Chirorab)[77] | N[78] | $4.77[79] |
| Serum Institute of India | India | Mumps virus used in MMR vaccine[80] | Y | $1.71-3.56[81] (UNICEF) |
| Zydus Cadila | India | Rabies virus used in vaccine (VaxiRab N)[82] | Y | $4.77[83] (India) |
| PT Bio Farma | Indonesia | Measles virus used in vaccine[84] | Y | $0.31[85] (UNICEF) |
| Pfizer | Ireland | Tick-borne encephalitis virus used in vaccine[86] | Y | $285 (Dept. of Veterans Affairs for TicoVac Jr.)[87] |
| Biovac | South Africa | Measles and mumps virus used in MMR vaccine (Morupar)[88] | N | – |
| Merck | U.S. | Measles and mumps virus used in MMR vaccine (rHA M-M-R II)[89] | Y | $62.70 (Adult) $25.68 (Child)(CDC)[90] |
The above analysis is not exhaustive. While the manufacturers listed above may be well-equipped to receive technology transfer to produce MVA-BN drug substance, there may also be manufacturers not captured here that meet specifications that enable them to receive technology and know-how to complete the final step of the manufacturing process, called fill-and-finish. For example, Bavarian Nordic will reportedly assist one African manufacturer to fill-and-finish the MVA-BN vaccine on the continent.[91] The selected manufacturer has not been disclosed. Separately, South African drugmaker Aspen Pharmacare stated that it was in talks with partners to manufacture mpox vaccines at its facilities, though it did not specify the vaccine.[92]
While Bavarian Nordic has signaled its willingness to partner with a fill-finish manufacturer in Africa, the terms of such an agreement remain unclear. The U.S. government, along with other stakeholders, can urge Bavarian Nordic to share know-how, provide licenses and work with manufacturers in LMICs to help shore up mpox vaccine production for LMIC markets. If Bavarian Nordic cannot meet demand or fails to adequately pursue technology transfer, governments should take necessary action to prevent a future global health crisis.
For example, the Danish government should consider options to compel the company to share its knowledge with other vaccine suppliers. Danish law includes emergency preparedness authorities which may allow the government to direct private businesses like Bavarian Nordic to take special measures.[93] The Danish government could use this power to direct Bavarian Nordic to transfer technology in order to meet demand for the ongoing mpox emergency. It appears that the Danish Emergency Management Agency (DEMA) could serve a coordinating function between Bavarian Nordic, Danish health agencies, the WHO, the Africa CDC, and local vaccine manufacturers to effectuate such technology transfer. Currently, DEMA and the WHO have a standby partnership agreement, and in the past, they coordinated to respond to the Ebola outbreak in West Africa.[94]
The Danish government also has the power to control and increase the supply of medicines to maintain domestic supplies, which could be triggered if Bavarian Nordic is unable to adequately meet demand for the ongoing emergency in LMICs while addressing domestic needs.[95]
In the U.S., BARDA should include conditions for diversifying supply in any further support or purchase agreements with Bavarian Nordic, as essential to health security. The U.S. increasingly recognizes the role that public funding conditions can play in facilitating affordability and access. For example, ASPR includes contract conditions for fair pricing of health security-related medical products in the U.S.[96] and the NIH recently proposed a policy to require licensees to outline plans to promote access to products derived from taxpayer-funded inventions.[97]
Bavarian Nordic will continue to secure financial gains through its business with high-income countries, so there is no plausible reason the company should hamper efforts to enable local production and diversified supply on the African continent. Corporate desire to maintain monopoly control over a publicly supported vaccine should not override the necessity to protect global health security. BARDA can play an instrumental role in conditioning future support to the company on the achievement of health security imperatives, which include global access to help stop outbreaks where they start. Moreover, the federal government may also consider exercising authorities under the Defense Production Act to compel knowledge sharing from the facility in the United States involved in fill-and-finish of the vaccine if that can support regional manufacturers abroad.[98]
A More Equitable Mpox Response
The ongoing mpox emergency demands that Bavarian Nordic adopt a drastically different approach than it has in the past—one that is more public health-oriented and contributes to a coordinated global response. While there may be other policy and legal tools to expand local production of the mpox vaccine in LMICs, at the very least, the U.S. and Danish governments’ long-term investments and stakes in MVA-BN provide leverage and cause to ensure that the company supports affordable and equitable access to its vaccine. Similarly, both governments, as well as Gavi and UNICEF, should push Bavarian Nordic to make clear commitments to transparency, affordability, and sharing technology and know-how with manufacturers in developing countries. This can help bring MVA-BN to the places it is needed most.
References
[1] Gabrielle Emanuel, WHO Declares 2024 Mpox Surge a ‘Public Health Emergency of International Concern’, NPR (Aug. 14, 2024), https://www.npr.org/sections/goats-and-soda/2024/08/14/g-s1-16977/mpox-public-health-emergency-world-health-organization-who; Press Conference, WHO, WHO press conference on global health issues, at 41:30:00 (Sept. 4, 2024), https://www.who.int/multi-media/details/who-press-conference-on-global-health-issues—4-september-2024# (referencing the price of mpox vaccines at $141 per dose).
[2] Press Release, UNICEF, UNICEF Signs Mpox Vaccine Deal at Lowest Market Price for 77 Low- and Lower-middle-income Countries (Sept. 26, 2024), https://www.unicef.org/press-releases/unicef-signs-mpox-vaccine-deal-lowest-market-price-77-low-and-lower-middle-income
[3] Sharon LaFraniere, Noah Weiland, & Joseph Goldstein, U.S. Could Have Had Many More Doses of Monkeypox Vaccine This Year, N.Y. Times (Aug. 3, 2022) https://www.nytimes.com/2022/08/03/us/politics/monkeypox-vaccine-doses-us.html
[4] Africa CDC Declares Mpox A Public Health Emergency of Continental Security, Mobilizing Resources Across the Continent, Africa Ctrs. for Disease Control & Prevention (Aug. 13, 2024), https://africacdc.org/news-item/africa-cdc-declares-mpox-a-public-health-emergency-of-continental-security-mobilizing-resources-across-the-continent/; WHO Director-General Declares Mpox Outbreak a Public Health Emergency of International Concern, WHO (Aug. 14, 2024), https://www.who.int/news/item/14-08-2024-who-director-general-declares-mpox-outbreak-a-public-health-emergency-of-international-concern
[5] Second Meeting of the International Health Regulations (2005) (IHR) Emergency Committee Regarding the Multi-country Outbreak of Monkeypox, WHO (July 23, 2022), https://www.who.int/news/item/23-07-2022-second-meeting-of-the-international-health-regulations-(2005)-(ihr)-emergency-committee-regarding-the-multi-country-outbreak-of-monkeypox
[6] Zain Rizvi & Aly Bancroft, Monkeypox Vaccine Shortage, Public Citizen (Aug. 31, 2022), https://www.citizen.org/article/monkeypox-vaccine-shortage/
[7] Advocates Tell Biden: Develop Global Plan to Prevent Spread of Monkeypox, Public Citizen (Aug. 19, 2022), https://www.citizen.org/article/advocates-tell-biden-develop-global-plan-to-prevent-spread-of-monkeypox/
[8] Apoorva Mandavilli, Will There Be Enough Monkeypox Vaccine?, N.Y. Times (July 1, 2022), https://www.nytimes.com/2022/07/01/health/monkeypox-vaccine-bavarian-nordic.html
[9] WHO Prequalifies the First Vaccine Against Mpox, WHO (Sept. 13, 2024), https://www.who.int/news/item/13-09-2024-who-prequalifies-the-first-vaccine-against-mpox
[10] Helen Branswell, To Counter Mpox, Vaccine Maker Could Ramp up by Another 8 Million Doses Next Year, STAT (Aug. 16, 2024), https://www.statnews.com/2024/08/16/bavarian-nordic-jynnneos-mpox-vaccine-maker-8-million-doses-next-year/
[11] Elaine Ruth Fletcher, Mpox Vaccine Manufacturing in Africa ‘Unlikely’, Donations as Most Likely Source, says Bavarian Nordic Official, Health Pol’y Watch (Aug. 15, 2024), https://healthpolicy-watch.news/mpox-vaccine-manufacturing-in-africa-unlikely-donations-are-most-likely-supply-channel-says-bavarian-nordic-official/
[12] Id. (“Sørensen also ruled local African production of the Bavarian Nordic vaccine as technologically unfeasible. ‘We talk to producers around the world. We are not aware of any producers that can produce with our technology. So your scenario doesn’t seem realistic at all,’ he said.”).
[13] News Release, Bavarian Nordic, Bavarian Nordic Provides Statement on Mpox Vaccine Supply and Collaboration with African and Global Stakeholders (Aug. 17, 2024), https://www.bavarian-nordic.com/investor/news/news.aspx?news=6970
[14] WHO, Mpox Global Strategic Preparedness and Response Plan, at 9 (Sept. 6, 2024), https://www.who.int/publications/m/item/mpox-global-strategic-preparedness-and-response-plan
[15] Id.
[16] WHO and Partners Establish an Access and Allocation Mechanism for Mpox Vaccines, Treatments, Tests, WHO (Sept. 13, 2024), (https://www.who.int/news/item/13-09-2024-who-and-partners-establish-an-access-and-allocation-mechanism-for-mpox-vaccines–treatments–tests
[17] Kaamil Ahmed, African Nations Hit by Mpox Still Waiting for Vaccines – Despite Promises by the West, The Guardian (Sept. 1, 2024), https://www.theguardian.com/global-development/article/2024/sep/01/mpox-africa-vaccines-fail-to-arrive
[18] The White House, FACT SHEET: The United States Commitment to Address the Global Mpox Outbreak (Sept. 24, 2024), https://www.whitehouse.gov/briefing-room/statements-releases/2024/09/24/fact-sheet-the-united-states-commitment-to-address-the-global-mpox-outbreak/
[19] Id. (“ Since 2007, the United States, through the Department of Health and Human Services (HHS), has invested more than $2 billion in the JYNNEOS vaccine as part of smallpox preparedness. Additionally, U.S. Government research institutions led the development of the JYNNEOS vaccine through preclinical evaluation, clinical trials, and advanced clinical evaluation platforms. These investments directly led to product licensure for both smallpox and mpox.”).
[20] First Meeting of the International Health Regulations (2005) Emergency Committee Regarding the Upsurge of Mpox 2024, WHO (Aug. 19, 2024), https://www.who.int/news/item/19-08-2024-first-meeting-of-the-international-health-regulations-(2005)-emergency-committee-regarding-the-upsurge-of-mpox-2024
[21] Mpox: Multi-country External Situation Report no.38, WHO (Sept. 28, 2024), https://www.who.int/publications/m/item/multi-country-outbreak-of-mpox–external-situation-report–38—28-september-2024
[22] Id.
[23] Id.
[24] WHO, Mpox Global Strategic Preparedness and Response Plan, at 17 (Sept. 6, 2024), https://www.who.int/publications/m/item/mpox-global-strategic-preparedness-and-response-plan
[25] Africa Ctrs. for Disease Control & Prevention, Mpox Continental Preparedness and Response Plan for Africa, at 21 (Sept. 5, 2024), https://africacdc.org/download/mpox-continental-preparedness-and-response-plan-for-africa/
[26] Chloe Searchinger & Allison Krugman, Mpox Vaccine Tracker: Millions Pledged, Millions Still to Be Delivered, Think Glob. Health (Sept. 10, 2024), https://www.thinkglobalhealth.org/article/mpox-vaccine-tracker-millions-pledged-millions-still-be-delivered
[27] In supply-constrained outbreak situations, the WHO recommends “off-label” use of a single dose of MVA-BN. WHO Prequalifies the First Vaccine Against Mpox, WHO (Sept. 13, 2024), https://www.who.int/news/item/13-09-2024-who-prequalifies-the-first-vaccine-against-mpox
[28] The White House, FACT SHEET: The United States Commitment to Address the Global Mpox Outbreak (Sept. 24, 2024), https://www.whitehouse.gov/briefing-room/statements-releases/2024/09/24/fact-sheet-the-united-states-commitment-to-address-the-global-mpox-outbreak/; Chloe Searchinger & Allison Krugman, Mpox Vaccine Tracker: Millions Pledged, Millions Still to Be Delivered, Think Glob. Health (Sept. 10, 2024), https://www.thinkglobalhealth.org/article/mpox-vaccine-tracker-millions-pledged-millions-still-be-delivered; Press Release, Ministry of Foreign Affairs of Japan, Signing and Exchange of Notes Regarding the Grant of Mpox Vaccines to the Democratic Republic of the Congo, (Sept. 18, 2024), https://www.mofa.go.jp/press/release/pressite_000001_00590.html
[29] News Release, Bavarian Nordic, Bavarian Nordic Provides Update on the Mpox Vaccine Supply Situation (Sept. 12, 2024), https://www.bavarian-nordic.com/investor/news/news.aspx?news=6989
[30] Gabrielle Emanuel, WHO Declares 2024 Mpox Surge a ‘Public Health Emergency of International Concern’, NPR (Aug. 14, 2024), https://www.npr.org/sections/goats-and-soda/2024/08/14/g-s1-16977/mpox-public-health-emergency-world-health-organization-who; Press Conference, WHO, WHO press conference on global health issues, at 41:30:00 (Sept. 4, 2024), https://www.who.int/multi-media/details/who-press-conference-on-global-health-issues—4-september-2024# (referencing the price of mpox vaccines at $141 per dose).
