Stem cells from healthy, unrelated donors have been used to treat patients with a variety of diseases, and are considered an appropriate course of treatment for numerous forms of leukemia, lymphoma, and other blood, metabolic, and immune-deficiency disorders. The first source of stem cells used for transplant was bone marrow, but now stem cells from the bloodstream and cord blood can also be used. The success of stem cell transplants depends, among other things, on the extent to which certain blood cell proteins that are part of every donor’s genetic make-up—human leukocyte antigens (HLA)—match those in the patient. In general, the more closely related two people are, the more likely it is that their HLA will match. The HLA of members of different racial groups are typically less likely to match one another. There is evidence that cord blood may not require as exact a match as stem cells from bone marrow or the bloodstream because the antigens in cord blood are less mature. This characteristic means that transplants involving HLA-compatible stem cells from cord blood are less likely to result in graft versus host disease because the donor’s cells are less likely to perceive the patient’s cells as foreign bodies and attack them. This makes cord blood especially valuable to patients for whom a complete match cannot be found. Persons for whom a complete match may be difficult to find include those from communities with greater genetic diversity, such as African Americans and persons of mixed ethnic heritage. A broad selection of cord blood provides persons with rare HLA types greater access to stem cell transplantation. In the event that a patient cannot find a sibling or other family member to donate, an HLA match may be sought among the stem cells donated and listed in transplant registries. While there are over 60 stem cell donor registries worldwide, NMDP operates the largest registry, which is a database of information about cord blood units and adults who are willing to donate stem cells from their bone marrow or bloodstream (adult donors). As of May 31, 2011, NMDP’s registry included more than 6.5 million U.S. adult donors and nearly 135,000 cord blood units collected in the United States, of which almost 41,000 are from the NCBI. In January 2011, NMDP estimated that at least 86 percent of most racial and ethnic groups have a close match using all available sources of stem cells listed in its registry. Transplant centers may also find a suitable match through other U.S. and international registries. Table 1 provides a breakdown by racial and ethnic group of the U.S. cord blood units and adult donors in NMDP’s registry. The NCBI is more diverse for some racial and ethnic groups compared to the inventory of cord blood units not in the NCBI or adult donors in NMDP’s registry. For example, 14 percent of the NCBI units are from Black/African American donors, compared to 6 percent of those U.S. cord blood units not in the NCBI, and 10 percent of adult donors registered in the United States. Of all the U.S. cord blood units listed on NMDP’s registry, between January 2005 and May 2011 NMDP facilitated the shipment of 5,554 units throughout the world for use in transplants. About 28 percent of these units were sent to transplant centers outside the United States. Similarly, U.S. transplant centers import cord blood units from outside the United States. As illustrated in figure 1, among U.S. cord blood units listed on the NMDP registry, and for which NMDP facilitated shipment, those from the NCBI represent a growing percentage of cord blood units shipped for use in transplants. In the first 5 months of 2011, 52 percent of the U.S. units in the registry that were sold for use in transplants were from the NCBI. A challenge associated with cord blood as a source of stem cells is the small number of cells contained in a typical cord blood unit, which may not be sufficient for a heavier patient. The higher the number of stem cells infused into a transplant patient, the better the outcome. The median number of blood cells in a typical cord blood unit listed in the NMDP registry is 1.07 billion cells, which is sufficient to provide a patient weighing 94 pounds or less a minimum therapeutic dose. An adult bone marrow or bloodstream donor, on average, would provide the same patient with a dose of cells that is many times that which is provided by a single cord blood unit with a median number of cells. Thirteen banks are currently under contract with HRSA to contribute cord blood units to the NCBI and list the units on the NMDP registry. Each contract specifies goals—by racial and ethnic group—for the number of cord blood units to be banked under that contract. Some of the banks with HRSA contracts are engaged only in cord blood banking while others are subsidiaries of larger organizations such as a university, hospital, or community blood center. Eleven of the 13 banks under contract with HRSA are nonprofit organizations. As a part of their banking activities, the cord blood banks recruit donors, collect cord blood, process and store units, and distribute the units for transplant and research. Initial education about cord blood donation may be provided by the mother’s obstetrician, or from communications from radio, TV, or print sources. Recruitment of a potential donor mother is often done by cord blood banking staff at the hospital upon her arrival to deliver her baby but prior to active labor. Recruitment includes informing the mother about cord blood donation and the benefits of public donation, conducting eligibility screening by administering a maternal questionnaire and a family medical history, and obtaining the donor mother’s informed consent. Under NCBI requirements, donor mothers may not give informed consent during active labor. The 13 banks under contract with HRSA collect cord blood at 114 hospitals—referred to as collection sites—in 24 states. NCBI banks have written agreements with collection sites permitting bank staff, hospital staff, obstetricians, or midwives to collect the cord blood. The collection methods vary by site and can include an obstetrician collecting during a cesarean section; an obstetrician, midwife, or nurse collecting during a vaginal delivery in the second stage of labor; a