THE BLOOD BROKERS; Second in a series.


Gilbert M. Gaul, Inquirer Staff Writer, PHILADELPHIA INQUIRER; Monday September 25, 1989

Also visit The Blood Brokers:
Part 1 - How Blood, The 'Gift of Life,' Became a Billion Dollar Business
Part 3 - Fear of AIDS Spurs Change
Part 4 - Red Cross: From Disaster Relief to Blood
Part 5 - America: The OPEC of The Global Plasma Industry



For at least a year, people who had tested positive for the deadly AIDS virus were allowed to walk the streets of Philadelphia without knowing it.


In March, The Inquirer asked the Food and Drug Administration for information about what the American Red Cross was doing to correct safety problems in its blood program.

The written request, filed under the Freedom of Information Act, sought copies of records turned over to the FDA by the Red Cross as part of an agreement the two signed in September 1988, after the Red Cross recalled more than 2,000 blood products that had been improperly released.

FDA officials denied The Inquirer's request two months later, saying some of the records were still being reviewed and others contained "confidential commercial information."

They did not say the FDA had turned over the newspaper's request to the Red Cross for review.

In May, The Inquirer obtained a copy of a facsimile showing that the FDA had sent the written request to Karen Lipton, an attorney in the Red Cross general counsel's office.

Asked about the facsimile, William Stevens, an FDA official who handled the request, replied, "You weren't supposed to see that."

"I discussed what I could and couldn't release . . . with Karen Lipton," Stevens said. "Everything they (the Red Cross) send us is confidential and I can't release anything without first clearing it with her."

Under federal law, a company may be given an opportunity to object to the release of what it contends is competitively sensitive information - but the decision rests with the federal agency. The FDA says it did not have to notify The Inquirer of its discussions with the Red Cross because it decided not to release the records.

An appeal of the FDA's decision was turned down this month by the U. S. Department of Health and Human Services, of which the FDA is an agency.

There have been other contacts between FDA and Red Cross officials about the newspaper's Freedom of Information Act request. One record of an April 4, 1989, conversation between the FDA's Stevens and Dr. Gerald Sandler, medical director of the Red Cross blood program, reads:

"I (Stevens) explained that . . . it was decided the documents were either still under review; a voluntary submission not req'd. by regs, or pending licensing actions and were therefore non-disclosable. However, we thought that a way of demonstrating that both FDA & ARC were proceeding in good faith . . . would be to provide the cover letters which accompanied the submissions. Dr. (Sandler) said that sounded OK but he would like to examine these cover letters before giving ARC's permission. . . . I said OK . . . "

The Red Cross submitted three cover letters with the documents it was required to give the FDA in 1988; those letters, but not the data, were provided to The Inquirer.

An April 6 memo summarizing a conversation between Stevens and Lipton notes: "We briefly discussed (the reporter) and his numerous FOI requests and news articles. She (Lipton) agreed that providing (three brief letters written by the Red Cross) seemed like the best way to proceed in this case. I did reassure her that this office would be preparing a denial recommendation for the remainder" of The Inquirer's request.

"I thanked her for her call and we agreed to stay in contact," the memo concludes.


When an FDA agent inspected the Red Cross' Philadelphia blood center in May of last year, he uncovered several deviations from federal safety standards.

But none of them involved the kind of life-threatening errors that have been reported in the last 18 months at many other blood banks around the country.

The Philadelphia center, Penn-Jersey Regional Blood Services, was not among the centers that had to recall blood, government records show.

"I'm not trying to promote ourselves as a squeaky-clean blood center," said Dr. William C. Sherwood, 56, who has been Penn-Jersey's director since 1978. "We will continue to have errors. Hopefully, they will only be benign."

In lawsuits, at least five patients contend that they contracted the AIDS virus from blood provided by Penn-Jersey before testing for AIDS began in 1985, federal and municipal court records show.

"I can tell you it's not many more (lawsuits) than that," Sherwood said. He declined, however, to identify the precise number. "Our attorney doesn't want me to say anything."