[31] Letter Urging Gavi, UNICEF to Negotiate Fair Price of Mpox Vaccines, Public Citizen (Aug. 27, 2024), https://www.citizen.org/article/letter-urging-gavi-unicef-to-negotiate-fair-price-of-mpox-vaccines/
[32] Press Release, UNICEF, UNICEF Issues Emergency Tender to Secure Mpox Vaccines for Crisis-hit Countries in Collaboration with Africa CDC, Gavi and WHO (Aug. 31, 2024), https://www.unicef.org/press-releases/unicef-issues-emergency-tender-secure-mpox-vaccines-crisis-hit-countries
[33] Jennifer Rigby, Mpox: Vaccine Group Gavi Says It Has up to $500 million for Shots, Reuters (Aug. 16, 2024), https://www.reuters.com/business/healthcare-pharmaceuticals/vaccine-group-gavi-has-up-500-million-funds-mpox-shots-2024-08-15/
[34] Press Release, UNICEF, UNICEF Signs Mpox Vaccine Deal at Lowest Market Price for 77 Low- and Lower-middle-income Countries (Sept. 26, 2024), https://www.unicef.org/press-releases/unicef-signs-mpox-vaccine-deal-lowest-market-price-77-low-and-lower-middle-income
[35] Helen Branswell, To Counter Mpox, Vaccine Maker Could Ramp up by Another 8 Million Doses Next Year, STAT (Aug. 16, 2024), https://www.statnews.com/2024/08/16/bavarian-nordic-jynnneos-mpox-vaccine-maker-8-million-doses-next-year/
[36] Kaamil Ahmed, African Nations Hit by Mpox Still Waiting for Vaccines – Despite Promises by the West, The Guardian (Sept. 1, 2024), https://www.theguardian.com/global-development/article/2024/sep/01/mpox-africa-vaccines-fail-to-arrive
[37] Elaine Ruth Fletcher, Mpox Vaccine Manufacturing in Africa ‘Unlikely’, Donations as Most Likely Source, says Bavarian Nordic Official, Health Pol’y Watch (Aug. 15, 2024), https://healthpolicy-watch.news/mpox-vaccine-manufacturing-in-africa-unlikely-donations-are-most-likely-supply-channel-says-bavarian-nordic-official/; Kerry Cullinan, Africa CDC in Talks with Bavarian Nordic to Bring Mpox Vaccine Production to the Continent, Health Pol’y Watch(Aug. 20, 2024), https://healthpolicy-watch.news/africa-cdc-in-talks-with-bavarian-nordic-to-bring-mpox-vaccine-production-to-the-continent/
[38] For a detailed history, see Zain Rizvi, How a Danish Company Grabbed Control of the Monkeypox Vaccine, The American Prospect (Sept. 22, 2022), https://prospect.org/health/how-danish-company-grabbed-control-of-monkeypox-vaccine/
[39] Id.
[40] Id.
[41] Bavarian Nordic Prime Awards, USASpending.gov, https://www.usaspending.gov/search/?hash=5dde72b8aab4c09b5cdf3abf5f237789 (last visited Sept. 20, 2024).
[42] News Release, U.S. Dep’t Health & Hum. Servs., HHS Announces Contracts to Develop Safer Smallpox Vaccines (Feb. 25, 2003), https://web.archive.org/web/20030402090421/http://www.hhs.gov/news/press/2003pres/20030225.html
[43] News Release, U.S. Dep’t Health & Hum. Servs., HHS Awards $232 Million in Biodefense Contracts for Vaccine Development (Oct. 7, 2004), https://web.archive.org/web/20041031155630/http://www.hhs.gov/news/press/2004pres/20041007a.html; Bavarian Nordic Announces Significant Progress In Safe Smallpox Vaccine (Oct. 19, 2005), available at: https://www.biospace.com/bavarian-nordic-announces-significant-progress-in-safe-smallpox-vaccine; Bavarian Nordic, 2006 Annual Report 21 (Mar. 30, 2007), available at: https://www.globenewswire.com/en/news-release/2007/03/30/103225/0/en/Bavarian-Nordic-A-S-Annual-Report-2006.html
[44] News Release, U.S. Dep’t Health & Hum. Servs., HHS Buys Next Generation Smallpox Vaccine (June 4, 2007), https://web.archive.org/web/20140103162120/http://www.hhs.gov/news/press/2007pres/06/20070604a.html; Bavarian Nordic, 2016 Form F-1/A1, at 111, https://www.sec.gov/Archives/edgar/data/1576915/000104746916009636/a2227062zf-1a.htm
[45] Id.
[46] News Release, Bavarian Nordic, Bavarian Nordic Secures Contract Award for Supply of Freeze-Dried Imvamune Smallpox Vaccine to the U.S. Government (Sept. 27, 2017), https://www.bavarian-nordic.com/investor/news/news.aspx?news=5322; News Release, Bavarian Nordic, Bavarian Nordic Announces Exercise of USD 44 Million Option by the U.S. Government Under Contract for Freeze-Dried Mva-Bn® Smallpox Vaccine (Jan. 18, 2019), https://www.bavarian-nordic.com/investor/news/news.aspx?news=5560; Synopsis for Increase in Contract Ceiling – BN, Sam.gov (Aug. 12, 2022) https://sam.gov/opp/10d16af3602e48d29eca6cd3daded865/view
[47] News Release, Bavarian Nordic, Bavarian Nordic Announces Closing of Sale of Priority Review Voucher (Jan. 27, 2020), https://www.bavarian-nordic.com/investor/news/news.aspx?news=5899
[48] Zain Rizvi, How a Danish Company Grabbed Control of the Monkeypox Vaccine, The American Prospect (Sept. 22, 2022), https://prospect.org/health/how-danish-company-grabbed-control-of-monkeypox-vaccine/
[49] News Release, Bavarian Nordic, Bavarian Nordic Receives WHO Prequalification for Mpox Vaccine (Sept. 13, 2024), https://www.bavarian-nordic.com/investor/news/news.aspx?news=6990
[50] News Release, U.S. Dep’t Health & Hum. Servs., HHS Facilitates Agreement to Accelerate Delivery of Additional Smallpox and Monkeypox Vaccines Using New U.S. Production Line (Aug. 18, 2022) https://www.hhs.gov/about/news/2022/08/18/hhs-facilitates-agreement-accelerate-delivery-additional-smallpox-monkeypox-vaccines-using-new-us-production-line.html
[51] News Release, U.S. Dep’t Health & Hum. Servs., HHS Funds U.S.-Based Production of Smallpox and Monkeypox Vaccine (Aug. 29, 2022), https://www.hhs.gov/about/news/2022/08/29/hhs-funds-us-based-production-of-smallpox-and-monkeypox-vaccine.html
[52] Id.; News Release, Grand River Aseptic Manufacturing, Grand River Aseptic Manufacturing Receives Zero Observations from FDA Inspection, Aiding in the Supply of Bavarian Nordic’s JYNNEOS® (Mar. 17, 2023), https://www.grandriverasepticmfg.com/news/grand-river-aseptic-manufacturing-receives-zero-observations-from-fda-inspection-aiding-in-the-supply-of-bavarian-nordics-jynneos/
[53] Helen Branswell, To Counter Mpox, Vaccine Maker Could Ramp up by Another 8 Million Doses Next Year, STAT (Aug. 16, 2024), https://www.statnews.com/2024/08/16/bavarian-nordic-jynnneos-mpox-vaccine-maker-8-million-doses-next-year/
[54] ACIP Recommendations, U.S. Ctrs. for Disease Control & Prevention, https://www.cdc.gov/acip/vaccine-recommendations/?CDC_AAref_Val=https://www.cdc.gov/vaccines/acip/recommendations.html
[55] The vaccine launched on the U.S. commercial market in April 2024. News Release, Bavarian Nordic, Bavarian Nordic Announces Commercial Launch of Mpox Vaccine in the U.S. (Apr. 2, 2024), https://www.bavarian-nordic.com/investor/news/news.aspx?news=6931
[56] Mpox Update: Clinical Management and Outbreaks, U.S. Ctrs. for Disease Control & Prevention, at 38–40 (June 27, 2024), https://emergency.cdc.gov/coca/ppt/2024/062724_transcript.pdf
[57] Current CDC Vaccine Price List, U.S. Ctrs. for Disease Control & Prevention, https://www.cdc.gov/vaccines-for-children/php/awardees/current-cdc-vaccine-price-list.html (last visited Sept. 20, 2024).
[58] Id.
[59] Bavarian Nordic, 2016 Form F-1/A1, at 83, https://www.sec.gov/Archives/edgar/data/1576915/000104746916009636/a2227062zf-1a.htm
[60] News Release, U.S. Dep’t Health & Hum. Servs., HHS Orders 2.5 Million More Doses of JYNNEOS Vaccine For Monkeypox Preparedness (July 1, 2022), https://www.hhs.gov/about/news/2022/07/01/hhs-orders-2-point-5-million-more-doses-jynneos-vaccine-for-monkeypox-preparedness.html
[61] Bavarian Nordic, 2021 Annual Report 78 (Mar 4, 2022), https://www.bavarian-nordic.com/media/314126/bn_annual_report_2021.pdf (“…BARDA committed to an additional USD 83 million for the procurement of 35 BDS batches…”).
[62] i.e. converting the number of BDS batches to an equivalent number of doses. 1 BDS is equivalent to about 100,000 doses. J&A Procurement of Smallpox (Mpox) Vaccine for the Strategic National Stockpile, Sam.gov (Apr. 4, 2023), https://sam.gov/opp/3272500464df4074bcf512146f1f5fec/view (“As of May 2022, BARDA owned 164 batches of BDS (~16.4M dose equivalents) … BARDA exercised several contract options (June – July 2022) to utilize existing BDS (55 batches ordered; 109 batches remain) to support the fill/finish of 5.5M doses”) (emphasis added).
[63] BARDA placed 3 orders for filled doses in 2022. One for 500,000 doses and two more for 2.5 million doses each. The U.S. paid a total of ~$174 million for these orders. J&A Procurement of Smallpox (Mpox) Vaccine for the Strategic National Stockpile, Sam.gov (Apr. 4, 2023), https://sam.gov/opp/3272500464df4074bcf512146f1f5fec/view (“In response to the increasing number of cases of monkeypox within the US and globally, BARDA exercised several contract options … to support the fill/finish of 5.5M doses of liquid frozen JYNNEOS vaccine at a total costs of $174M.”).
[64] Bavarian Nordic, 2023 Annual Report 14 (Mar. 6, 2024), https://www.bavarian-nordic.com/investor/annual-report-2023.aspx
[65] BARDA entered a 10-year contract with Bavarian Nordic in 2017 and has placed recent orders to procure bulk vaccine and freeze-dried doses. The Public Health Agency of Canada entered a 10-year contract with Bavarian Nordic in 2022. See News Release, Bavarian Nordic, Bavarian Nordic Awarded USD 63 Million from the U.S. Government for Production and Supply of Additional Smallpox/Mpox Vaccines (Sept. 24, 2024) https://www.bavarian-nordic.com/media/media/news.aspx?news=7001; News Release, Bavarian Nordic, Bavarian Nordic Awarded Ten-Year Contract Amendment valued up to USD 434 million for the Supply of Smallpox and Monkeypox Vaccine to Canada (Sept. 20, 2022), https://www.bavarian-nordic.com/investor/news/news.aspx?news=6646
[66] Id. at 59.
[67] Africa CDC confident it can raise $600 million for mpox response, Reuters (Sept. 12, 2024), https://www.reuters.com/business/healthcare-pharmaceuticals/africa-cdc-confident-it-can-raise-600-million-mpox-response-2024-09-12/
[68] Public Citizen has previously documented know-how and patent barriers to scaling up global production of MVA-BN. See Zain Rizvi, Public Citizen, Ramping up MPXV Vaccine Production (Nov. 1, 2022), https://www.citizen.org/article/ramping-up-mpxv-vaccine-production/
[69] Zain Rizvi, Public Citizen, Ramping up MPXV Vaccine Production (Nov. 1, 2022), https://www.citizen.org/article/ramping-up-mpxv-vaccine-production/
[70] Biological Production Division, Viral Vaccines, Nat’l Inst. Health Pakistan, https://bpd.nih.org.pk/products/viral/
[71] G T Sathish, Girl’s Death in Karnataka Owing to Kyasanur Forest Disease Intensifies Need for Vaccine, The Hindu (Jan. 12, 2024),https://www.thehindu.com/news/national/karnataka/girls-death-owing-to-kfd-intensifies-need-for-vaccine/article67726754.ece; Seema Prasad, 2024 Peak Year for Kyasanur Forest Disease, Karnataka Health Officials Confirm as Cases Rise, Down to Earth (Feb.12, 2024), https://www.downtoearth.org.in/health/2024-peak-year-for-kyasanur-forest-disease-karnataka-health-officials-confirm-as-cases-rise-94403
[72] Press Release, GeoVax Labs, Inc., GeoVax Achieves Milestone in Transition to Commercially Validated Manufacturing System (Mar. 6, 2024), https://geovax.com/investors/press-releases/geovax-achieves-milestone-in-transition-to-commercially-validated-manufacturing-system
[73] Priorix Package Insert, WHO, https://extranet.who.int/prequal/sites/default/files/vwa_vaccine/pq_62_252_MMR_GSK_PI_2022.pdf (“produced in chick embryo cells”).