member of the bank’s staff collecting after the placenta has been delivered; or any combination of these practices. Once collected, the cord blood is placed into a tamper-proof, temperature-monitored container for ground or air transport from the collection site to the cord blood bank. Upon receipt at the bank, lab personnel check the paperwork and integrity of the cord blood unit. The cord blood is weighed and evaluated for any exposure to extreme temperature changes since collection and then processed. Processing includes various steps such as separating the stem cells from the cord blood; testing the stem cells for potency, viability, and for infectious disease; identifying their genetic characteristics; and freezing and storing the unit. The bank enters data about the cord blood unit, the mother, and the family medical history into an NMDP database for inclusion in NMDP’s national registry. The unit will be searchable on the NMDP registry after its sterility is confirmed. If the unit meets HRSA’s criteria for the inventory and the bank has not yet met its collection goals under its contract, the unit becomes part of the NCBI. In 2009, HRSA initiated a pilot project for remote collections—that is, collections at sites other than those with which a bank has a written agreement. Remote collections through the pilot are performed by physicians or midwives using a cord blood unit collection kit that was provided to eligible mothers by one of the banks participating in the pilot. The pilot provides HRSA with data to evaluate the feasibility and utility of the remote collections and inform future decisions to potentially expand the program as a national model for remote collections. It might also provide opportunities to donors who otherwise would be unable to donate because there is no collection site in their area; however, units that are remotely collected cannot currently be added to the NCBI. HRSA officials have said that they are uncertain about whether these units will meet FDA requirements for licensure. In commenting on a draft of this report, HHS noted that HRSA would be willing to revisit the exclusion of these units from the NCBI if they are able to be licensed. HRSA has awarded contracts to the cord blood banks, based on requirements set out in the Stem Cell Act, through a competitive request- for-proposal process. The act required that the contracts be for 10 years and required HRSA to ensure that no funds would be obligated under the contracts 3 years after the contracts were entered into. HRSA requires banks to make NCBI cord blood units available for transplant indefinitely, or for as long as they are determined viable by HHS. The Reauthorization Act authorized HRSA to obligate funds under new contracts for up to 5 years and to extend the contract period to 10 years past the last date the bank received funds under the contract. HRSA incorporated these changes into its most recent request-for-proposals for new contracts issued on June 15, 2011. HRSA officials said that they are modifying their existing contracts to reflect this change. As part of the competitive award process, each bank proposes the number of units, by racial and ethnic group, that it will place into the NCBI annually. HRSA uses collection and banking of cord blood units within these racial and ethnic groups as a means of increasing the genetic diversity of the NCBI. The banks’ proposed racial and ethnic targets are then subject to negotiations with HRSA and become part of the contract between HRSA and the bank. Since HRSA began contracting for cord blood units for the NCBI, it has indicated to prospective banks that when awarding contracts, special consideration would be given to banks that demonstrated a superior ability to collect and bank large numbers of cord blood units from underrepresented populations, especially African Americans. In addition, in 2009, HRSA began to negotiate reimbursement rates that varied depending on the racial and ethnic status of the unit. HRSA now pays banks higher rates for units collected from minority groups compared to the rates HRSA pays for units collected from the non-Hispanic Caucasian group. HRSA’s reimbursement rate for each cord blood unit banked for the NCBI is negotiated with each bank. HRSA and NMDP estimate that a bank’s cost for each cord blood unit placed on the registry is between $1,500 and $2,500. Once awarded a contract, a bank submits invoices to HRSA for payment for units placed on NMDP’s registry during the invoice period. Only cord blood units that meet HRSA requirements may be reimbursed by HRSA and placed in the NCBI. HRSA requirements include having a minimum blood cell count per unit of 900 million, a special procedure for wrapping the unit prior to freezing, and a 48-hour deadline for collection, processing, and freezing. Since the first contract became effective in November 2006, per unit reimbursement rates negotiated by HRSA have ranged from $648 to $1,637 with an average payment of $1,110 per unit. HRSA does not pay the complete costs of banking the unit in order to encourage the bank to seek out other sources of revenue. The largest source of revenue for the banks comes from the sale of cord blood units for transplantation. According to a limited financial analysis of the public cord blood banking industry conducted by NMDP in 2010, 81 percent of the industry’s operating costs are covered by sales of cord blood units for transplantation. As of August 2011, banks received payments ranging from $22,800 to $35,000 for cord blood units used for transplantation, with a median payment of $30,000. Other sources of revenue include charitable contributions, excess revenues from other lines of business engaged in by the bank or its parent organization, and HRSA reimbursement for units banked for the NCBI. The Advisory Council was created by the 2005 Stem Cell Act and advises the Secretary of HHS and the Administrator of HRSA on how to carry out activities associated with managing the NCBI. The council consists of up to 25 members, including cord blood and bone marrow donor centers, banks, transplant centers, and recipients. The members participate in workgroups that cover specific topics related to stem cell transplantation, such as cord blood collection. The