AIDS Fears Spur the Growth of ‘Personalized Blood Banks’ : Frozen Storage Firms Offering Safe Alternative

Merus Corp., which will open a “personalized blood bank” this year in San Diego, has joined about two dozen companies that hope to wring a profit from the public’s growing concern over the safety of blood transfusions.

Merus opened the first of a planned international network of the blood banks in July in Tampa, Fla. Consumers can, for a fee, have their own blood frozen and stored by the banks for “a potential medical eventuality,” according to Dr. Brian Datnow, a La Jolla pathologist and blood banker who serves as a medical adviser for Merus, a recently formed public company based in Tampa.

“I’m personally going to be the first client . . . to put my frozen blood away for an emergency,” Datnow said. “It’s like an insurance policy.”

Established community blood banks will store blood in liquid form for patients facing near-term surgery, but the new centers are courting consumers who will pay annual fees of $100 or more to store frozen blood that would only be transfused for some unforeseen medical reason.

There is one sign that the emerging business is here to stay: Representatives from 17 autologous blood banking companies in the United States, Canada and West Germany, including Merus and American Blood Services, met recently in Washington to form a trade group.

Firms Generally Small

The fledgling companies that have sprung up generally are small, privately held outfits with names like BloodSafe, American Blood Storage, Family Blood Services and My-Cell Personal Blood Bank.

The companies envision international growth: Merus expects to open banks in Great Britain and Switzerland, and New York-based Daxor last month signed a letter of intent with a group of Japanese investors who will provide $3 million to open Japan’s first autologous blood bank.

Additionally, New York-based Daxor is exploring the possibility of opening a national frozen-blood storage and distribution center in Memphis, Tenn., that, in conjunction with Federal Express, would “deliver frozen blood anywhere in the U.S. within six hours,” according to a Daxor spokesman.

Even before consumer concern about AIDS mushroomed, doctors had agreed that autologous blood--the use of one’s own blood for a transfusion--generates a speedier and safer recovery than a transfusion of homologous blood--that is, blood donated by another person that can generate side effects ranging from minor discomfort to death.

Proponents of using autologous blood point to national statistics showing that one in 10 patients receiving homologous blood will contract some form of hepatitis. Most patients, however, recover from it fairly quickly, doctors said.

The banking of frozen blood is not new. Cedars-Sinai Medical Center in Los Angeles, for example, has for 13 years stored autologous blood for patients. Cedars-Sinai has experienced enough of a demand to expand its freezer space, and the hospital will in September begin advertising its autologous storage service to the general public.

Consumers Take Lead

Cautious consumers are “way out in front of their doctors on this issue,” said Datnow, who predicted that doctors will begin demanding autologous blood donations from their patients as an increasing number of patients sue their doctors after contracting contagious diseases through blood transfusions.

Merus selected San Diego for its second center because “there is a (relatively) high incidence of infectious diseases in the (local) blood supply and the population is learned enough to be able to recognize that (disease) is a problem,” Datnow said.

Medical technology experts--and even some executives with the frozen blood centers--believe that consumer demand for autologous blood banks has been slow to materialize, according to Dr. Steven B. Gerber, a medical industry analyst with L.H. Friend & Co., a Century City investment banking firm.

So far, “there have not been droves of people going to personal blood banks,” according to Peter Halter, president of Tustin-based Biomedical Business International, which publishes a medical industry newsletter. “I don’t think anyone is making money at this moment.”

However, that slow demand will “change very drastically because more and more people are now aware of diseases transmitted by the blood supply,” Datnow said. “It’s been driven by the scare of AIDS, but we’re only seeing the tip of the iceberg right now. It’s going to get much, much worse.”

AIDS was not the motivating force that pushed Norman Jerome, president of San Diego-based Home-Med Services, to create an American Blood Service subsidiary that soon will open its first autologous blood storage bank.

Donations on Rise

Rather, doctors and hospital administrators have pressed Jerome to add autologous blood banking to his company’s home health-care services. Most industry experts believe that autologous blood banking can help cut the costs--and risks--of blood transfusions, according to Jerome, who anticipates that his company’s blood banks generally will work in conjunction with existing community blood banks.

Autologous donations are on the rise. During 1986, the Arlington, Va.-based Assn. of Blood Banks collected about 125,000 units of autologous blood compared to about 7 million units of homologous blood. Just two years earlier, only 45,000 autologous units were drawn. Blood experts believe that autologous blood accounts for about 1% of all blood transfusions.

However, the association’s member banks and hospitals, which draw half of the nation’s blood supply and transfuse nearly 90% of all blood, store about 99% of autologous blood in liquid form.

Community blood banks, including the San Diego Blood Bank, don’t “encourage the storage of blood from people who don’t expect that they’ll be needing to use it,” according to a spokeswoman.

The for-profit banks respond that established blood banks view the growth of frozen autologous blood banks as unwanted competition.