[74] Measles, mumps and rubella vaccine (MMR) price data, UNICEF, https://www.unicef.org/supply/media/20206/file/MMR-vaccine-prices-06122023.pdf (price in 2023).
[75] Bio-Manguinhos received a full technology transfer from GSK to manufacture the MMR product, which relies on CEF. Triple Viral, Fiocruz (May 20, 2024), https://www.bio.fiocruz.br/index.php/br/produtos/vacinas/triplice-viral; ANVISA Filing, (“A vacina sarampo, caxumba, rubéola (atenuada) é uma preparação mista liofilizada das cepas de vírus atenuados de sarampo (Schwarz), caxumba (RIT 4385 – derivada da cepa Jeryl Lynn) e rubéola (Wistar RA 27/3), e, separadamente obtidas por propagação em culturas de tecido de ovos embrionados de galinha (sarampo e caxumba) ou células diplóides humanas MRC-5 (rubéola).”).
[76] Bio-Manguinhos has a prequalified yellow fever vaccine. Yellow Fever, WHO, https://extranet.who.int/prequal/vaccines/p/yellow-fever
[77] Press Release, Chiron Behring Re-Launches It’s Rabies Vaccine as “Chirorab®” (Nov. 14, 2019), ChiroRab-Press-Release-Nov-13-2019.pdf (bharatbiotech.com)
[78] While Bharat Biotech has received PQ for Rabipur, it is not clear whether this extends to Chirorab, the vaccine currently being produced by the company.
[79] Chirorab Vaccine, TATA 1MG, https://www.1mg.com/drugs/chirorab-vaccine-611728?srsltid=AfmBOopTaCZqejr6btQCR5bIW16b7b5Qv_bwpavIly2d1pTUcjD4hqeH&wpsrc=Google+Organic+Search (last visited Sept. 10, 2024).
[80] Measles, Mumps and Rubella Vaccine, Live, Attenuated, WHO, https://extranet.who.int/prequal/vaccines/p/measles-mumps-and-rubella-vaccine-live-attenuated-2; Measles, Mumps and Rubella Vaccine, Live, Attenuated Package Insert, https://extranet.who.int/prequal/sites/default/files/vwa_vaccine/pq_142_143_144_145_MMR_SIIPL_PI_UNICEF-2022.pdf (“The mumps virus is grown on chick fibroblasts from SPF eggs.”).
[81] Measles, mumps and rubella vaccine (MMR) price data, UNICEF, https://www.unicef.org/supply/media/20206/file/MMR-vaccine-prices-06122023.pdf
[82] VaxiRab N, WHO, https://extranet.who.int/prequal/vaccines/p/vaxirab-n; VaxiRab N Package Insert, https://extranet.who.int/prequal/sites/default/files/vwa_vaccine/FVP-P-330_Rabies_1dose_Zydus_PI-2024_0.pdf (“Virus is propagated in chick embryo fibroblast cell culture and Inactivated by β-propiolactone.”).
[83] Vaxirab N 2.5IU Injection, TATA 1MG, https://www.1mg.com/drugs/vaxirab-n-2.5iu-injection-232000?srsltid=AfmBOopLdY_ft8mFSVimJ1jZngzEU-99pkUTUpmiQPqeXQ02c8rDXnAW&wpsrc=Google+Organic+Search (last visited Sept. 10, 2024).
[84] Measles vaccine, WHO, https://extranet.who.int/prequal/vaccines/p/measles-vaccine; Measles vaccine Package Insert, https://extranet.who.int/prequal/sites/default/files/vwa_vaccine/pq_18_19_Measles_BioFarma_PI-2021.pdf (“Each dose of 0.5 ml contains not less than 1,000 CCID50 (cell culture infective doses 50%) of Measles virus strain CAM 70, prepared in SPF chicken embryo.”).
[85] Measles vaccine price data, UNICEF, https://www.unicef.org/supply/media/20201/file/Measles-vaccine-prices-14062024.pdf (last visited Sept. 24, 2024).
[86] TICOVAC-tick-borne encephalitis vaccine injection, Pfizer, Inc., https://labeling.pfizer.com/showlabeling.aspx?id=15600 (“TICOVAC is prepared from tick-borne encephalitis (TBE) virus propagated in chick embryo fibroblast (CEF) cells.”).
[87] Office of Procurement, Acquisition and Logistics (OPAL), U.S. Dep’t of Veterans Aff., https://www.va.gov/opal/nac/fss/pharmprices.asp (last visited Sept. 23, 2024).
[88] Adele Visser, Combination Vaccines in the South African Setting, https://repository.up.ac.za/bitstream/handle/2263/20793/Visser_Combination(2012).pdf?sequence=1 (“Measles virus (Schwarz strain in chick embryo cell line); Mumps virus (Urabe AM9 strain in chick embryo cell line”).
[89] rHA M-M-R II, WHO, https://extranet.who.int/prequal/vaccines/p/rha-m-m-r-ii; M-M-R II Package Insert, https://www.fda.gov/media/75191/download (“M-M-R II vaccine is a sterile lyophilized preparation of (1) Measles Virus Vaccine Live, an attenuated line of measles virus, derived from Enders’ attenuated Edmonston strain and propagated in chick embryo cell culture; (2) Mumps Virus Vaccine Live, the Jeryl Lynn™ (B level) strain of mumps virus propagated in chick embryo cell culture;”).
[90] Current CDC Vaccine Price List, U.S. Ctrs. for Disease Control & Prevention, https://www.cdc.gov/vaccines-for-children/php/awardees/current-cdc-vaccine-price-list.html (last visited Sept. 20, 2024).
[91] Mpox Response Plan Envisions Support Across 22 Countries, Africa Ctrs. for Disease Control & Prevention (Sept. 10, 2024), https://africacdc.org/news-item/mpox-response-plan-envisions-support-across-22-countries/ (“Other efforts to contain the outbreak included an agreement with the European pharmaceutical company Bavarian Nordic to assist one of nine large African pharmaceutical companies to manufacture the Mpox vaccine.”); Can the World Outmanoeuvre Mpox?, Euractiv (Aug. 29, 2024), https://www.euractiv.com/section/health-consumers/news/can-the-world-out-manoeuvre-mpox/ (“Talks have started with Bavarian Nordic to establish a ‘fill and finish’ facility in Africa.”).
[92] Nqobile Dludla, African Drugmaker Aspen in Talks to Manufacture Mpox Vaccines, Reuters (Sept. 3, 2024), https://www.reuters.com/business/healthcare-pharmaceuticals/african-drugmaker-aspen-advanced-talks-manufacture-mpox-vaccines-2024-09-03/
[93] Lov nr. 314 af 03.04.2017 om beredskabsloven, § 28(2).
[94] Strengthening WHO’s Disaster Response: DEMA and WHO Extend the Partnership Agreement for 5 More Years, WHO, https://www.who.int/news/item/11-10-2023-strengthening-who-s-disaster-response–dema-and-who-extend-the-partnership-agreement-for-5-more-years (last visited Sept. 23, 2024).
[95] Lov nr. 339 af 15.03.2023 om lægemidler, § 76.
[96] ASPR recently secured a fair pricing agreement in its contract with Moderna to develop a pandemic flu vaccine. This followed the earlier announcement that ASPR was making fair pricing a standard part of development and procurement contract negotiations. News Release, U.S. Dep’t Health & Hum. Servs., HHS Provides $176 Million to Develop Pandemic Influenza mRNA-based Vaccine (July 2, 2024), https://www.hhs.gov/about/news/2024/07/02/hhs-provides-176-million-develop-pandemic-influenza-mrna-based-vaccine.html; The White House, FACT SHEET: Biden-Harris Administration Announces Dozens of Pharma Companies Raised Prices Faster than Inflation, Triggering Medicare Rebates (Dec. 14, 2023), https://www.whitehouse.gov/briefing-room/statements-releases/2023/12/14/fact-sheet-biden-harris-administration-announces-dozens-of-pharma-companies-raised-prices-faster-than-inflation-triggering-medicare-rebates/
[97] Request for Information on Draft NIH Intramural Research Program Policy: Promoting Equity Through Access Planning, 89 Fed. Reg. 45003 (May 22, 2024), https://www.federalregister.gov/documents/2024/05/22/2024-11188/national-institutes-of-health-nih-office-of-science-policy-osp-request-for-information-on-draft-nih
[98] Zain Rizvi, Jishian Ravinthiran, & Amy Kapczynski, Sharing the Knowledge: How President Joe Biden Can Use The Defense Production Act to End the Pandemic Worldwide, Health Aff. Forefront (Aug. 6, 2021), https://www.healthaffairs.org/content/forefront/sharing-knowledge-president-joe-biden-can-use-defense-production-act-end-pandemic
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Outrage of the Month: Expanded FDA Approval of a Gene Therapy for Muscular Dystrophy
Health Letter, October 2024
By Robert Steinbrook, M.D.
Director, Public Citizen's Health Research Group
If you’re not outraged,
you’re not paying attention!
Read what Public Citizen has to say about the biggest blunders and outrageous offenses in the world of public health, published monthly in Health Letter.
(A version of this article appeared in the October 2024 issue of Public Citizen’s Worst Pills, Best Pills News.)
In June 2024 the Food and Drug Administration (FDA) expanded its earlier approval of delandistrogene moxeparvovec-rokl (ELEVIDYS), a gene therapy for patients with Duchenne muscular dystrophy.[1] Basing his unilateral decision on convoluted reasoning rather than convincing scientific evidence, a senior FDA official cast aside the misgivings of other agency officials and review teams, and green-lighted the approval.[2] The decision was even more astounding because a large randomized clinical trial designed to confirm the clinical benefit of the gene therapy did not meet its primary endpoint of improvement compared with a placebo on a scale commonly used to assess the motor function of males with Duchenne muscular dystrophy who are capable of walking.[3]
Duchenne muscular dystrophy is a rare but devastating genetic condition that mainly affects males (incidence of about 1 in 5,000 live male births); the disease leads to weakness and wasting away of the body’s muscles so that affected children typically have gait disturbances by the age of five years and become wheelchair dependent by an average of 13 years of age.[4]
The FDA granted accelerated approval for delandistrogene moxeparvovec-rokl in June 2023 for children who are four or five years of age and ambulatory (able to walk) in another controversial decision by the same agency official and also based on scant evidence. The agency subsequently expanded the approval to include traditional approval in ambulatory individuals four years of age and older with the disease and a confirmed mutation in the Duchenne muscular dystrophy gene; the agency also added accelerated approval for wheelchair-dependent individuals four years of age and older.[5]
This adeno-associated virus vector-based gene therapy is one of the most expensive drugs in the world, costing $3.2 million for a one-time, single-dose intravenous infusion.[6] Moreover, patients who receive the therapy may be unable to receive better treatments in the future because they will have developed antibodies to the adeno-associated virus vector used to deliver the treatment.[7] A vector is a vehicle that delivers the therapeutic genetic material directly into a cell.
Gene therapy holds promise for Duchenne muscular dystrophy and other rare diseases. The expanded approval of delandistrogene moxeparvovec-rokl, however, sets a disturbing precedent for the FDA, which should invariably ground its decisions about drugs on convincing scientific and clinical evidence that they are safe and effective, not wishful thinking.
The FDA should promptly review its internal procedures for approval decisions and establish guardrails that protect the integrity of the process. Every time the FDA approves a drug without convincing scientific and clinical evidence that it is safe and effective, it becomes more difficult to uphold the agency’s standards for other drugs or to require pharmaceutical companies to conduct further clinical trials of the approved drug (offering patients a placebo in a trial of a drug that has already been approved could be considered unethical).[8]
A more sensible approach, as recommended by other FDA officials who were overruled, would have been for the agency to continue the accelerated approval of the gene therapy without expanding it and to require the manufacturer to conduct additional placebo-controlled trials in specific groups of patients for whom there was promising but inconclusive evidence of potential benefit.[9]
The FDA should not have granted delandistrogene moxeparvovec-rokl accelerated approval in 2023, nor should it have granted it full approval in 2024.
References
[1] Food and Drug Administration. FDA expands approval of gene therapy for patients with Duchenne muscular dystrophy. FDA news release. June 20, 2024. https://www.fda.gov/news-events/press-announcements/fda-expands-approval-gene-therapy-patients-duchenne-muscular-dystrophy. Accessed August 5, 2024.