workgroups then develop and present the entire Advisory Council with recommendations that could be made to the Secretary of HHS and HRSA about how the NCBI should function. The FDA regulates cord blood for use in transplants when the patient is not related to the donor. FDA requires, among other things, that public cord blood banks register with FDA, screen potential donors for certain diseases according to FDA eligibility criteria, and comply with Current Good Manufacturing Practice, Current Good Tissue Practice, and applicable regulations. Until October 20, 2011, banks can voluntarily distribute cord blood units for use in transplants—when the patient is not related to the cord blood donor—as an investigational new drug (IND). Effective October 20, 2011, all cord blood units, including those currently in cord blood bank inventories, will have to be approved for use by the FDA as an IND or under an FDA-approved license. As of August 2011, none of the banks had an approved license for cord blood, though many were using their own or NMDP’s existing IND approvals. Two cord blood banks have submitted license applications, and eleven banks have either completed or scheduled meetings with FDA to discuss the license application process. Banks reported practices that they believe could increase collections at existing sites, but noted that increased expenditures and other factors could present challenges to banking cord blood. Expanding the number of collection sites could also increase the number and diversity of cord blood units in the NCBI, but banks reported funding challenges related to establishing new sites. Banks also reported additional practices to increase the genetic diversity of the NCBI, but certain characteristics of the cord blood units collected from various racial groups may limit the number of units banked. Remote collection of cord blood units is under consideration. Finally, sales of cord blood units have slowed and could challenge banks’ efforts to increase the NCBI. Ten of the 13 banks that we interviewed told us that the following practices could increase the number of cord blood units collected at existing collection sites:  Adding more staff at collection sites during more hours of the day and/or more days of the week. For example, one bank said that they are currently losing the opportunity to collect from 25 percent of the women who deliver on the weekends because they do not have staff working 24 hours a day on weekends.  Providing recognition or feedback to motivate medical staff about their cord blood collections. Eight banks told us that they use this practice, and several of these banks noted that this has resulted in increased collections or improved the quality of collection practices, which results in better cord blood units with high volumes and cell counts. Such feedback can also include letting collectors know if the units that they collected did not meet the bank’s standards.  Lowering the age of consent for donating cord blood. For example, one bank said it could collect more cord blood units if the age of consent was lowered, particularly at one hospital that serves many women under the age of 18, which is HRSA’s current age requirement. In May 2011, the Advisory Council recommended that HRSA broaden the definition of the minimal eligible maternal age for consenting to donate cord blood to reflect the law in each state. As a result, the age of maternal emancipation could be used, which in some states is lower than 18. HRSA officials told us that they are implementing this change in their fiscal year 2011 contracts and in modifications to existing contracts. Resource limitations, as well as competition from private cord blood banks, could make increasing collections at existing sites challenging. Three of the five banks who discussed adding staff to increase collections noted that they have limited ability to address the increase in expenditures associated with hiring additional staff to cover more hours of collection. Some banks said that they receive additional funds from donations and financial support from parent organizations—in addition to HRSA’s reimbursement and cord blood sales—to cover their total cost of operations. Four banks also reported that competition from private banking at the hospital where they are collecting reduces their opportunity for collections as some mothers choose to privately bank their cord blood. For example, one bank said that at hospitals with more affluent patients, the loss of available cord blood units to private banking can exceed 20 percent of the deliveries. Another challenge reported by four banks was that bank staff must provide continuous opportunities for hospital staff to learn how to collect cord blood due, in part, to turnover of the medical staff collecting cord blood units. For example, residents who are trained to collect cord blood may later move to their next medical rotation or to another hospital. Additionally, one bank said having bank staff routinely conduct training about cord blood collection at the hospital helps ensure the proficiency levels of trained collectors in collecting high quality units by reinforcing proper methods. However, these continuous training requirements force banks to dedicate staff hours to training and reduce their ability to use them to expand hours to support cord blood collections. Another way to increase the number of units in the NCBI, and the inventory’s diversity, is to expand the number of collection sites, especially if banks can identify collection sites that will add to the racial and ethnic diversity of their collections. When considering new collection sites, most of the banks we interviewed reported focusing on those sites with a large number of deliveries or those with significant racial and ethnic diversity among their deliveries. Eight of the 13 banks reported using one of the following practices related to expanding collections to sites with a high number of minority births. These include:  Using hospital census data to target hospitals with a high number of minority births. Some banks try to ascertain the ethnic composition of the deliveries at a hospital before approaching the hospital as a potential collection site.  