The Market For Human Tissue Katherine M. Sauer University of Southern Indiana April 3 rd, 2008 MBAA – ABE Annual Conference Chicago, IL

In the news… On March 19, 2008, Michael Mastromarino plead guilty to stealing human body parts, enterprise corruption, and reckless endangerment. - Biomedical Tissue Services (BTS) $4.6m - pay funeral directors for access to bodies - resell the tissue to biotech firms - falsify records

Body PartPrice Range Brain$500-$600 Torso$1,200-$3,000 Hand$350 - $850 (each) Knee$450 - $650 (each) Cervical Spine$835 - $1,825 Whole Cadaver$4,000 - $5,000 Source: Body Brokers: Inside America’s Underground Trade in Human Remains By Annie Cheney 2006

Background What is human tissue? - bone, skin, corneas, ligaments, tendons, dura mater, heart valves, ova, semen, cells from biopsies, etc… - not vascularized organs (e.g. kidney, heart, liver)

Human Tissue Uses 1.allografts (over 1million in US per year)  transplanted tissues are used extensively for: orthopedicsneurosurgery burn victims general/plastic surgery dental procedures  Cornea transplants can restore an individual’s sight.  reproductive medicine

2. research  basic research  pharmaceutical testing (liver toxicity)  diagnostic tests In 2000, there were an estimated 300 million samples of human tissue being stored with an additional 20 million being added each year. - military facilities, forensic DNA banks, government labs, diagnostic pathology, commercial, hospitals, universities

Tissue Transfers donate (25,000 per year) - living (research, reproductive) - cadaveric (legit donation or stolen) medical waste - diagnostic purposes - commercial purposes

Regulations Human cell, tissue, and cellular and tissue- based products (HCT/Ps) are regulated by the FDA’s Center for Biologics Evaluation and Research (CBER). Code of Federal Regulations 21–1270,1 - establishment registration - screen and test donors - procedures and records

1947 – 1968: statutes in 40 states allowing anatomical donations from cadavers for transplantation or scientific research 1968: Uniform Anatomical Gifts Act - all 50 states and DC adopted - two witnesses required - right to donate organs, eyes, tissues

1984: National Organ Transplantation Act - outlaws transfer of “any human organ for valuable consideration” - allows for “reasonable payments” associated with the removal transportation implantation processing preserving quality control storage of human organs

1987: revised UAGA - prohibited organ sales - streamlined donor registry - medical examiners/coroners can provide organs from autopsies - 26 states adopted 2006: revised UAGA - facilitates donation - modernizes the Act - 20 states enacted in 2007

To What Extent is there a Market? In the United States allografts: $1billion industry research: $700 million market Human tissue is valued at $5000/gram.

Producer Price Index Series Id: PCU Industry: Blood and organ banks Product: Blood and organ banks Base Date: 0606 Year JanFebMarAprMayJunJulAugSepOctNovDecAnn (P) (P) (P) (P) (P) P : Preliminary. All indexes are subject to revision four months after original publication.

With the exception of ova and sperm, donors do not receive compensation. Donors are encouraged to conceptualize their donation as a “gift” to the recipient. Non profit tissue banks are heavily involved. - LifeNet … LifeCell ($190.5m revenue) - Musculoskeletal Transplant Foundation

Previous Work solid organs – efficiency of markets, ethics tissues – property rights, ethics (medicine, law) Charo (2002) “Skin and Bones: Post Mortem Markets” Nova Law Review Mahoney (2000) “The Market for Human Tissue” Virginia Law Review Harrison (2002) “Neither Moore nor the Market” American Journal of Law and Medicine

What’s missing? - treatment in the economic literature Research Question: What determines the number of HCT/P establishments?

FDA/CBER registration data: - name - location - function screen, recover, process, distribute, etc - product bone, ligament, heart valve, etc 2001 to present

statedistributelabelpackageprocessrecoverscreenstoretest AL AK AZ AR CA CO CT DE FL GA Total max min mean Number of Firms by State and Function (bone) Source: FDA/CBER HCTER database

statedistributelabelpackageprocessrecoverscreenstoretest AL AK AZ AR CA CO CT DE FL GA Total max min mean Number of Firms by State and Function (cornea) Source: FDA/CBER HCTER database

Potential determinants: - population (density, death rates, age) - registered organ donors - research institutions, medical facilities - industry profits - presumed consent laws (corneas) - income (reproductive medicine, cosmetic surgery) - religion

Comments? Questions? Katherine M. Sauer University of Southern Indiana April 3 rd, 2008 MBAA – ABE Annual Conference Chicago, IL