[2] Marks P. Center director decisional memo. BLA 1255781/Amendment 34. https://www.fda.gov/media/179485/download. Accessed August 5, 2024.
[3] Food and Drug Administration. FDA expands approval of gene therapy for patients with Duchenne muscular dystrophy. FDA news release. June 20, 2024. https://www.fda.gov/news-events/press-announcements/fda-expands-approval-gene-therapy-patients-duchenne-muscular-dystrophy. Accessed August 5, 2024.URL
[4] Kariyawasam, D, D’Silva A, Mowat D, et al. Incidence of Duchenne muscular dystrophy in the modern era; an Australian study. European Journal of Human Genetics. 2022;30:1398-1404. Accessed August 4, 2024.
[5] Food and Drug Administration. FDA expands approval of gene therapy for patients with Duchenne muscular dystrophy. FDA news release. June 20, 2024. https://www.fda.gov/news-events/press-announcements/fda-expands-approval-gene-therapy-patients-duchenne-muscular-dystrophy. Accessed August 5, 2024.
[6] Rind DM. The FDA and gene therapy for Duchene muscular dystrophy. JAMA. 2024;331(20):1705-1706. Doi:10.1002/jama.2024.5613
[7] Public Citizen. Letter to the FDA opposing accelerated approval of the gene therapy SRP-9001as a treatment for Duchenne muscular dystrophy. Public Citizen’s Health Research Group Publication #2660. June 15, 2023. https://www.citizen.org/article/letter-to-the-fda-opposing-accelerated-approval-of-the-gene-therapy-srp-9001-as-a-treatment-for-ambulatory-duchenne-muscular-dystrophy-dmd/. Accessed August 5, 2024.
[8] Ibid.
[9] Bendicksen L, Cliff E, Kesselheim AS. This gene therapy may not work. So why did the FDA fully approve it. Washington Post. July 22, 2024. https://www.washingtonpost.com/opinions/2024/07/22/fda-gene-therapy-elevidys/. Accessed August 5, 2024.
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Ranking of the Rate of State Medical Boards’ Serious Disciplinary Actions, 2021-2023
ACKNOWLEDGMENTS
This report was written by Robert E. Oshel, Ph.D., former Associate Director for Research and Disputed Report Resolution of the National Practitioner Data Bank and Advisor to Public Citizen’s Health Research Group, and Robert Steinbrook, M.D., Director of Public Citizen’s Health Research Group. The report was copyedited by Fiona Lynn, Managing Editor of Public Citizen’s Health Research Group.
ABOUT PUBLIC CITIZEN
Public Citizen is a national non-profit organization with more than 500,000 members and supporters. We represent consumer interests through lobbying, litigation, administrative advocacy, research, and public education on a broad range of issues including consumer rights in the marketplace, product safety, financial regulation, worker safety, safe and affordable health care, campaign finance reform and government ethics, fair trade, climate change, and corporate and government accountability.
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For more information, please visit www.citizen.org.
EXECUTIVE SUMMARY
This report examines the extent to which medical-licensing boards are taking actions to protect the public from licensed physicians who injure patients or behave inappropriately or illegally. Covering state medical boards’ serious disciplinary actions from 2021 to 2023, the report builds on previous reports from Public Citizen’s Health Research Group, the most recent of which covered serious disciplinary actions from 2019 to 2021.
As there is no reason to believe that physicians in any one state are more or less likely to be incompetent or miscreant than the physicians in any other state, we calculated the rate of serious disciplinary actions per 1,000 physicians licensed by boards in each state. Thirty-seven states plus the District of Columbia each have one board that licenses both M.D.s (Doctors of Allopathic Medicine) and D.O.s (Doctors of Osteopathic Medicine). Thirteen states have separate licensing boards for M.D.s and D.O.s. We used state-level data that includes physician type (M.D. or D.O) from the National Practitioner Data Bank’s (NPDB’s) Public Use Data File dated March 31, 2024. We defined “serious disciplinary actions” as those that had a clear impact on a physician’s ability to practice. We added the number of serious disciplinary actions taken by each state licensing board for 2021, 2022, and 2023 and then divided this total by three to obtain the average number of serious disciplinary actions for each board per year during the three-year period. We obtained data on the number of physicians licensed by each state medical board from an interactive map on the Federation of State Medical Boards website. We ranked boards by their average annual rate of serious disciplinary actions for the 2021-2023 period. We excluded boards with fewer than 5,000 licensees from the rankings.
The 64 medical boards, including the ten that were not ranked, took 1,289 serious disciplinary actions in 2021, 1,250 in 2,022, and 1,196 in 2023. With an average annual rate of 1.82 serious disciplinary actions per 1,000 physicians, Ohio had the strongest record of disciplining doctor misconduct for the 2021-2023 period. The Michigan Osteopathic board ranked second, Wisconsin third, and North Dakota fourth. Of the 54 ranked boards, 40 had rates that were less than half that of Ohio’s. With a rate of only 0.17 serious disciplinary actions per 1,000 physicians per year, the Indiana board ranked lowest. The rate of serious disciplinary actions taken by the Ohio board was almost 11 times higher than the rate of serious actions taken by the board in the neighboring state of Indiana. Other boards with low rankings included Georgia, the Pennsylvania Allopathic Board, Delaware, and South Carolina.
To improve medical boards’ performance, we recommend reforms such as appointing nonconflicted board members, expanded oversight by state legislatures, increasing the use of the NPDB by medical boards, and improved reporting of disciplinary actions. A limitation of the report is that it cannot account for the effects, if any, of the COVID-19 pandemic on serous disciplinary actions.
INTRODUCTION
The system of licensing medical practitioners was designed to protect the public from physicians who are inadequately trained or incompetent or whose conduct is illegal or abusive towards patients. Medical practice laws in all states mandate that medical boards, as a part of their important function of responsibly licensing physicians, have the legal obligation to take necessary, appropriate disciplinary actions against licensees known to have injured, endangered, or behaved inappropriately or illegally towards patients.
There is abundant evidence that many patients are injured, often through negligence or incompetence and rarely intentionally, while being treated. A 2010 study by the Department of Health and Human Services Office of Inspector General analyzing the records of a nationally representative sample of Medicare patients hospitalized in October 2008 found that 13.5% of patients experienced adverse events during their hospital stays.[1] Projected nationally, the researchers estimated that 134,000 Medicare beneficiaries experienced at least one adverse event in hospitals during that month. Further analysis found that 44% of these adverse events, 59,000 a month, were preventable. Nearly one-half of the preventable events involved substandard care, most frequently because of a delay in diagnosis or treatment.
The purpose of this report is to examine the extent to which medical-licensing boards are taking actions to protect the public from licensed physicians who injure patients or behave inappropriately or illegally. Because, to date, no objective standards have been developed to measure board performance in the abstract, we compare the performance of the state medical boards based on the annual average number of serious disciplinary actions taken by the boards per 1,000 licensees. There is no reason to believe that physicians in any one state are more or less likely to be incompetent or miscreant than the physicians in any other state. Therefore, we believe all observed differences between the boards reflect variations in board performance rather than physician behavior across different states.
This report, covering state medical boards’ serious disciplinary actions from 2021 to 2023, builds on previous reports from Public Citizen’s Health Research Group, the most recent of which covered serious disciplinary actions from 2019 to 2021.[2]
BACKGROUND: THE NATIONAL PRACTITIONER DATA BANK
All data on licensing board disciplinary actions used in this report come from the National Practitioner Data Bank (NPDB). Since September 1990, state licensing boards, hospitals, and other health care entities, including professional societies, have been required to report to the NPDB certain adverse licensing and disciplinary actions taken against individual practitioners. Malpractice insurers and other payers are required to report all malpractice payments made on behalf of individual practitioners.
This physician-specific information is only made available from the NPDB in response to inquiries from licensing boards and credentialing authorities. Hospitals are required to query the NPDB concerning all new staff appointments of physicians, dentists, and other practitioners and to query concerning their entire medical staff at least once every two years. Other health care entities, such as health-maintenance organizations or medical or dental group practices, may query the NPDB if they have adopted a formal peer-review process.
State boards that license practitioners also may query the NPDB and thereby determine whether licensees have been disciplined in other states, have had adverse actions taken against them by hospitals or other entities, or have had malpractice payment reports. However, the public is denied access to any physician-specific information.[3] The NPDB makes report data that does not identify individual practitioners or health care entities available for research purposes in a Public Use Data File that is updated quarterly.
METHODOLOGY
Public Citizen’s Health Research Group calculated the rate of serious disciplinary actions per 1,000 physicians licensed by boards in each state. Thirty-seven states and the District of Columbia each have one board that licenses both M.D.s (Doctors of Allopathic Medicine) and D.O.s (Doctors of Osteopathic Medicine). Thirteen states have separate licensing boards for M.D.s and D.O.s. We used state-level data that includes physician type (M.D. or D.O.) for licensure disciplinary actions from the NPDB’s Public Use Data File dated March 31, 2024. The file includes all reports received through that date. We limited our analysis to serious disciplinary actions taken against physicians during 2021, 2022, and 2023, not the year the report was submitted to the NPDB. For states that have separate licensing boards for M.D.s and D.O.s, we totaled serious disciplinary actions for M.D.s and D.O.s separately and attributed them to the corresponding licensing board. For analytical purposes, we also calculated the number of all adverse[4] licensing reports (i.e., both serious and nonserious) made by each licensing board for actions taken during 2021, 2022, and 2023.
For comparative purposes, we performed a similar analysis for serious actions taken in 2019, 2020, and 2021 that were included in the NPDB’s Public Use Data File as of March 31, 2022. For M.D. and combined M.D./D.O. boards, this analysis is identical to that published in Public Citizen’s “Ranking of the Rate of State Medical Boards’ Serious Disciplinary Actions, 2019-2021” report published on August 16, 2023. That report excluded D.O. boards, so we have newly calculated the rate of serious disciplinary actions for D.O. boards for the 2019-2021 period so those rates can be compared with the rates for D.O. boards for the 2021-2023 period.
We also counted serious actions taken during 2017, 2018, and 2019 that were included in the NPDB’s Public Use Data File as of March 31, 2019, so trends in the number of serious actions per year could be observed. Because of limitations in the licensing data available to us for 2018, we were only able to compare rates of serious actions per 1,000 licensees for the 2017-2019 period with rates calculated for later years for licensing boards that license both M.D.s and D.O.s.[5]
We defined “serious disciplinary actions” as those that had a clear impact on a physician’s ability to practice. We used the NPDB’s reporting categories of license revocations, suspensions, summary restrictions, summary suspensions, voluntary surrenders while under investigation, voluntary limitations while under investigation, limitations or restrictions, denials of renewal, and voluntary agreements to refrain or suspend pending completion of investigation.[6] Probation was not considered to be a “serious disciplinary action” because even if conditions are imposed with probations, most of the conditions of probation, such as a requirement for a chaperone to be present during a pelvic exam, are unenforceable and often do not affect a physician’s practice.
The NPDB allows reporters to report up to five actions taken simultaneously on a single report. We therefore included a licensing report in our count only if one or more of the reported actions met our criteria for serious disciplinary actions. Regardless of the number of other serious actions specified in a single report, each report was counted only once.
To obtain the numerator for our calculation of serious disciplinary actions per 1,000 physicians, we added the number of serious disciplinary actions taken by each state licensing board for 2021, 2022, and 2023 (or, for comparative purposes, 2017, 2018, and 2019 for our rankings report published in March 2021 and 2019, 2020, and 2021 for our rankings report published in August 2023) and then divided this total by three to obtain the average number of serious disciplinary actions for each board per year during the entire three-year period.
The source of the number of physicians licensed by each state board for both 2022 and 2020 was an interactive map on the Federation of State Medical Boards (FSMB) website (fsmb.org/physician census). Only data for 2022 were posted by the FSMB at the time of the preparation of this report, but we retained the previously posted data for 2020 used for our report for the 2019-2021 period. 2022 was the median year of our study period. 2020 was the median year for our previous study. We also retained licensing data for 2018 from the FSMB, but this data does not separate M.D.s and D.O.s, so we can use it only for comparative purposes for boards that license both types of physicians.
Because the boards of the smallest states and some osteopathic boards do not license many physicians, an increase or decrease of one or two serious actions in a year will have a much greater effect on the rate of discipline in such states (and, therefore, their rankings) than it would for boards that license larger numbers of physicians. To minimize such fluctuations, we calculated the average annual rate of serious disciplinary actions for all states over a three-year period. Thus, the ranking is based on the average annual rate of serious actions taken in 2021, 2022, and 2023 (or for comparison, 2019, 2020, and 2021).
Even using a three-year average annual rate may not adequately minimize fluctuations for boards with the smallest number of licensees. For example, the Vermont Board of Osteopathic Physicians and Surgeons reported having only 492 licensees in 2022. An increase of only one serious action taken during a three-year period would increase the ratio of the board’s serious actions per 1,000 licensees by 0.68. This is an extreme case. To prevent small fluctuations from greatly affecting the ratios and rankings, we excluded boards with fewer than 5,000 licensees from the rankings. We do, however, present data on the number of licensees, the number of serious disciplinary actions taken, and their average actions per 1,000 licensees for these small boards.