Building on existing relationships with collection sites served by the bank’s parent organization. For example, some banks are also part of a community blood center. Hospitals that use the community blood center’s services may be encouraged to also operate as a cord blood collection site.  Working with advocacy groups that support cord blood banking to encourage collection sites to participate. One cord blood bank said that it has added collection sites as a result of their relationships and networking with advocacy groups and foundations. Twelve of the banks we interviewed identified at least one of the following challenges to adding new collection sites. First, banks reported that they must finance the costs for new collection sites, including bank and hospital staff salaries, supplies, and expenses associated with transporting cord blood, because HRSA does not provide specific funding to defray these costs. Some banks reported being contacted by hospitals that are interested in becoming cord blood collection sites, but the banks say they are limited in the number of sites they can add because of the expense of adding new sites. HRSA officials agreed that it is expensive to add new collection sites. They reported that the agency is encouraging efforts to increase collections in the most efficient manner, consistent with available resources. HRSA officials also said that as long as capacity for additional cord blood collections remains at current collection sites, the agency believes that increasing activity at those sites may be the most efficient means of increasing annual collections. HRSA officials said they do not plan to estimate the number of collection sites to meet the NCBI goal of at least 150,000 units because there are multiple variables to consider when trying to estimate the number of collection sites needed. Instead, the agency is encouraging efforts to increase collections at existing sites. The 13 banks providing cord blood units to the NCBI have agreements with between 2 and 33 collection sites, depending on the bank, for a total of 114 collection sites. A second challenge banks reported was the amount of time they spend developing agreements to collect at sites because of multiple reviews, such as the site’s agreement having to be approved by different departments within a hospital. Finally, one bank reported that a challenge that is specific to expanding to a new collection site with a large number of racial and ethnic deliveries is that these sites are more likely to be understaffed; therefore, nurses and physicians have less time to participate in cord blood collection. The bank reported that when they approach the administration of such hospitals the administration is less likely to agree to participate in cord blood collection because of the additional workload collecting cord blood will place on their staff. Whether the bank is trying to increase cord blood collection at an existing site or by adding a new site, the banks reported the following practices: identifying a “champion” associated with the collection site, such as a doctor or administrator, to support the site’s collection efforts and to motivate staff to collect cord blood; providing bank staff or paying the salaries of hospital staff to carry out some or all of the collection activities at each site; contributing to the nurses’ education fund at the site; or paying for space to use for collection activities. In addition to adding new collection sites with diverse populations, 6 of the 13 banks that we interviewed reported specific practices to recruit donors and bank cord blood from various racial and ethnic groups in order to increase collections that enhance the genetic diversity of the NCBI. For example, some of the banks have tried to reach more African American donors through outreach to community groups such as churches, health fairs, schools, and support groups, such as Mocha Moms, Inc., rather than through events that are conducted in concert with medical practices. As another example, some banks use bilingual recruiters and educational materials to recruit Hispanic donors. One bank reported that the use of bilingual cord blood collectors combined with a targeted public relations effort that included radio advertising and a telethon decreased their refusal rate among the predominantly Spanish- speaking patient population at one hospital from 25 percent to 2 percent within a 48-hour period. While a few of the banks reported challenges related to the willingness of mothers from racial and ethnic groups to donate cord blood, most banks reported that certain characteristics of the cord blood collected from various racial groups present challenges to banking units that meet HRSA standards for inclusion in the NCBI. Specifically, four banks said issues of medical mistrust, including concern about how units may be used for research, could present a barrier to increasing the number of donors from certain groups. Seven of the banks reported that the cord blood they collected from certain groups, such as African American donors, has a lower volume and total cell count especially when compared to units collected from Caucasian donors. Of the seven banks that reported differences in collections from African Americans compared to others, two of the banks reported collecting more units from African American donors in order to collect one unit that can meet their banking standards relative to the number of units collected and banked from Caucasian donors. In addition, some banks use different volume or cell count thresholds when deciding whether to process cord blood collected from different racial and ethnic groups. One cord blood bank reported that it was able to establish a higher volume threshold to process cord blood from Caucasian donors than cord blood from African American donors because it is easier to collect large-volume units from Caucasian donors. For this bank, cord blood collected from Caucasian donors must contain at least 80 milliliters to be processed further, while cord blood collected from African American donors must contain at least 60 milliliters of blood. Another bank reported that it raised the cell count threshold for units from Caucasian donors to 1.25 billion cells while holding the cell count threshold for units from