Fees For Human Tissue Total Millions

Firms Turn Donations Into Medical Products

By Marilynn Marchione

of the Journal Sentinel staff

Selling human tissue or organs is illegal, but there's no restriction on fees for recovery, processing and transportation.

For-profit companies earn millions off medical products made from what started out as donations to non-profit tissue banks.

Most families of donors don't know that tissue may be used for cosmetic surgery rather than to help burn and trauma victims.

When an accident last fall left her 24-year-old daughter with severe burns and the possibility that no cadaver skin could be found to treat them, Kate Nolan thought the unthinkable.

"I considered suicide to make my skin available," the Madison woman said.

Fortunately, she didn't do it. Tragically, her daughter died of problems unrelated to the lack of skin.

But two months ago, Nolan learned something that completely changed how she feels about the universal organ/tissue donor sticker she's had on her license ever since she started to drive: Tissue, bone and skin are not allocated according to medical need in the way that organs - like kidneys, hearts and livers - are allocated.

If Nolan had killed herself, her skin would have gone to a private, for-profit firm that may have made it available for cosmetic surgery and other lucrative, elective procedures rather than for treating burn victims.

"I was horrified, outraged, appalled," she said. "How would you feel? This has to be changed. It would be a tragedy if people stopped being organ donors because of this."

Problems with tissue banking came to light in April, when three University of Wisconsin-Madison employees, including the director of its nationally known organ procurement program, were suspended and later resigned over their roles in a private tissue recovery business.

A subsequent Journal Sentinel examination of the tissue banking industry found these problems:

• Federal law bans selling human tissue or organs but leaves a huge loophole: Fees can be charged for recovering, processing and transporting tissue, and there's no oversight on what constitutes reasonable fees.
• Grieving family members often are told that as many as 75 people can be helped when they donate a loved one's tissue, bone and skin. They're almost never told that for-profit companies earn millions of dollars processing and peddling medical products made from what started out as donations to non-profit tissue banks.
• There's no requirement - in fact, there may be a financial disincentive - for businesses to offer skin, tissue and bones to burn centers or for other therapeutic uses rather than for cosmetic surgery or other elective procedures.

As more people learn about the situation, there is some fear that organ and tissue donation will drop at a time when demand already greatly exceeds supply.

"I hope not," said Jeanne Mowe, executive director of the American Association of Tissue Banks, a trade organization of about 65 tissue banks. "I'm holding my breath. That would be a tragedy."

Tissue donation usually starts with organ donation. When a potential organ donor is identified, procurement experts approach families, who can give permission to donate anything from a single organ or tissue to the entire body - a so-called universal donation.

All hospitals and federally authorized organ procurement organizations are required to have agreements with tissue banks to recover any skin, tissue or bones that people want to donate. Tissue procurers take over after usable organs have been removed.

Tissue banks typically are non-profit, but many were set up and are controlled by for-profit tissue processing firms, which sterilize tissue and bones and fashion them into an array of medical products. Hospitals and doctors then pay to obtain those products for operations ranging from repairing athletic injuries and fusing spinal disks to erasing crow's feet and plumping thin lips.

Fees Added At Every Step

At every step, fees are paid. In the end, no one technically "sells" tissue, bone or skin, but lots of people get lots of money for recovering, shipping, processing, transporting and marketing it. The bottom line: Something that started out as a gift winds up as a $4,000 medical product.

Consider the economics of the system.

St. Luke's Medical Center runs Wisconsin Tissue Bank, a tissue and bone recovery firm that serves 50 hospitals in the state. The tissue bank sends all donated bone to New Jersey-based Musculoskeletal Transplant Foundation, the nation's largest tissue bank. MTF is a non-profit company created in 1987 by a group of orthopedic surgeons who also were involved in establishing Osteotech Inc., a separate, for-profit tissue processing firm.

MTF pays Wisconsin Tissue Bank a flat fee of $4,500 for procuring all usable bones, tendons and ligaments - a so-called musculoskeletal or orthopedic tissue recovery. (If the donor is over age 55, the fee is $2,500 because there's less tissue that can be recovered.) That fee reimburses Wisconsin Tissue Bank for operating room charges it pays St. Luke's and covers transportation costs and salaries of tissue bank employees who arrange and procure the tissue and bone.

MTF also pays Osteotech to test the bone to make sure it's free of viruses or other germs, to sterilize it and make it ready for use in surgical procedures. Osteotech then sends the bone back to MTF, which makes it available to hospitals.

In the end, the cost to St. Luke's to get back a femur that was originally donated is $2,772; a patellar tendon, popular for knee reconstruction, costs $1,075.

The situation is similar with heart valves. Wisconsin Tissue Bank gets $1,000 for a cardiovascular tissue recovery - typically, two heart valves and the aorta, the body's biggest blood vessel - from CryoLife, a publicly traded, Atlanta-based company that sterilizes and processes them. But acquiring just a single heart valve from CryoLife after processing costs the hospital an average of $4,000.

Alfred Tector, a renowned heart surgeon who is medical director of St. Luke's transplant program and of the tissue bank there, said the processing charges paid to the private firms seem high, but "for one individual hospital to do it would probably cost 20 times as much" and not be as good.