RESULTS
The 64 medical boards, including the ten that were not ranked, took 1,289 serious disciplinary actions in 2021, 1,250 in 2022, and 1,196 in 2023, as compared to 1,489 in 2017, 1,391 in 2018, 1,493 in 2019, and 1,235 in 2020 (Table 1). The ten unranked boards with fewer than 5,000 licensees took a total of 108 serious actions in the 2021-2023 period.
A limitation of the report is that we cannot account for the effects, if any, of the COVID-19 pandemic on serious disciplinary actions in 2020, 2021, 2022, or 2023. COVID-19 may have had different impacts in different states and affected not only complaints to the boards but also the ability or willingness of the boards to take serious disciplinary actions.
Our ranking of states based on their 2021-2023 annual average rate of serious disciplinary actions per 1,000 physicians is shown in Table 2. For comparison, similar rankings are presented for 2019-2021. The Ohio board had the highest rate, with an average of 1.82 serious disciplinary actions per 1,000 physician licensees per year during the 2021-2023 period. The Indiana board had the lowest rate, with only 0.17 serious disciplinary actions per 1,000 physicians per year. Thus, the rate of serious disciplinary actions per 1,000 physicians per year taken by the Ohio board was almost 11 times higher than the rate of serious actions taken by the board in the neighboring state of Indiana (1.82 divided by 0.17). There is, of course, no reason to believe that physician competency or behavior deserving of licensure disciplinary actions are 11 times worse in Ohio than in Indiana.[7]
Nationally, the total number of serious disciplinary actions taken by licensing boards decreased for the 2021-2023 period as compared with the 2019-2021 period. The average total number of serious disciplinary actions taken per year in the 2021-2023 period by all state boards, including the small boards that we do not rank, was 1,245, which is 94 serious actions per year fewer than the average of 1,339 for the 2019-2021 period. Because the number of licensees increased by almost 98,000 from 2020 to 2022, the national average of serious disciplinary actions per 1,000 licensees decreased from 0.92 to 0.81, a 12% decrease.
Table 3 shows how many more serious disciplinary actions each board would have needed to take to match the rate at which the best performing board, Ohio, took serious disciplinary actions during the 2021-2023 period. The board with the largest number of licensees, the California M.D. board, which has almost 156,000 licensees, ranked 24th in the 2021-2023 period, with a rate of 0.73 serious disciplinary actions per 1,000 licensees. The board ranked 29th in the 2019-2021 period. The board’s 2021-2023 rate was only 40.1% of the rate of the Ohio board. If the California M.D. board had taken serious actions at the same rate as the Ohio board, it would have taken an average of 283 serious actions per year during 2021-2023 rather than its actual average of 113. This finding raises concerns about whether the California M.D. board is acting as diligently as it should in protecting the public, particularly in light of the fact that the number of serious actions taken by the board trended down year by year, from 136 in 2021 to 110 in 2022 and 94 in 2023.
The trend for the Pennsylvania M.D. board is particularly alarming. For 2019-2021 the Pennsylvania M.D. board ranked 27th ; for 2021-2023 it ranked 52nd, with a mean rate of 0.26 serious disciplinary actions per 1,000 physicians. This board has almost 56,000 licensees, the fifth largest number of licensees in the country. The Pennsylvania M.D. board reported 30 serious actions that met the criteria used in this report in 2021,13 in 2022, and none in 2023.[8] Over the 2021-2023 period the board took only one-seventh as many actions as the Ohio board. If the Pennsylvania M.D. board had taken actions at the same rate as the Ohio board for 2021-2023, it would have taken an average of 100 serious actions per year rather than its actual average of 14 serious actions each year.
Notably, the trend for the Pennsylvania D.O. board is similar. The Pennsylvania D.O. board fell from a rank of 11th in the 2019-2021 period to 35thinthe2021-2023period,with12seriousactionsin2021 that met the criteria used in this report,fivein2022, and none in 2023.
For the 2021-2023 period, some boards showed marked improvements over the 2019-2021 period. The Wyoming board, which licenses about 6,000 physicians and was ranked 37th in the earlier period, improved to a rank of 13th for 2021-2023. The California D.O. board went from 48th to 27th. The Nevada M.D. board improved from 50th to 30th. The California D.O. board, which has over 11,000 licensees and ranked 48th in our calculations for the 2019-2021 period, improved to 27th.
Nonetheless, there is room for improvement in how all the boards protect the public from dangerous physicians. If all boards, including the unranked small boards, had taken serious disciplinary actions at the same rate as the highest-ranked board (Ohio) during the 2021-2023 period, there would have been 2,803 serious actions taken during 2023, about 2.34 times more than the 1,196 actions that were taken.
Even in Ohio there is room for improvement. For example, although the Ohio board had the highest ranking for 2021-2023 (1.82 serious disciplinary actions per 1,000 physician licensees per year), Kentucky, the highest-ranked board for the 2017-2019 period studied in the Public Citizen rankings report published in in March 2021[9], took actions at a rate of 2.29 per 1,000 licensees, a 26% higher rate.
If all boards had taken serious disciplinary actions at Kentucky’s 2017-2019 rate of 2.29 per 1,000 licensees in 2023, there would have been 3,527 serious actions taken, almost three times the 1,196 actions that were actually taken. There is no evidence, however, that even 2.29 serious actions per 1,000 licensees is the rate needed to adequately protect the public from dangerous physicians.
In addition to showing how many serious disciplinary actions each board would have taken if it had taken actions at the rate of the Ohio board in 2021-2023, Table 3 shows how many actions each board would have taken if they had taken actions at the same rate as the Kentucky board in 2017-2019. The information in Table 3 shows that many boards have considerable room for improvement.
TABLE 1: Medical Licensing Board Serious Disciplinary Actions, 2017-2023
| State Board | 2017 | 2018 | 2019* | 2020 | 2021* | 2022 | 2023 |
|---|---|---|---|---|---|---|---|
| AK Alaska | 8 | 5 | 7 | 1 | 5 | 2 | 8 |
| AL Alabama | 13 | 24 | 18 | 18 | 24 | 29 | 30 |
| AR Arkansas | 15 | 13 | 14 | 11 | 11 | 13 | 7 |
| AZ Arizona Allopathic | 38 | 30 | 55 | 35 | 31 | 30 | 29 |
| AZ Arizona Osteopathic | 12 | 3 | 11 | 1 | 1 | 4 | 1 |
| CA California Allopathic | 137 | 120 | 125 | 118 | 136 | 110 | 94 |
| CA California Osteopathic | 11 | 15 | 3 | 2 | 6 | 10 | 8 |
| CO Colorado | 27 | 28 | 43 | 42 | 45 | 20 | 33 |
| CT Connecticut | 10 | 14 | 11 | 8 | 8 | 8 | 14 |
| DC Dist. of Columbia | 2 | 3 | 3 | 2 | 4 | 5 | 7 |
| DE Delaware | 3 | 6 | 6 | 3 | 1 | 4 | 2 |
| FL Florida Allopathic | 80 | 80 | 69 | 74 | 87 | 60 | 70 |
| FL Florida Osteopathic | 9 | 7 | 8 | 10 | 7 | 8 | 6 |
| GA Georgia | 17 | 8 | 11 | 10 | 10 | 13 | 7 |
| HI Hawaii | 3 | 5 | 6 | 7 | 3 | 4 | 5 |
| IA Iowa | 6 | 14 | 7 | 14 | 10 | 12 | 4 |
| ID Idaho | 3 | 3 | 5 | 6 | 4 | 5 | 3 |
| IL Illinois | 76 | 74 | 65 | 28 | 78 | 83 | 69 |
| IN Indiana | 19 | 22 | 15 | 8 | 4 | 6 | 6 |
| KS Kansas | 14 | 16 | 13 | 10 | 12 | 4 | 8 |
| KY Kentucky | 39 | 53 | 42 | 26 | 23 | 40 | 24 |
| LA Louisiana | 9 | 1 | 20 | 14 | 4 | 15 | 5 |
| MA Massachusetts | 41 | 23 | 43 | 52 | 18 | 14 | 25 |
| MD Maryland | 29 | 26 | 37 | 24 | 24 | 31 | 20 |
| ME Maine Allopathic | 9 | 11 | 7 | 4 | 7 | 4 | 7 |
| ME Maine Osteopathic | 1 | 0 | 1 | 2 | 2 | 2 | 1 |
| MI Michigan Allopathic | 57 | 54 | 61 | 60 | 66 | 37 | 40 |
| MI Michigan Osteopathic | 22 | 12 | 13 | 14 | 12 | 17 | 14 |
| MN Minnesota | 7 | 9 | 19 | 12 | 14 | 20 | 16 |
| MO Missouri | 43 | 33 | 19 | 7 | 24 | 21 | 20 |
| MS Mississippi | 11 | 10 | 10 | 12 | 13 | 10 | 8 |
| MT Montana | 6 | 1 | 4 | 2 | 2 | 3 | 8 |
| NC North Carolina | 31 | 27 | 22 | 29 | 26 | 32 | 24 |
| ND North Dakota | 4 | 6 | 6 | 8 | 10 | 5 | 9 |
| NE Nebraska | 4 | 5 | 5 | 2 | 5 | 6 | 4 |
| NH New Hampshire | 3 | 3 | 1 | 4 | 1 | 7 | 4 |
| NJ New Jersey | 24 | 44 | 27 | 16 | 16 | 18 | 17 |
| NM New Mexico | 8 | 18 | 16 | 4 | 5 | 6 | 8 |
| NV Nevada Allopathic | 0 | 5 | 4 | 1 | 4 | 7 | 10 |
| NV Nevada Osteopathic | 0 | 1 | 0 | 0 | 0 | 3 | 1 |
| NY New York | 139 | 94 | 150 | 132 | 103 | 105 | 122 |
| OH Ohio | 70 | 61 | 74 | 67 | 114 | 88 | 88 |
| OK Oklahoma Allopathic | 13 | 5 | 6 | 8 | 5 | 3 | 7 |
| OK Oklahoma Osteopathic | 3 | 3 | 1 | 5 | 7 | 8 | 5 |
| OR Oregon | 21 | 14 | 13 | 23 | 16 | 19 | 16 |
| PA Pennsylvania Allopathic | 84 | 78 | 68 | 47 | 30 | 13 | 0 |
| PA Pennsylvania Osteopathic | 20 | 25 | 12 | 8 | 12 | 5 | 0 |
| RI Rhode Island | 4 | 7 | 7 | 5 | 7 | 1 | 1 |
| SC South Carolina | 20 | 21 | 12 | 4 | 8 | 10 | 7 |
| SD South Dakota | 1 | 2 | 2 | 5 | 2 | 6 | 3 |
| TN Tennessee Allopathic | 17 | 20 | 15 | 11 | 12 | 21 | 26 |
| TN Tennessee Osteopathic | 1 | 1 | 1 | 0 | 0 | 2 | 0 |
| TX Texas | 112 | 116 | 134 | 89 | 82 | 76 | 89 |
| UT Utah Allopathic | 4 | 5 | 7 | 4 | 2 | 6 | 6 |
| UT Utah Osteopathic | 1 | 0 | 0 | 0 | 1 | 2 | 0 |
| VA Virginia | 45 | 38 | 47 | 42 | 38 | 38 | 38 |
| VT Vermont Allopathic | 7 | 4 | 6 | 6 | 1 | 6 | 2 |
| VT Vermont Osteopathic | 0 | 0 | 0 | 0 | 0 | 2 | 0 |
| WA Washington Allopathic | 28 | 31 | 20 | 38 | 32 | 35 | 39 |
| WA Washington Osteopathic | 4 | 2 | 4 | 1 | 5 | 2 | 3 |
| WI Wisconsin | 21 | 14 | 44 | 20 | 43 | 51 | 50 |
| WV West Virginia Allopathic | 12 | 9 | 11 | 10 | 4 | 7 | 7 |
| WV West Virginia Osteopathic | 5 | 9 | 3 | 6 | 1 | 7 | 4 |
| WY Wyoming | 6 | 0 | 4 | 3 | 1 | 9 | 7 |
| Total | 1,489 | 1,391 | 1,493 | 1,235 | 1,289 | 1,250 | 1,196 |
*This number may be different from that shown in our previous Rankings Reports because of late reporting or because reports were subsequently voided or corrected to reflect a nonserious penalty. Concerning late reporting, reports are due within 30 days of the date of action. Our data files reflect all reports received by March 31 of the year following the years that overlap with our previous rankings reports (i.e., 2020 for 2019 reports and 2024 for 2023 reports). There was no change for most states, and most states that did have a change differed by only one or two reports. For 2019 data, in addition to 13 boards with a change of only one or two reports, the newer data file reflected a decrease of six reports for the Arizona Allopathic board and an increase of three reports for the Minnesota board. For 2021 data, the newer data file reflected a change of only one or two reports for 20 boards. It also reflected an increase of six reports for the Colorado board, 10 reports for the Florida Allopathic board, seven reports for the Iowa board, five reports for the Illinois board, seven reports for the Maryland board, six reports for the Michigan Allopathic board, three reports for the Nevada board, 26 reports for the New York board, six reports for the Ohio board, five reports for the Texas board, and 19 reports for the Wisconsin Board. All of these increases reflect reporting at least two months late by the boards. Our previous rankings reports did not include Osteopathic boards.