African American donors at 900 million cells, while for a second bank its cell count threshold to process cord blood from Caucasian donors is 1.5 billion and 1.1 billion cells for other groups. According to some of the banks, this allows them to add cord blood units with higher cell counts, while increasing the number of units from African American donors in the inventory. While some banks reported difficulty in collecting and banking cord blood units with at least 900 million cells from African Americans, the median cell count of such units in NMDP’s registry is 1.05 billion cells per unit. Those banks whose HRSA contracts were effective September 2010 are paid more for cord blood units collected from some minority groups who have historically had difficulty finding a cord blood or adult donor match. HRSA identifies alternative ways federal funds could be distributed to cord blood banks, in part to encourage the collection of diverse cord blood units, in its Interim Report on How Federal Funds are Distributed to Cord Blood Banks Participating in the National Cord Blood Inventory, which was provided to Congress on August 11, 2011. The report describes options for modifying the existing methods for distributing funds to cord blood banks, including providing a small amount of up-front funding to cord blood banks to defray start-up costs associated with initiating collections at new sites, providing payment for cord blood units collected remotely at hospitals in which the cord blood bank does not have a written agreement, or providing higher per unit reimbursement rates for cord blood units contracted by HRSA. The report notes that specific recommendations relating to NCBI funding will be included in HHS’ next annual Report to Congress on stem cell issues. Another potential approach for increasing the NCBI is to use remote collections. Remote collections involve sending a cord blood collection kit to a mother who plans to deliver her child at a site that does not have a written agreement with a public cord blood bank to routinely allow collections. The kit is then used by the mother’s physician or midwife to collect the cord blood unit, which is then transported to the sponsoring cord blood bank. Currently, cord blood units collected remotely cannot be added to the NCBI because HRSA requires banks to have a written agreement with the collection site in order for units collected at the site to be included in the NCBI. Additionally, HRSA officials have said that they are uncertain about whether these units will meet FDA requirements for licensure. HRSA, through a contract with NMDP, has begun a pilot program with three of its contracted cord blood banks to remotely collect and bank 500 cord blood units to determine whether cord blood donation using a kit- based model can increase the opportunities for public cord blood donation. As of March 2011, the three banks had collected 758 units. Of the 758 units, 68 had been banked—that is, processed and stored; the major reasons that units were discarded and not banked were units arriving at the lab after the allowed time for processing, low volume of cord blood collected, and required labels or documents associated with units being missing. Two of the three banks participating in the HRSA pilot identified some practices to address challenges identified during the pilot. Some of the lessons learned by one cord blood bank included (1) only initiating remote collections with mothers who start the process no later than 35 weeks gestation; (2) screening mothers for eligibility before sending out a collection kit; and (3) obtaining the doctors’ agreement to participate and complete training on cord blood collection. Another bank reported working to develop a web-based training program targeting the physician collectors participating in remote collections that emphasizes the importance of collecting a large-volume cord blood unit. This pilot is scheduled to end September 2011 and the results will be analyzed by HRSA and NMDP at that time. Worldwide demand for U.S. cord blood units has slowed compared to the demand that existed when the NCBI was created. According to a GAO analysis of data from the World Marrow Donor Association, worldwide sales of cord blood units by U.S. banks rose 13.6 percent between 2005 and 2006 and 38.4 percent between 2006 and 2007. In contrast, sales rose only 0.2 percent between 2007 and 2008, 10.4 percent between 2008 and 2009, and only 0.4 percent between 2009 and 2010. According to the Advisory Council and HRSA, the slowing increase in demand for cord blood units may reflect factors that affect the demand for cord blood specifically, or stem cells in general. These factors include the medical community’s questions about what diseases are best treated using stem cell transplantation, coverage limitations by health insurers for stem cell transplants, and alternative types of treatment for blood-related cancers that stem cell transplants are used to treat. Because banks rely heavily on cord blood unit sales to finance their operations, slowdowns in demand could adversely affect the banks’ ability to finance efforts to expand collections at current collection sites or to expand the number of sites. According to presentations at Advisory Council meetings, stem cell transplantation is an evolving area of medicine in which questions exist about the diseases that are best treated by blood stem cell transplantation or about treatment protocols. Questions related to the practice of stem cell transplantation that are still under active clinical investigation include criteria for stem cell source selection, patient pretransplant preparation regimens, and ways to treat acute and chronic graft versus host disease. In May 2010, the Advisory Council recommended that the Secretary of HHS convene an expert panel to develop consensus regarding an evidence-based list of diagnoses for which stem cell transplantation is an accepted standard of care. The panel has been formed and is in the process of conducting its work. Insurance coverage for treatment for stem cell transplantation varies. According to an Advisory Council working group, coverage varies because the use of stem cell transplantation as an effective treatment against certain diseases is not well