Looking for Answers

“When the market, be it oil or anything else, is controlled by a monopoly, there is a tendency to become somewhat inefficient with resources and somewhat inelastic to the public,” said Mark Davis, chief executive of Bethesda, Md.-based My-Cell Personal Blood Bank and acting chairman of the newly formed Assn. of Personal Blood Services.

Davis maintained that consumers, not traditional blood banks, “are the best place to get an answer” as to whether there is a demand for frozen autologous blood banking.

Consumers “don’t want to be told that they can’t have their own blood, especially if it’s the safest thing out there,” said Davis. “The one implication inherent in our business is (that), if autologous blood is the safest blood available, then what the hell do (community blood banks) have to offer?”

Thomas M. Asher, chairman of Sherman Oaks-based HemaCare, which generated less than 1% of its $1.5 million in 1986 revenue from autologous blood banking, characterized the feud as “a religious war, because (community blood banks) view their business as a religion and we’re an attack on their theology.”

Territorial Disputes

“Blood banks have been fighting territorial disputes for the past 40 years,” said Erenton Hanlon, president and founder of Health Assurance Corp., a privately owned company that operates four autologous centers in the San Francisco area. “There’s nothing different about (for-profit operators) except for the fact that we wear three-piece suits.”

Your Blood, a recently formed, privately held company based in Scottsdale, Ariz., is one of the few commercial banks that has formed an alliance with a local community blood bank.

Your Blood conducts its own advertising and marketing, but it has contracted with United Blood Services, the nation’s second-largest not-for-profit blood bank, to draw and freeze autologous donations.

United Blood Services, which provides homologous blood banking in Arizona and much of the western United States, views frozen, autologous blood banking as a complement to its traditional role as a community blood bank, spokesman Bob Houston said.

“We believe our donors will continue to donate for pure, altruistic, humanitarian reasons,” Houston said.

Your Blood, which has stored 70 units of blood during its first four months of operation, refrains from attacking the safety of United Blood Services’ homologous blood supply.

“My advertising does not talk about AIDS,” said Jack Marinick, president of Your Blood. The company instead promotes the fact that “frozen blood is just as good as the day it’s drawn. There’s no toxic reaction, there’s no transmission of disease and there’s no incompatibility problems.”

Patient Developed Hepatitis

Simon Fredricks, a Houston plastic surgeon who helped to form Merus, turned to autologous donations 10 years ago after a patient developed hepatitis from a blood transfusion administered during elective surgery.

“The hepatitis was so severe that the quality of her life was dramatically reduced,” said Fredricks, who now requires patients to store their own blood if the need for a transfusion appears likely.

Fredricks also argues that doctors who don’t advise patients to make autologous blood donations are unwittingly guilty of “prima facie malpractice.”

Companies generally charge an annual fee of $100 or more to store frozen blood.

It can cost more than $500,000 to outfit a laboratory and install the high-tech freezer system that are required to draw and store blood safely, said Dennis Goldfinger, a blood pathologist with Cedars-Sinai Medical Center, who added that “a lot of under-capitalized companies could be trying to get into this business.”

“You’re going to have to store tens of thousands of units of blood to make it profitable,” Goldfinger said. “It’s considerably more expensive and more difficult than many of these people recognize.”

Additionally, insurance companies that pay for whole blood used in transfusions generally won’t cover the added cost of freezing autologous blood. However, Goldfinger and others are compiling data needed to persuade insurance companies that autologous blood banking can trim medical bills by reducing hospital stays caused by complications that develop from transfusions.

Stored Blood Good for Years

Technology exists to store blood for long periods of time.

The U.S. Navy, which has been experimenting with frozen blood for 25 years, has asked the U.S. Food and Drug Administration for permission to use blood that has been stored for as long as 21 years. The Navy also maintains homologous frozen blood banks at its hospital complex in San Diego and on various ships scattered throughout the world.

(According to FDA regulations, blood that crosses state lines can be frozen for three years; blood that doesn’t cross state lines generally can be frozen for as long as seven years. Blood stored in liquid form remains usable for just over a month.)

Interest in autologous blood banking is on the rise. Would-be for-profit blood bank operators from the United States, Europe, Australia and Japan recently have toured the Navy’s blood research laboratory in Boston that long has been considered the nation’s state-of-the-art facility.

“I personally believe that in five years (autologous blood banking) will be the only way that a sensible person will have blood drawn,” said Marinick, a former aerospace industry executive who hopes to open a frozen, autologous bank in Southern California during the next few months.

Datnow acknowledged that stored blood will not be available in some emergencies, even though the company hopes to develop a foolproof method that will alert emergency room personnel to the fact that stored blood is available.

Datnow also dismissed another complaint made by traditional blood bankers: That frozen blood will be wasted if it is not used during its three- or seven-year lifetime.

“What happens (after the regulatory deadline) may or may not be of consequence,” he said, “because a person’s prime concern is: Will the blood be there for me if I need it?”