TABLE 2: Ranking of State Medical Boards by Annual Average Number of Serious Disciplinary Actions per 1,000 Physicians, 2021-2023, and Comparison to 2019-2021
| State Board | 2021-2023 Ranking | Rate 2021-2023 per 1,000 Licensees | Average Annual 2021-2023 | Physicians Licensed, 2022 | 2019-2021 Ranking | Rate 2019-2021 per 1,000 Licensees | Average Annual, 2019-2021 | Physicians Licensed, 2020 | Change in Rank 2021- 2023 vs 2019-2021 |
|---|---|---|---|---|---|---|---|---|---|
| State Boards with More Than 5,000 Licensees (Listed in Rank Order) | |||||||||
| OH Ohio | 1 | 1.82 | 96.67 | 53,110 | 2 | 1.61 | 85.00 | 52,720 | 1 |
| MI Michigan Osteopathic | 2 | 1.62 | 14.33 | 8,868 | 6 | 1.52 | 13.00 | 8,552 | 4 |
| WI Wisconsin | 3 | 1.49 | 48.00 | 32,165 | 9 | 1.23 | 35.67 | 29,110 | 6 |
| ND North Dakota | 4 | 1.39 | 8.00 | 5,765 | 3 | 1.60 | 8.00 | 5,005 | -1 |
| IL Illinois | 5 | 1.35 | 76.67 | 56,875 | 10 | 1.19 | 57.00 | 47,846 | 5 |
| AL Alabama | 6 | 1.34 | 27.67 | 20,591 | 15 | 1.07 | 20.00 | 18,629 | 9 |
| MI Michigan Allopathic | 7 | 1.31 | 47.67 | 36,307 | 1 | 1.76 | 62.33 | 35,506 | -6 |
| KY Kentucky | 8 | 1.29 | 29.00 | 22,443 | 7 | 1.50 | 30.33 | 20,156 | -1 |
| WA Washington Allopathic | 9 | 1.18 | 35.33 | 29,855 | 17 | 1.04 | 30.00 | 28,722 | 8 |
| CO Colorado | 10 | 1.07 | 32.67 | 30,568 | 4 | 1.57 | 43.33 | 27,681 | -6 |
| AZ Arizona Allopathic | 11 | 1.06 | 30.00 | 28,384 | 5 | 1.53 | 40.33 | 26,397 | -6 |
| NY New York | 12 | 1.02 | 110.00 | 107,789 | 8 | 1.25 | 128.33 | 102,361 | -4 |
| WY Wyoming | 13 | 0.95 | 5.67 | 5,939 | 37 | .56 | 2.67 | 4,747 | 24 |
| OR Oregon | 14 | 0.91 | 17.00 | 18,594 | 22 | 1.00 | 17.33 | 17,321 | 8 |
| AK Alaska | 15 | 0.90 | 5.00 | 5,540 | 26 | .90 | 4.33 | 4,791 | 11 |
| FL Florida Allopathic | 16 | 0.87 | 72.33 | 83,167 | 21 | 1.00 | 76.67 | 76,395 | 5 |
| TX Texas | 17 | 0.86 | 82.33 | 96,058 | 13 | 1.15 | 101.67 | 88,747 | -4 |
| VA Virginia | 18 | 0.85 | 38.00 | 44,832 | 20 | 1.02 | 42.33 | 41,588 | 2 |
| ME Maine Allopathic | 19 | 0.84 | 6.00 | 7,173 | 25 | .91 | 6.00 | 6,601 | 6 |
| AR Arkansas | 20 | 0.82 | 10.33 | 12,651 | 18 | 1.04 | 12.00 | 11,565 | -2 |
| MS Mississippi | 21 | 0.80 | 10.33 | 12,881 | 23 | .99 | 11.67 | 11,742 | 2 |
| TN Tennessee Allopathic | 22 | 0.77 | 19.67 | 25,562 | 40 | .53 | 12.67 | 23,872 | 18 |
| WV West Virginia Allopathic | 23 | 0.74 | 6.00 | 8,054 | 12 | 1.15 | 8.33 | 7,219 | -11 |
| CA California Allopathic | 24 | 0.73 | 113.33 | 155,684 | 29 | .83 | 126.33 | 152,450 | 5 |
| MD Maryland | 25 | 0.73 | 25.00 | 34,348 | 28 | .89 | 28.33 | 31,841 | 3 |
| MO Missouri | 26 | 0.69 | 21.67 | 31,271 | 35 | .57 | 16.67 | 29,477 | 9 |
| CA California Osteopathic | 27 | 0.69 | 8.00 | 11,562 | 48 | .36 | 3.67 | 10,271 | 21 |
| FL Florida Osteopathic | 28 | 0.67 | 7.00 | 10,519 | 24 | .93 | 8.33 | 8,955 | -4 |
| NC North Carolina | 29 | 0.64 | 27.33 | 42,882 | 34 | .58 | 25.67 | 44,015 | 5 |
| NV Nevada Allopathic | 30 | 0.62 | 7.00 | 11,375 | 50 | .30 | 3.00 | 9,898 | 20 |
| KS Kansas | 31 | 0.60 | 8.00 | 13,309 | 16 | 1.06 | 11.67 | 10,967 | -15 |
| MN Minnesota | 32 | 0.59 | 16.67 | 28,083 | 36 | .56 | 15.00 | 26,574 | 4 |
| IA Iowa | 33 | 0.59 | 8.67 | 14,712 | 31 | .76 | 10.33 | 13,530 | -2 |
| NM New Mexico | 34 | 0.58 | 6.33 | 10,927 | 30 | .81 | 8.33 | 10,277 | -4 |
| PA Pennsylvania Osteopathic | 35 | 0.58 | 5.67 | 9,800 | 11 | 1.18 | 10.67 | 9,066 | -24 |
| SD South Dakota | 36 | 0.57 | 3.67 | 6,422 | 39 | .54 | 3.00 | 5,588 | 3 |
| MT Montana | 37 | 0.54 | 4.33 | 8,094 | 45 | .38 | 2.67 | 6,973 | 8 |
| MA Massachusetts | 38 | 0.49 | 19.00 | 38,566 | 19 | 1.03 | 37.67 | 36,591 | -19 |
| RI Rhode Island | 39 | 0.48 | 3.00 | 6,233 | 14 | 1.08 | 6.33 | 5,838 | -25 |
| NE Nebraska | 40 | 0.44 | 5.00 | 11,337 | 49 | .32 | 4.00 | 12,376 | 9 |
| CT Connecticut | 41 | 0.44 | 10.00 | 22,908 | 44 | .43 | 9.00 | 20,817 | 3 |
| LA Louisiana | 42 | 0.43 | 8.00 | 18,406 | 32 | .70 | 12.67 | 18,052 | -10 |
| NH New Hampshire | 43 | 0.43 | 4.00 | 9,206 | 53 | .25 | 2.00 | 8,019 | 10 |
| ID Idaho | 44 | 0.42 | 4.00 | 9,605 | 33 | .65 | 5.00 | 7,667 | -11 |
| DC Dist. of Columbia | 45 | 0.41 | 5.33 | 12,986 | 54 | .22 | 3.00 | 13,714 | 9 |
| OK Oklahoma Allopathic | 46 | 0.38 | 5.00 | 13,125 | 42 | .48 | 6.33 | 13,250 | -4 |
| NJ New Jersey | 47 | 0.37 | 17.00 | 45,637 | 43 | .45 | 19.67 | 43,563 | -4 |
| UT Utah Allopathic | 48 | 0.37 | 4.67 | 12,736 | 46 | .38 | 4.33 | 11,477 | -2 |
| HI Hawaii | 49 | 0.36 | 4.00 | 10,960 | 41 | .51 | 5.33 | 10,515 | -8 |
| SC South Carolina | 50 | 0.34 | 8.33 | 24,248 | 47 | .36 | 8.00 | 22,307 | -3 |
| DE Delaware | 51 | 0.31 | 2.33 | 7,475 | 38 | .55 | 3.33 | 6,102 | -13 |
| PA Pennsylvania Allopathic | 52 | 0.26 | 14.33 | 55,824 | 27 | .89 | 48.33 | 54,136 | -25 |
| GA Georgia | 53 | 0.24 | 10.00 | 41,659 | 52 | .27 | 10.33 | 38,367 | -1 |
| IN Indiana | 54 | 0.17 | 5.33 | 32,017 | 51 | .29 | 9.00 | 30,649 | -3 |
| State Boards Licensing Fewer than 5,000 physicians - Not Ranked (Listed in Alphabetical Order) | |||||||||
| AZ Arizona Osteopathic | Unranked* | 0.45 | 2.00 | 4,492 | Unranked* | 1.08 | 4.33 | 4,007 | Unranked* |
| ME Maine Osteopathic | Unranked* | 1.11 | 1.67 | 1,507 | Unranked* | 1.19 | 1.67 | 1,399 | Unranked* |
| NV Nevada Osteopathic | Unranked* | 0.69 | 1.33 | 1,933 | Unranked* | .00 | 0.00 | 1,587 | Unranked* |
| OK Oklahoma Osteopathic | Unranked* | 1.80 | 6.67 | 3,694 | Unranked* | 1.20 | 4.33 | 3,618 | Unranked* |
| TN Tennessee Osteopathic | Unranked* | 0.26 | 0.67 | 2,600 | Unranked* | .16 | 0.33 | 2,057 | Unranked* |
| UT Utah Osteopathic | Unranked* | 0.58 | 1.00 | 1,735 | Unranked* | .25 | 0.33 | 1,332 | Unranked* |
| VT Vermont Allopathic | Unranked* | 0.78 | 3.00 | 3,846 | Unranked* | 1.20 | 4.33 | 3,609 | Unranked* |
| VT Vermont Osteopathic | Unranked* | 1.36 | 0.67 | 492 | Unranked* | .00 | 0.00 | 295 | Unranked* |
| WA Washington Osteopathic | Unranked* | 1.01 | 3.33 | 3,285 | Unranked* | 1.24 | 3.33 | 2,694 | Unranked* |
| WV West Virginia Osteopathic | Unranked* | 2.46 | 4.00 | 1,623 | Unranked* | 2.43 | 3.33 | 1,373 | Unranked* |
Notes: Calculations were performed with greater precision than shown in the table. Licensee Data Source: https://www.fsmb.org/physician-census, accessed 12-21-2023, as noted in the text.
*Boards that had fewer than 5,000 licensees in 2022 are not ranked.