understood by physicians, the insurance industry, or the public. The working group found that public and private insurers may not cover blood stem cell transplantation and if they do, they may cover the procedure only under limited circumstances or may exclude ancillary costs such as costs associated with searching for a donor. For example, the Medicare program covers stem cell transplants from donors for the treatment of certain diseases, and, in some cases, only if the beneficiary receives the transplant as part of a clinical trial. Alternative treatments to cord blood transplantation may also affect the demand for cord blood. Alternative treatments can include chemotherapy or stem cell transplants from sources other than cord blood. According to HRSA, advances in a drug used in the treatment of some types of leukemia have been successful in achieving remission for some patients, who might otherwise have been treated with a transplant, thereby reducing the demand for cord blood units for this particular group. However, according to at least three banks, it is too early to know whether advances in other types of treatments will reduce the future demand for cord blood. Alternatively, other potential factors might increase the demand for cord blood. In 2010, a clinical researcher at the Fred Hutchinson Cancer Research Center successfully expanded the number of blood stem cells in cord blood units up to 164-fold. This could be beneficial because a higher number of stem cells in a cord blood unit could more quickly reconstitute a patient’s immune system with new stem cells, thereby lowering the risk that a patient would acquire life-threatening infections during this recovery period. Researchers are also examining other types of stem cells contained in cord blood for possible future clinical applications including tissue regeneration. If such advancements lead to future increases in demand, it would also increase banks’ ability to finance their efforts to expand collections and more quickly reach the NCBI goal. Most banks reported that they had adopted practices to reduce the costs of cord blood banking, but some expressed concern that one proposed practice could reduce the genetic diversity of the NCBI. Some banks also reported uncertainty about the effect of FDA regulations on costs and revenues. Banks reported using a variety of practices to reduce the costs or to improve the efficiency of some of the activities associated with cord blood banking. One cost-saving practice reported by 11 of the 13 banks we interviewed is to use an early screening process to identify units that do not meet the NCBI cell count threshold of 900 million cells or the bank’s own volume or weight requirements before incurring the costs of processing these units. This practice of establishing a preprocessing threshold eliminates the costs of processing units unlikely to be reimbursed by HRSA or to be desirable for use in stem cell transplantation. Preprocessing thresholds reported by the banks ranged from 900 million to 1.5 billion cells. Some of these banks reported lower thresholds for units from African American donors and other donor groups. However, a proposed practice could reduce the genetic diversity of collections, including those for the NCBI. A limited financial analysis of public cord blood banking conducted by NMDP in 2010 found that raising the preprocessing threshold for all public cord blood units to at least 1.25 billion cells would allow the cord blood banking industry (but not necessarily individual banks) to gain enough excess revenue within 2 years to cover their annual operating costs. According to NMDP’s analysis, increasing the percentage of higher cell count cord blood units in the public inventory, including those units in the NCBI, would respond to the increasing demand for higher cell count cord blood units. However, some of the cord blood banks have expressed concerns about NMDP’s analysis, including that the industry averages used did not adequately account for bank variations in overhead and operating costs, that the model’s assumptions about future demand were too high, and that NMDP did not take into account the potential effect of raising the cell count threshold on some groups’ access to transplants. An official from NMDP acknowledged that, at higher thresholds, banks would process fewer units, particularly in some minority populations, which could reduce the genetic diversity of cord blood inventories, including the NCBI. According to HRSA, the Center for International Blood and Marrow Transplant Research is currently analyzing whether matching cord blood across ethnicities is as effective as matching cord blood between donors and recipients of the same groups. Some banks reported other practices for reducing their costs by increasing collaboration with organizations that have activities that are related to those of the bank.  To lower the cost of transportation, two banks rely on their local community blood bank to transport cord blood units collected at regional hospitals.  To lower its costs of donor recruitment and ongoing staff support to collection sites, one bank has developed partnerships with two nonprofit organizations dedicated to increasing patients’ access to cord blood transplants. The two organizations have assumed some of the responsibilities normally assigned to bank staff, including monitoring collection activity at the site, ensuring an adequate supply of collection kits, and answering questions from site staff about cord blood collection. One of the organizations also pays for the collection kits at a collection site.  To lower the per unit cost of processing and storing cord blood units, two banks reported that they also process and store units for companies that market cord blood collection to expectant mothers for future use by the baby or other family members.  