Major Cord Blood Industry Change in 2015
Although we are only a few months into 2015, the cord blood banking market has already been experiencing rapid change.
The industry has seen structural advances occur, including a recent announcement of the Board of Directors for the Cord Blood Association, an international nonprofit that promotes the storage and use of cord blood and related tissues, such as cord tissue and placenta.
There have been major research advances as well. In one major example, a porcine animal study was conducted by the Mayo Clinic to evaluate the safety and feasibility of cord blood-derived mononuclear cells (UBC-MNC) for use in promoting regeneration in pediatric congenital heart disease (CHD).
There have even been major clinical advances made already in 2015, with CryoSave leading and sponsoring a multicentre clinical trial following GCP-ICH standards, to determine if Cerebral Palsy can be addressed by infusing stem cells derived from umbilical cord blood and cord tissue into patients.
However, no understanding of the cord blood market is complete without a consideration of recent case law and significant legal decisions, which brings us to the focus on this market update.
Cord Blood Case Law & Legal Updates
Currently, there are three legal situations of which cord blood market participants should be aware:
1. Mississippi Enacts Cord Blood Law Designed to Address Teen Pregnancy
If a girl younger than 16 gives birth and elects not to or cannot identify the father, a recent Mississippi law requires state authorities to collect cord blood from the newborn and run DNA tests to identify paternity. The state is using this activity as a step toward prosecuting statutory rape cases. While the legislation has been taking form since 2013, a recent article titled, “Congratulations! Your Umbilical Cord is Now State Property: A Comparative Analysis of Mississippi’s Cord Blood Law and the Fight Against Teen Pregnancy” brings new attention to the subject within the United States.
2. Russian Company Offering Private Cord Blood Banking Services is Awarded Settlement for Dissemination of Misleading Information
The Human Stem Cells Institute (HSCI), a public biotech company founded in Russia in 2003, announced that the Moscow Arbitration Court had made a decision regarding the lawsuit they brought against “Russian Reporter” magazine and its founder, CJSC Expert Media Holding.
The case started when “Russian Reporter” published an article in its magazine and website on January 24, 2013, called “Money Made on Children’s Blood.” It contained false information about Gemabank, the largest private cord blood stem cell bank in Russia, which belongs to the Human Stem Cell Institute (HSCI). The magazine also made false claims about cord blood banking across Russia, discrediting HSCI’s reputation and the credibility of their business services.
On October 28, 2014, the Moscow Arbitration Court ordered CJSC Expert Group and CJSC Expert Media Holding to pay a total of 44.4 million rubles (or about 1 million US dollars) as compensation for the losses incurred by HSCI, and for damage to the company’s reputation. The court also ordered Expert Group to remove its web pages with the published article.
While this case took place within a Russian court, similar situations have occurred in nearly every country worldwide. It is a significant event because it gives hope to all private cord blood banks that they may have legal rights to stand up for the validity and significance of their cord blood banking services.
3. New England Cord Blood Bank (NECBB) Settles Overcharge Claims for Cord Blood Storage
In January 2015, New England Cord Blood Bank Incorporated agreed to pay more than $40,000 in refunds and penalties to settle claims that it overcharged a small subset of customers who had used its cord blood storage services.
In court documents filed in the Suffolk Superior Court, the Attorney General’s Office accused New England Cord Blood Bank of violating its agreements with some clients. The situations that were cited were the company’s automatic renewal of cord blood storage agreements after contracts should have expired, and the company’s continued charges to customers even after they had notified the company they wanted to end the agreement. Instead, the company required parents to send a notarized “discard form” to sever the obligation.
From an outsider’s perspective, these actions do not seem fully unreasonable. For instance, many health clubs, phone companies, and utility companies follow similar business practices to those described.
However, the Newton, Massachusetts-based company, made the strategic decision to resolve the allegations, signing a consent agreement on Jan. 16 where it promised it will issue $20,624 in refunds to a total of clients 119, who will receive an average refund of $173. It also agreed to pay the state of Massachusetts $20,000, which includes a $15,000 penalty and $5,000 owed for the Attorney’s General’s costs.
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To learn more about trends and opportunities within the cord blood banking industry, view the “Complete 2015-16 Global Cord Blood Banking Industry Report” now.