TABLE 3: Calculated Increase in Annual Numbers of Serious Disciplinary Actions Each Board Would Have Needed To Take To Match the Rate for Ohio (2021-2023) and Kentucky (2017-2019)
| State Board | 2021-2023 Ranking | Average Annual 2021-2023 | Calculated Average Needed To Match Ohio’s Rate, 2021-2023 | Calculated Percent Increase Needed To Match Ohio’s Rate, 2021-2023 | Average Annual 2019-2021 | Calculated Average Needed To Match Kentucky’s Rate, 2017-2019 | Calculated Percent Increase Needed To Match Kentucky’s Rate, 2017-2019 |
|---|---|---|---|---|---|---|---|
| OH Ohio | 1 | 96.67 | N/A | 0.00 | 81.00 | 121.48 | 25.67 |
| MI Michigan Osteopathic | 2 | 14.33 | 16.14 | 12.61 | 11.67 | 20.28 | 41.52 |
| WI Wisconsin | 3 | 48.00 | 58.54 | 21.97 | 22.33 | 73.57 | 53.27 |
| ND North Dakota | 4 | 8.00 | 10.49 | 31.16 | 8.00 | 13.19 | 64.83 |
| IL Illinois | 5 | 76.67 | 103.52 | 35.03 | 55.33 | 130.09 | 69.68 |
| AL Alabama | 6 | 27.67 | 37.48 | 35.46 | 19.67 | 47.10 | 70.23 |
| MI Michigan Allopathic | 7 | 47.67 | 66.08 | 38.64 | 57.67 | 83.05 | 74.22 |
| KY Kentucky | 8 | 29.00 | 40.85 | 40.86 | 30.33 | 51.33 | 77.01 |
| WA Washington Allopathic | 9 | 35.33 | 54.34 | 53.79 | 30.00 | 68.29 | 93.27 |
| CO Colorado | 10 | 32.67 | 55.64 | 70.32 | 39.67 | 69.92 | 114.04 |
| AZ Arizona Allopathic | 11 | 30.00 | 51.66 | 72.21 | 38.33 | 64.92 | 116.41 |
| NY New York | 12 | 110.00 | 196.19 | 78.35 | 100.33 | 246.55 | 124.13 |
| WY Wyoming | 13 | 5.67 | 10.81 | 90.76 | 2.33 | 13.58 | 139.72 |
| OR Oregon | 14 | 17.00 | 33.84 | 99.08 | 16.00 | 42.53 | 150.18 |
| AK Alaska | 15 | 5.00 | 10.08 | 101.67 | 4.33 | 12.67 | 153.43 |
| FL Florida Allopathic | 16 | 72.33 | 151.37 | 109.27 | 69.67 | 190.23 | 162.99 |
| TX Texas | 17 | 82.33 | 174.84 | 112.35 | 97.00 | 219.71 | 166.86 |
| VA Virginia | 18 | 38.00 | 81.60 | 114.74 | 38.33 | 102.54 | 169.85 |
| ME Maine Allopathic | 19 | 6.00 | 13.06 | 117.60 | 5.00 | 16.41 | 173.45 |
| AR Arkansas | 20 | 10.33 | 23.03 | 122.84 | 12.00 | 28.94 | 180.03 |
| MS Mississippi | 21 | 10.33 | 23.44 | 126.89 | 10.67 | 29.46 | 185.12 |
| TN Tennessee Allopathic | 22 | 19.67 | 46.53 | 136.57 | 13.00 | 58.47 | 197.30 |
| WV West Virginia Allopathic | 23 | 6.00 | 14.66 | 144.32 | 8.33 | 18.42 | 207.03 |
| CA California Allopathic | 24 | 113.33 | 283.36 | 150.03 | 126.00 | 356.10 | 214.20 |
| MD Maryland | 25 | 25.00 | 62.52 | 150.07 | 24.67 | 78.56 | 214.26 |
| MO Missouri | 26 | 21.67 | 56.92 | 162.69 | 16.33 | 71.53 | 230.12 |
| CA California Osteopathic | 27 | 8.00 | 21.04 | 163.05 | 3.33 | 26.45 | 230.57 |
| FL Florida Osteopathic | 28 | 7.00 | 19.15 | 173.51 | 7.33 | 24.06 | 243.72 |
| NC North Carolina | 29 | 27.33 | 78.05 | 185.55 | 25.00 | 98.08 | 258.85 |
| NV Nevada Allopathic | 30 | 7.00 | 20.70 | 195.77 | 1.33 | 26.02 | 271.69 |
| KS Kansas | 31 | 8.00 | 24.22 | 202.80 | 11.00 | 30.44 | 280.52 |
| MN Minnesota | 32 | 16.67 | 51.11 | 206.69 | 13.33 | 64.23 | 285.41 |
| IA Iowa | 33 | 8.67 | 26.78 | 208.97 | 5.00 | 33.65 | 288.28 |
| NM New Mexico | 34 | 6.33 | 19.89 | 214.03 | 8.33 | 24.99 | 294.63 |
| PA Pennsylvania Osteopathic | 35 | 5.67 | 17.84 | 214.77 | 10.33 | 22.42 | 295.57 |
| SD South Dakota | 36 | 3.67 | 11.69 | 218.79 | 3.00 | 14.69 | 300.61 |
| MT Montana | 37 | 4.33 | 14.73 | 239.97 | 2.67 | 18.51 | 327.24 |
| MA Massachusetts | 38 | 19.00 | 70.19 | 269.45 | 37.00 | 88.21 | 364.28 |
| RI Rhode Island | 39 | 3.00 | 11.34 | 278.16 | 6.33 | 14.26 | 375.23 |
| NE Nebraska | 40 | 5.00 | 20.63 | 312.69 | 3.00 | 25.93 | 418.63 |
| CT Connecticut | 41 | 10.00 | 41.70 | 316.95 | 8.33 | 52.40 | 423.98 |
| LA Louisiana | 42 | 8.00 | 33.50 | 318.76 | 12.67 | 42.10 | 426.25 |
| NH New Hampshire | 43 | 4.00 | 16.76 | 318.90 | 2.00 | 21.06 | 426.43 |
| ID Idaho | 44 | 4.00 | 17.48 | 337.06 | 5.00 | 21.97 | 449.24 |
| DC Dist. of Columbia | 45 | 5.33 | 23.64 | 343.18 | 2.33 | 29.70 | 456.93 |
| OK Oklahoma Allopathic | 46 | 5.00 | 23.89 | 377.78 | 6.33 | 30.02 | 500.42 |
| NJ New Jersey | 47 | 17.00 | 83.06 | 388.62 | 18.00 | 104.39 | 514.04 |
| UT Utah Allopathic | 48 | 4.67 | 23.18 | 396.74 | 4.33 | 29.13 | 524.24 |
| HI Hawaii | 49 | 4.00 | 19.95 | 398.71 | 5.33 | 25.07 | 526.72 |
| SC South Carolina | 50 | 8.33 | 44.13 | 429.61 | 7.67 | 55.46 | 565.55 |
| DE Delaware | 51 | 2.33 | 13.61 | 483.09 | 3.00 | 17.10 | 632.76 |
| PA Pennsylvania Allopathic | 52 | 14.33 | 101.61 | 608.88 | 45.33 | 127.69 | 790.84 |
| GA Georgia | 53 | 10.00 | 75.82 | 658.24 | 10.33 | 95.29 | 852.87 |
| IN Indiana | 54 | 5.33 | 58.27 | 992.65 | 8.67 | 73.23 | 1273.12 |
| AZ Arizona Osteopathic | Unranked* | 2.00 | 8.18 | 308.80 | 0.33 | 10.27 | 413.73 |
| ME Maine Osteopathic | Unranked* | 1.67 | 2.74 | 64.58 | 1.67 | 3.45 | 106.82 |
| NV Nevada Osteopathic | Unranked* | 1.33 | 3.52 | 163.87 | 0.00 | 4.42 | 231.60 |
| OK Oklahoma Osteopathic | Unranked* | 6.67 | 6.72 | 0.85 | 4.33 | 8.45 | 26.74 |
| TN Tennessee Osteopathic | Unranked* | 0.67 | 4.73 | 609.85 | 0.33 | 5.95 | 792.05 |
| UT Utah Osteopathic | Unranked* | 1.00 | 3.16 | 215.79 | 0.33 | 3.97 | 296.85 |
| VT Vermont Allopathic | Unranked* | 3.00 | 7.00 | 133.34 | 4.00 | 8.80 | 193.23 |
| VT Vermont Osteopathic | Unranked* | 0.67 | 0.90 | 34.32 | 0.00 | 1.13 | 68.80 |
| WA Washington Osteopathic | Unranked* | 3.33 | 5.98 | 79.37 | 3.33 | 7.51 | 125.41 |
| WV West Virginia Osteopathic | Unranked* | 4.00 | 2.95 | -26.15 | 3.00 | 3.71 | -7.19 |
*Boards which had fewer than 5,000 licensees in 2022 are not ranked.
DISCUSSION: IMPROVING MEDICAL BOARDS’ PERFORMANCE
The observed wide variation in serious disciplinary actions taken per 1,000 physicians between the licensing boards in the states and the District of Columbia suggests that many (if not most) boards are doing a dangerously lax job in enforcing their states’ medical practice acts. Low rates of serious disciplinary actions suggest that the boards are not adequately taking actions to discipline physicians responsible for negligent medical care or whose behavior is unacceptably dangerous to patients.
There is no evidence that the observed differences in state disciplinary action rates can be explained by differences in the competence or conduct of the physicians practicing in the various states; therefore, the observed differences are likely related to the performance of the licensing boards.
There is additional evidence from NPDB data demonstrating that licensing boards are often lax in taking disciplinary actions. A recent analysis of NPDB data showed that by the end of 2023, a total of 9,837 U.S. physicians had five or more malpractice payments reported to the NPDB since payments began to be reported in 1990. These physicians had a malpractice records worse than well over 99% of all physicians who have practiced since 1990. Yet 75% of these 9,837 physicians have never had a medical board licensure action of any kind, either serious or nonserious.[10]
Of the 17,054 physicians who have been reported to the NPDB for clinical-privileges actions affecting their ability to practice for more than 30 days by hospitals or other organizations that grant privileges to practice in their facilities or organizations, only 51.8% have ever had any action, even a reprimand, reported by a state licensing board. Thus, almost one-half of physicians deemed worthy of discipline by their peers had no action taken by a licensing board. Even for the 933 physicians who had been judged by their peers to be an immediate threat to health or safety, the percentage who had ever had state board action taken against their license was only marginally higher. Of these “immediate threat” physicians, only 54.1% had ever had any licensure action taken against them.[11]
The following reforms could materially improve the performance of medical boards:
- Appoint Nonconflicted Board Members
State governors, who typically appoint the members of state medical boards, should appoint members whose qualifications include being committed to changing the culture of the boards so that their priority is to protect the public from incompetent or miscreant physicians, not to protect the livelihood of questionable physicians. This must include a substantial number of nonconflicted public members who are likely to prioritize protecting the public.
- Expand Oversight
State legislatures should expand oversight of and/or investigate the licensing boards to ensure that they are following the requirements of the state’s medical practice act to protect the public from dangerous physicians when they investigate physician competence or conduct and take disciplinary actions. Although most if not all funding for state boards comes from physicians’ licensing fees, the critical importance of a properly functioning medical board — one that vigorously enforces the state’s medical practice act — means that these boards require more oversight than they currently receive. Oversight should not be unduly influenced by special-interest groups such as state and national medical societies. Disturbingly, there is generally considerably more oversight of state medical boards by the news media than by state legislatures.
- Significantly Increase the Use of the NPDB by Medical Boards
The Health Care Quality Improvement Act of 1986, which created the NPDB, requires all hospitals to make a background query every time a physician seeks admitting privileges and every two years thereafter upon renewal.[12] No such requirement exists for medical boards, even if a complaint about a physician is made to the board by a patient or another physician. If the boards consistently queried the NPDB for all their licensees or applicants, they would learn of all adverse actions taken by licensing boards in other states, all malpractice payments, all adverse actions taken by hospitals or other health care entities, all criminal convictions related to health care, all exclusions from participation in Medicare and Medicaid, and other kinds of actions that might affect their licensing decisions. Unless they routinely query the NPDB or enroll all their licensees in the NPDB’s continuous query service, there is no guarantee that state medical boards will be adequately informed of a physician’s record when deciding to allow a physician to practice in the state.
For $2.50 per physician per year, boards can purchase “continuous query” from the NPDB for each licensee. This means that within 24 hours of the NPDB receiving a new report about an action taken by a hospital or other health care entity, another state’s licensing action, a malpractice payment, or other actions, the information will be transmitted from the NPDB to the board. Published data from the NPDB shows how infrequently boards seek data from the NPDB. In 2023 a total of 32 licensing boards had no physicians enrolled in the Data Bank’s continuous query service.
Another six state boards had fewer than 10 physicians enrolled. Seven state boards had no continuous query enrollments and made no single-name queries to the Data Bank. Only the licensing boards of Florida (M.D. and D.O.), Massachusetts, Nevada (D.O. only), Vermont (M.D. and D.O.), and Wyoming enrolled nearly all their licensees in continuous query.[13] All of these boards except the Wyoming board — the board of a low-population state for which relatively few licensure actions could make a significant change in ranking position — were among the twenty highest-ranked boards. Of note, New Jersey and Texas have recently enacted legislation requiring their licensing boards to query the Data Bank or enroll all licensees in the Data Bank’s continuous query service.[14]
Congress should amend the Health Care Quality Improvement Act of 1986 to require state licensing boards to routinely query the NPDB for all applicants for licensure and periodically when they renew their licensees. A requirement that all state licensing boards enroll all their licensees in the NPDB’s continuous query service would be even better because boards would be immediately notified of any new reports about their licensees. Hospitals are already required to routinely query the NPDB. This legal requirement should be expanded to include state boards. The licensing boards are the last line of defense for the public from incompetent and miscreant physicians. Ideally, this amendment should include free continuous query access by medical boards for all their licensees.
In the absence of any action by Congress, individual state legislatures should require their licensing boards to query all their licensees or enroll in continuous query.
- Improve Reporting by the Boards to the NPDB.
While comparing counts for serious actions for the “overlap” years (2019 and 2021) in our previous reports, we discovered some states had been at least two months late (and likely much later) in reporting some actions, as discussed in a footnote to Table 1. It is imperative that licensing boards file reports to the NPDB within the required time period to ensure that other boards, hospitals, and other Data Bank queriers learn of serious disciplinary actions taken by the boards in a timely manner.
- Open the NPDB to the Public
Congress also should amend the Health Care Quality Improvement Act so that any person can get the information to do a background check on a physician.
Opening the NPDB to the public would benefit patients and provide licensing boards with further incentives to query the Data Bank. If licensing boards routinely queried the NPDB, they would be less likely to be faulted by the public and state legislators for not knowing about malpractice payments, disciplinary actions, and other adverse actions affecting their licensees.
Having successfully stopped public access to the NPDB during the legislative battles preceding passage of the Health Care Quality Improvement Act of 1986, the American Medical Association (AMA) has continued to oppose the public’s right to conduct background checks on physicians as well as physicians’ rights to conduct background checks on other physicians as one potential basis for referrals.