To lower the bank’s costs of donor recruitment, one bank reported that it has entered into an arrangement with a neighboring state. The state is paying for staff to screen potential donor mothers and to obtain their informed consent, to pack and transport cord blood collected by physicians, and to administratively support the program. Upon receipt of the cord blood, the bank will then process and store the units. If a unit is sold for transplant, the bank will share the revenue with the state. In other efforts to reduce costs, one bank shifted recruiters’ time that was spent obtaining informed consent from nonhospital settings to the hospital. Initially, bank staff obtained consent from potential donor mothers at clinics, health fairs, and birthing classes weeks and months prior to delivery. However, the bank noticed that many of these women, upon arrival at the hospital to deliver their babies, forgot their paperwork or did not inform the hospital staff of their desire to donate. To increase the effectiveness of the staff’s efforts, the bank shifted the informed consent process to the hospital where the time spent in this process could ensure a greater number of mothers actually donating. Finally, to improve the efficiency of processing cord blood, two banks reported moving from manual to automated cord blood processing systems. According to one of the banks, the new system will allow the bank to increase the number of units processed threefold without changing the number of laboratory technicians. Five of the 13 banks reported that their efforts to apply for FDA licensure have already increased their costs or noted that the total cost burden of operating as an FDA licensed bank is unclear. For example, two banks reported having to hire external consultants or reorganize staff duties to complete the application for licensure. Two banks reported that they have already incurred significant expenditures to make building renovations, buy new equipment, or hire additional staff in attempts to comply with FDA regulations. Further, banks reported uncertainty in how to meet some of FDA’s regulatory and administrative requirements for licensure, which could result in increased expenditures to meet these requirements. Nine of the 13 banks reported that these concerns related to whether the spaces and equipment currently used by banks to collect and process cord blood will satisfy FDA licensure requirements or whether the banks will lose collection sites if licensure requirements force collection sites to register with the FDA. Some banks questioned whether FDA would require a “clean room” for processing units, which not all banks currently have. Banks also expressed concern that collection sites will no longer want to participate in public cord blood collection if FDA requires the sites to register with FDA. According to FDA officials, establishments that manufacture certain products, which include cord blood, are required to register and list their products with the FDA. These establishments are subject to FDA inspection. Some banks are concerned about the additional burdens that this will impose. If banks lose collection sites because of concerns about possible FDA inspection, the banks would be subject to the additional costs of adding new sites, which would include training site staff, providing collection materials, and transporting the units from the site to the bank. However, FDA officials told GAO in a July 2011 interview that they are taking the approach that neither individuals nor hospitals that have agreements with banks to collect cord blood will be required to register separately with FDA. FDA officials said that such entities are required to comply with product requirements applicable to their collecting activities, and the cord blood bank is responsible for ensuring that these entities under contract with the bank comply with FDA regulations. FDA officials have said that the benefits of cord blood licensure include greater assurance among doctors and patients of the quality and efficacy of cord blood units. Additionally, with licensure, cord blood banks will be able to sell cord blood units without IND pricing restrictions. However, some banks also reported that they were uncertain whether potential increased revenue from licensed units will offset their costs. In addition, the Advisory Council has expressed concerns about the potential for FDA’s licensure requirements to result in increased cost and decreased availability of public cord blood units without necessarily increasing the safety, stability, potency, or purity of the units. In November 2010, the Advisory Council recommended that the FDA meet with the banks applying for licensure to share and resolve specific concerns regarding licensure. FDA officials have been meeting individually with cord blood banks to discuss the specifics of each bank’s licensure application and circumstances. While FDA officials have stated that they could not confirm, for example, that a certain facility design would be acceptable in all situations, they said that they could provide clarification of the manufacturing regulations for individual banks. Since 2005, HRSA has contracted for about 30 percent of the minimum statutory goal of at least 150,000 new units of high quality cord blood. While not yet meeting the statutory goal, the NCBI has increased the number of high quality, genetically diverse units available for transplantation in the United States. This inventory, along with other sources of cord blood stem cells, contributed to making nearly 135,000 U.S. cord blood units available in the NMDP registry. In 2010, about 1,200 patients had received cord blood transplants from units identified in the registry. However, although there are nearly 135,000 cord blood units in the registry, members of certain racial and ethnic groups will continue to have more difficulty finding a closely matched unit than other groups. This disparity would be reduced, though not completely eliminated, if the number of units available were expanded. Cord blood banks contracting with HRSA are taking steps to increase collections and make their operations more efficient and cost-effective, but continuing advances in medical science make it difficult to predict future demand for cord blood stem cells and the resulting level of collections that should be undertaken. Based on current science, cord blood appears to present some advantages over other stem cell sources—such as bone marrow—both in terms of health benefits and in being already collected and readily available for use when listed in public registries. These advantages may increase in future years if factors that