MTF's vice president of donor services, Martha Anderson, said the system isn't designed to allow the for-profit company - Osteotech - to make money in a way that the non-profit - MTF - could not. Their boards of directors are separate, and no one working for one company can have stock in the other, she said.

The non-profit company "is not a shell for a for-profit," she insisted. "We pay a for-profit for services just as we pay Federal Express to ship the tissue back and forth across the country."

Several federal officials said they saw no cause for action or an investigation into what the industry charges in tissue processing fees. A criminal code provision adopted along with the National Organ Transplant Act bans the sale of tissue but allows "reasonable fees" for processing it.

"Human tissue itself is never sold at a profit," says a statement from MTF. "There are very high costs associated with the preparation of the bone for transplant, and these costs are reimbursed by the recipient of the tissue."

A Hole In Regulations

But there's a hole in the regulatory process when it comes to tissue banks. The United Network for Organ Sharing, or UNOS, sets policies for how solid organs like hearts and livers are allocated, but has no jurisdiction over tissue and bone.

The Food and Drug Administration regulates tissue and bone transplants to make sure they're free of disease-causing germs and are medically safe.

No one regulates the commercial or business aspects of tissue banking or verifies the propriety of what companies charge for tissue and bone products, said Jon Nelson, director of special programs for the Health Resources Services Administration (HRSA), which oversees the organ transplant network.

Meanwhile, the number of medical procedures using transplanted or processed tissue, bone and skin continues to grow. There were about 450,000 last year in the United States, according to MTF. About 17,000 people donated tissue, skin or bone last year, said Mowe of the tissue bank association.

A statement from MTF says the 26 non-profit tissue banks that procure tissue for MTF fully inform families about all the potential uses of what is donated.

"Families are routinely told about the life-enhancing uses of tissues, distinguished from the life-saving uses of organs," the statement says. "Families who do not wish their tissues to be used for specific applications - including research or non-therapeutic uses such as cosmetic surgery - have the ability to specify that."

But one MTF-affiliated tissue bank, the one at St. Luke's, says the reality is that such conversations usually are not so detailed.

"We tell the family about the use of the tissues," that cancer, burn and trauma victims can be helped, along with people with problem bladders, worn out heart valves, and injuries that require new tendons, said Joan Heimler, the St. Luke's tissue bank director.

Typically, "the mom will cry, the dad will cry," and both will say their child or other relative would have wanted to help others, she said. Very few people want to know about the processing of tissue or the financial aspects of the business, she said.

Anderson, the MTF executive, said donor families "expect that the tissue will be used to help patients." As to whether they should be told that for-profit firms may make money from what they donated, "we don't know whether that's relevant to families or not," she said.

One of the largest areas of controversy is what becomes of donated skin. The very notion of removing skin causes many to blanch, but actually, only a layer as thin as a single facial tissue is removed; the area merely appears sunburned afterward.

Different Missions

Some tissue banks don't even try to supply skin for burn treatment. Others, like the American Red Cross, do the opposite, and don't supply it for cosmetic purposes.

"The Red Cross is a true non-profit. We have a humanitarian mission," said spokesman Michael Fulwider. "Our skin goes to burn centers and hospitals. It does not go to cosmetic uses."

MTF says that 75% of the skin it receives is used for treating urologic problems, and that less than 20% goes to "non-therapeutic uses" such as cosmetic surgery.

"MTF has always encouraged their members to send skin to burn centers first," and how much of a skin shortage exists for burn care is debatable, the company's statement says.

Tom Schneider, medical director of the St. Mary's Regional Burn Center, said processed human skin "is not something we use that often," but it is important for treating large burns. Supply hasn't been much of a problem, he said.

But Nolan, the Madison woman, recalls doctors there saying they couldn't get enough skin to treat her daughter.

"The surgeon talked about how hard it was to get," she said.

"There's always a need for tissue; there's always a need for skin," said Fulwider of the Red Cross.

At UW-Madison, Robert Hoffmann, the director of the organ procurement program, abruptly canceled an agreement with the Red Cross in June 1998 and replaced it with one with Allograft Resources of Wisconsin Inc.

In May, Hoffmann resigned and admitted that he had taken fees from Red Cross and Allograft, a company he helped form without telling the university, as required. It turned out that two of the four members of Allograft's board also were board members or executives of Regeneration Technologies Inc., a for-profit, Florida-based tissue processing firm.

Hoffman also was a board member of Allograft. He has agreed to repay the hospital $86,000 - the fees, after taxes, that he got from tissue banks - to be used for organ donor education. Two other UW employees with ties to Allograft also have resigned.

A university investigation into those financial dealings and other allegations of impropriety "is virtually completed" and found nothing significant beyond the financial conflicts, said Donna Sollenberger, the UW Hospitals and Clinics' chief executive officer.

UW continues to use Allograft but has hired a consultant and appointed an ethics committee to examine how the hospital and the university do business with tissue banks and the processing firms tied to them.

Appeared in the Milwaukee Journal Sentinel on July 1, 2000.

Copyright © 2000 Milwaukee Journal Sentinel.

This article posted July 3, 2000.