In 1993 the AMA went even further by passing a resolution that stated the following: “Resolved, that the American Medical Association… call for the dissolution of the National Practitioner Data Bank.” The late Dr. Sidney Wolfe, the founder of Public Citizen’s Health Research Group and an author of previous editions of this rankings report, subsequently published an article entitled “Congress Should Open the National Practitioner Data Bank to All”:
“As more information about more physicians is entered into the Data Bank, its usefulness can only increase. The main problem with the NPDB, however, is neither the accuracy nor the usefulness of the data but the unconscionable secrecy whereby this Federal repository of important information about American physicians is kept from American patients and other physicians.[15]”
Senator Ron Wyden, the author of the Health Care Quality Improvement Act, has strongly supported public access to the NPDB despite the AMA’s opposition. In a 2023 interview, Senator Wyden said it’s past time to make the information public. “When we’re talking about proven, flagrant abuses, the public has a right to know,” Wyden said. “It’s time for the law to be updated.”[16]
Improve the NPDB To Provide More Comprehensive Information to State Boards and Others
- Close Corporate Shield Loophole
The Health Care Quality Improvement Act or its implementing regulations should be amended as necessary to close the “corporate shield” loophole, which allows some malpractice payments against physicians to go unreported. This reform is urgently needed because the majority of physicians are employees of corporate hospitals or health systems.
- Eliminate Other Loopholes
Amend the Health Care Quality Improvement Act to eliminate other loopholes for reporting malpractice payments, including the “written demand” loophole. The Health Care Quality Improvement Act requires that only malpractice payments made as the result of a “written claim or demand for payment” are reportable. As a result, some malpractice payers encourage claimants not to request payment in writing so that no payment report would be required. Although not requesting payment in writing may facilitate payment for individual malpractice victims, this procedure prevents licensing boards from identifying physicians with dangerous malpractice records.
- Improve Reporting of Clinical-Privileges Actions
Amend the Health Care Quality Improvement Act to improve reporting of clinical privileges actions. Hospitals and other health care entities that are obligated to report clinical privileges are known to evade reporting by making deals with physicians to resign just prior to the initiation of an investigation or immediately after closure of an investigation, before any action has been taken. As a result of the timing of the resignation, it would not be reported to the NPDB as would otherwise be required by law. In addition, the NPDB should be provided with the authority to audit clinical-privileges reporting and impose severe penalties on reporting entities and their management personnel if clinical-privileges actions are not fully reported.
Other steps to improve state medical boards’ performance include:
- Provide adequate funding and staffing: All money from physicians’ license fees should go to fund board activities, not other state programs. Restrictions on hiring or the number of positions should not preclude adequate levels of appropriately qualified staff.
- Provide for proactive investigations as well as investigations in response to
- Ensure independence from state medical societies, including greatly reducing the number of physicians on medical boards and increasing the number of public members with no ties to the medical profession, hospitals, or other individuals or businesses in health care. When a board needs additional, focused medical expertise to investigate or adjudicate individual cases, independent consultant physicians can be hired.
- Ensure independence from other parts of the state government so that the board can develop its own budgets and regulations, including assuring adequate funding to enforce its regulations.
- Require a reasonable legal standard for disciplining physicians (“preponderance of evidence” rather than “beyond a reasonable doubt” or “clear and convincing evidence”).[17]
- Create a more patient-oriented board culture so that protecting the public takes precedence over protecting physicians’ livelihoods.
CONCLUSIONS
The state licensing boards could and should do a much better job of protecting the public from incompetent and miscreant physicians. If all the licensing boards, including the unranked small boards, had taken serious disciplinary actions at the same rate as the highest-ranked board (Ohio) during the 2021-2023 period, there would have been 2,803 serious actions taken during 2023, about 2.34 times more than the 1,196 actions that were actually taken.
Even in Ohio, there is room for improvement. Although the Ohio board had the highest ranking for 2021-2023 (1.82 serious disciplinary actions per 1,000 physician licensees per year), Kentucky, the highest-ranked board for the 2017-2019 period studied in the Public Citizen rankings report published in March 2021[18], took actions at a rate of 2.29 per 1,000 licensees, a 26% higher rate. If all boards had taken serious disciplinary actions at Kentucky’s 2017-2019 rate in 2023, there would have been 3,527 serious actions taken, almost three times more than the 1,196 actions that were actually taken. There is no evidence, however, that even 2.29 serious actions per 1,000 licensees is the rate needed to adequately protect the public from dangerous physicians.
Implementing the reforms called for in this report could reduce the health risk to thousands of patients being injured by the minority of physicians who should not be practicing or should have their practices restricted but are still fully licensed because of inadequate discipline by state boards. If adopted, the reforms could help correct the deficiencies we have identified in the performance of state medical boards. Even the best-rated boards and the public they serve would benefit from their adoption. These reforms are urgently needed in states whose boards have the lowest rates of serious disciplinary actions against physicians. Most physicians are competent and provide appropriate medical services. These physicians would also benefit from improvements to the system for regulating physicians, thereby raising the quality of medical practice in their states.
References
[1] Department of Health and Human Services, Office of Inspector General. Adverse Events in Hospitals: National Incidence Among Medicare Beneficiaries. November 2010 OEI-06-09-00090. https://oig.hhs.gov/oei/reports/oei-06-09-00090.pdf . Accessed March 16, 2021.
[2] Oshel R, Wolfe SM. Ranking of the rate of state medical boards’ serious disciplinary actions, 2019-2021. Public Citizen’s Health Research Group. August 16. 2023. https://www.citizen.org/article/report-ranking-of-the-rate-of-state-medical-boards-serious-disciplinary-actions-2019-2021/. Accessed August 5, 2024.
[3] Physicians can only obtain their own record from the NPDB.
[4] Adverse reports are defined to exclude reinstatements of license, reductions in penalties, etc.
[5] Licensure counts for 2018 available from the Federation of State Medical Boards did not separate Allopaths and Osteopaths. Therefore we are unable to count licensees of Osteopathic or combined boards in the same way they were counted in later reports, and rankings for these boards would not be completely compatible with rankings for later periods.
[6] Additional serious actions involving multiple states include multi-state license-privilege revocations, multi-state license-privilege suspensions, multistate license-privilege summary restrictions, multistate license-privilege summary suspensions, multistate license-privilege voluntary surrenders, multistate license-privilege voluntary limitations, and multistate license-privilege limitations or restrictions. Further, to avoid an additional potential source of double counting, we included only “initial” and “correction” reports (which replace the “initial” report being corrected in the NPDB). We excluded “revision to action” and “correction to revision to action” reports, which are separate reports that modify an action reported in a previous report but do not replace the related “initial” or “correction” report or any previous “revision to action” or “correction to revision to action” report. This could result in a minor undercount of serious actions in those rare cases in which a board revised a previously nonserious action to become a serious action. Similarly, however, our exclusion of actions revised from serious to nonserious could result in an overcount of serious actions. We believe these two counteracting effects do not materially affect the rankings.
[7] The West Virginia osteopathic board took 2.46 serious actions per 1,000 licensees during the 2021-2023 period and 3.00 serious actions per 1,000 licensees during the 2019-2021 period. These rates are the highest in the country. Because the board licensed fewer than 5,000 osteopaths in 2022 and, thus, has the potential for high volatility in the rate of serious actions taken per 1,000 licensees for boards that license relatively few physicians, we exclude these rates from our discussion, but we commend the West Virginia D.O. board for its level of actions during these years.
[8] We confirmed with the National Practitioner Data Bank that the Pennsylvania M.D. board had reported no new serious actions in 2023. In addition, as of July 13, 2024, the Data Bank reports that all Pennsylvania licensing boards are in compliance with reporting requirement:, https://www.npdb.hrsa.gov/resources/npdbstats/npdbMap.jsp.
[9]We confirmed with the National Practitioner Data Bank that the Pennsylvania M.D. board had reported no new serious actions in 2023. In addition, as of July 13, 2024, the Data Bank reports that all Pennsylvania licensing boards are in compliance with reporting requirements, https://www.npdb.hrsa.gov/resources/npdbstats/npdbMap.jsp.
[10] Oshel R. Analysis of malpractice payments and licensure reports in the NPDB Public Use Data File of March 31, 2024.
[11] Oshel R. Analysis of clinical privileges and licensure reports in the NPDB Public Use Data File of March 31, 2024.
[12] Department of Health and Human Services. Title IV of Public Law 99-660. The Health Care Quality Improvement Act of 1986, as amended 42 USC Sec. 11101 01/26/98. https://www.npdb.hrsa.gov/resources/titleIv.jsp. Accessed March 17, 2021.
[13] Data on 2022 query volume and continuous query enrollments by state licensing boards provided by HRSA on July 17, 2024, in response to Public Citizen’s request for this information.
[14] NJ Stat §45.1-32.1a(1) and (2); Texas HB1998 signed by governor June 13, 2023
[15] Wolfe SM. Congress should open the National Practitioner Data Bank to all. Public Health Reports. 1995. Jul-Aug; 110(4): 378–379.
[16] Gazaway W. Most extensive database for doctor misconduct is unviewable to public. KPIC. February 27, 2023. https://kpic.com/news/local/most-extensive-database-for-doctor-misconduct-is-unviewable-to-public-dhhs-national-practitioner-data-bank-healthcare-records-malpractice-lawsuit-history#. Accessed August 5, 2023
[17] It is concerning that in 2024 the New Hampshire legislature passed House Bill 518 which increases the legal standard from “preponderance of the evidence” to “clear and convincing.” The Bill also abolishes the state’s Medical Review Subcommittee (MRSC), which investigates licensee complaints. At this writing the bill awaits the Governor’s signature.
[18] Oshel R, Wolfe SM. Ranking of the rate of state medical boards’ serious disciplinary actions, 2017-2019. March 31, 2021. https://www.citizen.org/wp-content/uploads/2574.pdf. Accessed September 26, 2024.
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Product Recalls: August 14, 2024 – September 18, 2024
Health Letter, October 2024
Note: Never stop taking a drug that appears on the product recall list without first talking to your doctor or pharmacist. Most recalls are limited to a single manufacturer and may not be related to the version of a particular drug you are taking. If a recall does relate to the version of the drug you are taking, you should not stop taking the drug until you discuss an alternative treatment with your doctor or pharmacist.
For Class 1 recalls, there is a potential for serious injury or death.
For Class 2 recalls, there is a potential for serious adverse events but a lower chance of the drug causing serious injury or death than in a Class 1 recall.
CLASS I
Healthy Living acetaminophen, aspirin (NSAID) and caffeine tablets, 250 mg/250 mg/65 mg, 100-count bottles. Distributed by: Aurohealth LLC. Lot #: AC2523005A, exp. date: 6/30/2025.
CLASS II
IBU ibuprofen tablets; 400, 600 or 800 mg; 100 or 500 tablets per bottle. Distributed by: Dr. Reddy’s Laboratories Inc. Lot #: C2207525, exp. date: 5/31/2026; Lot #: C2212902, exp. date: 11/30/2026; Lot #: C2207526, exp. date: 5/31/2026; Lot #: C2210751 or C2210752, exp. date: 9/30/2026; Lot #: C2212765 or C2212766, exp. date: 11/30/2026; Lot #: C2301027, C2301063, C2301187, C2301188 or C2301247, exp. date: 12/31/2026; Lot #: C2301356, C2301388, C2301494, C2301478 or C2301617, exp. date: 1/31/2027; Lot #: C2303381, C2303432, C2303565, C2303630, C2303643 or C2303710, exp. date: 2/28/2027; Lot #: C2303879, C2303806, C2303895, C2303963, C2304263, C2304264, C2304130, C2304163 or C2304427, exp. date: 3/31/2027; Lot #: C2207527, exp. date: 5/31/2026; Lot #: C2210864, exp. date: 9/30/2026; Lot #: C2213018, exp. date: 11/30/2026; Lot #: C2207528, exp. date: 5/31/2026; Lot #: C2210860, exp. date: 9/30/2026; Lot #: C2213016 or C2213017, exp. date: 11/30/2026; Lot #: C2301852, C2302056 or C2302057, exp. date: 1/31/2027; Lot #: C2207529, exp. date: 5/31/2026; Lot #: C2210993, exp. date: 9/30/2026. Lot #: C2207530, exp. date: 5/31/2026; Lot #: C2210992 or C2210994, exp. date: 9/30/2026; Lot #: C2213304 or C2213305, exp. date: 11/30/2026.
ibuprofen tablets, 400 mg, 30 tablets per bottle. Manufactured by: Dr. Reddy’s Laboratories. Lot #: B0223H, exp. date: 5/31/2026; Lot #: C3023H, exp. date: 9/30/2026.
indomethacin extended-release capsules, 75 mg, packaged in 60- or 90-count bottles. Manufactured by: Glenmark Pharmaceuticals Limited. Lot #: 17240105, exp. date: 12/31/2025.
For more information about the drug recalls listed above, please visit http://www.accessdata.fda.gov/scripts/ires/index.cfm.
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For a list of recent recalls of consumer products, please visit the Consumer Product Safety Commission website at http://www.cpsc.gov/en/Recalls/.