could increase the quality of cord blood units are realized or they may diminish if alternatives to cord blood are developed or improved. In commenting on a draft of this report, HHS provided additional information concerning several content areas of the report, including demand for U.S. cord blood units, HRSA’s pilot project for remote collections of cord blood units, and efforts to increase the diversity of the cord blood units collected for the NCBI. We included that additional information where appropriate. HHS’s comments are printed in appendix I. HHS also provided technical comments, which we incorporated as appropriate. We are sending copies of this report to the Secretary of Health and Human Services and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-7114 or at crossem@gao.gov. Contact points for our Office of Congressional Relations and Office of Public Affairs can be found on the last page of this report. Other major contributors to this report are listed in appendix II. In addition to the contact named above, Karen Doran, Assistant Director; Carrie Davidson; Cathleen Hamann; Toni Harrison; Natalie Herzog; and Monica Perez-Nelson made key contributions to this report.

Summary: Every year, many people diagnosed with diseases such as leukemia and lymphoma require transplants of stem cells from umbilical cord blood or other sources. The Stem Cell Therapeutic and Research Act of 2005 authorized funding for banking 150,000 new units of high quality and genetically diverse cord blood and directed the Department of Health and Human Services (HHS) to contract with cord blood banks to assist in cord blood collection. HHS, through the Health Resources and Services Administration (HRSA), established the National Cord Blood Inventory (NCBI) program to support banking of cord blood units and contracted with 13 cord blood banks to bank these units. The 2010 reauthorization required GAO to report on efforts to increase cord blood unit collection for the NCBI. As of May 2011, HRSA had reimbursed banks for over 41,000 units banked for the NCBI. In this report, GAO describes (1) practices identified to increase banking of cord blood units for the NCBI and related challenges and (2) practices cord blood banks are using to lower costs and improve the efficiency of cord blood banking and associated challenges. To do so, GAO reviewed relevant regulations and documents, and interviewed officials from pertinent organizations. These included officials from HRSA, the Food and Drug Administration (FDA), which is responsible for regulating cord blood used in transplants for patients who are not related to the donor, the National Marrow Donor Program (NMDP), which operates a national registry of cord blood units and other sources of stem cells, and the 13 banks with contracts to bank cord blood units for the NCBI.. The 13 banks with NCBI contracts reported various practices that could increase the number of cord blood units banked at existing and new collection sites, as well as increasing the diversity of the units collected. However, challenges to increasing collection for these banks include resource limitations, as well as competition from other cord blood banks, which collect units for use only by family members of the donor, and slowing growth in demand for U.S. cord blood units. Cord blood banks reported that increasing staff at collection sites, providing feedback to those who collect cord blood, and lowering the age for those donating could increase the number of units collected for the NCBI at existing sites. Expanding the number of collection sites could also increase the number and diversity of NCBI units. However, the banks in our review reported financial challenges related to increasing the number of units collected at existing or new collection sites, such as a limited ability to address the costs associated with hiring additional staff to cover more hours of collection or to support bank and hospital staff salaries at new sites. These banks identified additional practices for increasing the diversity of the units collected for the NCBI, but also reported that the units collected from some racial groups have lower volumes or cell counts compared to other groups, making such units less likely to meet standards for inclusion in the NCBI. Further, growth in sales of U.S. cord blood units, banks' primary source of funding, has slowed and could challenge banks' efforts. Demand for cord blood could increase or decrease depending on a number of variables, such as whether new research identifies ways to increase the benefits of cord blood or conversely, the development of alternative treatments to cord blood transplantation. Most of the 13 banks with NCBI contracts reported adopting practices to reduce costs and improve the efficiency of cord blood banking, but also reported some uncertainty about the effect on costs and revenues of complying with FDA licensure regulations that now apply to cord blood. These banks reported practices such as using an early screening process to identify units that do not meet NCBI or the bank's own requirements prior to incurring the costs of processing these units. Further, banks with NCBI contracts reported that efforts to comply with applicable FDA regulations could increase the costs of banking cord blood. For example, some banks reported hiring external consultants or additional staff, reorganizing staff duties, beginning building renovations, or purchasing new processing equipment in attempts to comply with FDA regulations regarding cord blood manufacture and licensing. Some banks also said they were uncertain whether these efforts would comply with FDA requirements or if their collection sites would have to register with the FDA as an establishment that manufactures cord blood. However, FDA officials told GAO that neither individuals nor collection sites that have agreements with banks to collect units will be required to register, though banks must ensure the collection sites comply with FDA regulations. Further, some banks also reported that they were uncertain whether potential increased revenue from licensed units will offset their costs of cord blood banking. HHS provided additional information regarding our findings, which was incorporated as appropriate.