By Marta Belcher, Juris Doctorate Candidate at Stanford Law School
Umbilical cord blood transplants cure more than 70 serious diseases, but public cord blood banking requires funding. Governments and nonprofits are increasingly addressing the issue, but thousands of patients still die every year while waiting to find a match in the public registry. Social enterprises--which hybridize for-profit business with charitable missions--are known for the type of innovative business models that could be game-changers for cord blood banking.
For something that cures 70 life-threatening illnesses, including leukemia, breast cancer, testicular cancer, and even HIV, umbilical cord blood has received shockingly little media attention in the U.S. Correspondingly, public cord blood banking has been slow to receive government funding, which is essential because collecting and storing cord blood units to make available for transplantation comes with a cost of a few thousand dollars per unit. Inadequate public funding has led to a supply gap: hundreds of thousands of umbilical cords are discarded as medical waste every day while thousands of patients die every year while waiting to find a match in the woefully inadequate public cord blood banking system.
Jordy Serwin has been fighting to increase public funding for cord blood since she was 6 years old, when she hand-delivered a note written in crayon to President Clinton asking him to support a public cord blood banking system. Serwin was 2 years old when she was diagnosed with leukemia in 1992. After several years of treatment and remission, she relapsed in 1996. This time chemotherapy didn't work. Out of options and running out of time, her family turned to what was then an experimental procedure that had only been performed a few times before--an umbilical cord blood transplant. Doctors essentially wiped out Serwin's immune system and gave her a transfusion of the blood left over from a baby's umbilical cord, which is filled with blood-forming stem cells that replaced damaged cells in Serwin's system with healthy ones. The transplant cured Serwin's leukemia and saved her life.
Cord blood cures the same 70 diseases as bone marrow, but has comparative advantages: the collection process is non-invasive and risk-free; cord blood units can be cryopreserved for 15 years, whereas bone marrow donation is a time-sensitive procedure; there is a lower risk of graft-versus-host-disease; and cord blood requires a less precise tissue match between donor and recipient, which is important for ensuring that diverse patients have access to transplants.
Cord blood banking presents something of a collective action problem, as there are costs associated with collecting and storing units to make available to the public as part of the national registry. Serwin's cord blood unit came from New York, which established one of the earliest state-funded cord blood collection programs along with North Carolina and California. In the vast majority of U.S. states today, however--and even in many hospitals within the states that do have public systems--new parents do not even have the option of publicly donating their newborns' cord blood.
Meanwhile, private cord blood banks prey on new parents, charging a flat fee of around $2,000 plus up to $150 per year to bank one unit of cord blood for the family's private use. Unless there is a preexisting condition suggesting that someone in the family will need a cord blood transplant, there is a miniscule chance that a privately banked cord blood unit will be used, and experts agree that it is a waste of money. There is also a circular logic to private banks' advertisements, which often exploit parents' fears of their child falling ill: the baby's own cord blood will have the same genetic diseases as the baby.
Public cord blood banking has been addressed by a combination of government funding and nonprofit interventions, but is an issue that might also be addressed by social enterprise. A few nonprofits, like the Joanne Pang Foundation, have used mail-in kits to collect cord blood from any hospital within a certain region, giving parents the option of publicly banking cord blood when otherwise the choice would be either paying for private banking or throwing it in the trash. The foundation has publicly banked 250 cord blood units since 2010. Like all nonprofits, though, its potential impact is limited by the funds it can raise through donations, events, and grants. Similarly, while government funding is growing as states establish public systems and the National Cord Blood Inventory lobbies for federal support, these funds have often been limited, unreliable, and slow.
The problem is that public cord blood banking is a money-losing endeavor for public cord blood banks. When a patient has a cord blood transplant, the recipient's health insurance company reimburses the public cord blood bank for the cost of the collection and storage of the unit that is used. For each unit that is transplanted, however, approximately 10 others remain unused in storage because they have not yet matched any patients. This imposes unmitigated costs on pubic banks.
There are regulatory ways to potentially solve this issue--for example, requiring health insurance companies to internalize the full cost of one publicly banked unit by also paying for the collection and storage costs of the 10 units that are not utilized for every unit that is used. Government regulations could also, in theory, shift the cost of public banking to private cord blood banks.
What if, instead, public cord blood banks could break even or even make a profit? Social enterprises--which hybridize for-profit businesses with charitable missions--are known for the type of innovative business models that could be game-changers for cord blood banking. Perhaps a statistics-based software program could predict which publicly banked cord blood units are most likely to be utilized (and therefore paid for), or maybe advancement in cryopreservation technology could drive the cost of storage down. Maybe rapid testing could allow doctors to see if an umbilical cord that is about to be discarded is a match for someone waiting for a transplant. The major appeal of the social enterprise approach for cord blood banking is that it empowers anyone to do something about it now--because while we grapple with the question of who pays for public cord blood banking, thousands of lives are at stake.
Jordy Serwin, 23, at the No Worries Now Prom for teens with life-threatening illnesses in Los Angeles. At age 6, Jordy received one of the first umbilical cord blood transplants ever performed. The procedure cured her leukemia and saved her life; Photo courtesy of Jordy Serwin.
Marta Belcher is a writer for Student Reporter. We are a journalism incubator and online media outlet, providing media coverage of events and featuring current topics in management and economics around the world.
This post is part of a series produced by The Huffington Post and the Schwab Foundation for Social Entrepreneurship, in recognition of the latter's Social Entrepreneurs Class of 2013. To see all the post in the series, click here.
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