"I can't say we could acknowledge that the blood we provided caused AIDS," he said. "I can say we know that blood has had the risk of causing AIDS in recipients and that risk was much higher prior to the initiation of testing."

Sherwood said that in at least one case, the Red Cross is convinced that AIDS did not result from the blood transfusion. He declined to say whether any AIDS cases have been reported since testing began.

FDA inspection reports in 1988 and 1989 indicate that the safety-related problems at Penn-Jersey have involved written protocols for its computer system, donor records and the handling of the cases of two donors whose blood initially tested positive for AIDS but later proved to be safe.

A May 1988 FDA inspection found that workers in one laboratory were "routinely" using opaque correction fluid to make changes on donor records. "We don't like to see that in a laboratory at all," Sherwood told the inspector, according to a copy of the report.

A year later, the FDA cited Penn-Jersey for failing to follow proper procedures in the cases of two donors who initially tested positive for AIDS. "Both donors continued to be accepted as donors after the date (1986) and . . . gave blood in 1987 and 1988," FDA records show.

Penn-Jersey officials uncovered the problem in 1988 and reported it to the regional office of the FDA. The federal agency cited Penn-Jersey in May for failing to re-enter the names of the two donors in the proper category of its computerized system for ensuring that only safe persons donate blood. By that time, the donors had proved safe.

Penn-Jersey, at 23d and Chestnut Streets in Philadelphia, is the second-largest of the Red Cross' 56 blood centers nationwide, with annual collections in excess of 350,000 pints and revenues of more than $30 million. Only the Los Angeles center is larger.

It provides blood to 93 hospitals in 13 counties, from Montgomery County in the west to Cape May County in the east.

In 1988, Penn-Jersey charged hospitals $46.80 a pint for red blood cells - 15th highest among Red Cross's 56 blood banks - and posted a profit of $410,366 (the Red Cross calls it "excesses over expenses"). The blood center has since raised its charge for red cells to $53.40 a pint. Sherwood said the increase was to cover the cost of additional tests and expenses in general.

Like many blood banks in large cities, Penn-Jersey has been unable to collect enough blood locally to meet the needs of area hospitals. To make up its shortages, the blood center has regularly bought blood from other centers, including non-Red Cross blood banks.

Between 1983 and 1987, Penn-Jersey bought an average of 42,106 pints of blood annually - about 12 percent of its supply. In 1987, with revenues of $28 million, the center ran a deficit of $1 million. Part of that loss came as a result of the center's paying $2.2 million for 41,290 pints bought from other blood banks. Last year, the center cut back these outside purchases.

"We've always known that importing (blood) costs us more than providing the units ourselves," said Robert B. Benninger, Penn-Jersey's associate administrator.

This summer, Penn-Jersey contracted to buy about 150 pints a week from the Gulf Coast Regional Blood Center in Houston. The contract ran through Labor Day.

In interviews, Sherwood praised Penn-Jersey workers for improving collections recently and offered several reasons why the region still isn't self-sufficient:

* Hospitals in Philadelphia perform more surgery and use more blood than most other areas.

* The decline of large manufacturing plants in the region has forced the blood center more and more to collect blood from smaller businesses and service organizations.

"We are like a lot of other metropolitan locations. . . . It isn't always easy to collect as much blood as we would like. We try, but we're not perfect because we haven't managed it perfectly and obviously we have a problem," Sherwood said.

More than 90 percent of the blood collected by Penn-Jersey is done through the use of bloodmobiles - vans that go to companies, schools and military sites to collect blood and then return to the Red Cross' processing facility in Philadelphia.

Penn-Jersey also operates four permanent collection sites, in Philadelphia, West Chester, Cherry Hill and Pleasantville, N. J. It does not have a collection site in North or West Philadelphia, where large numbers of minorities live.

Sherwood said collection sites were located "where they will be most effective." He added that bloodmobiles travel regularly to areas where minorities live.

Local hospital blood-bank directors seem well-satisfied with Penn-Jersey's performance. "I think Bill Sherwood has done a good job. Under him, Penn-Jersey, I think, has improved greatly over the years," said Dr. Richard S. Eisenstaedt of Temple University Hospital.

Until recently, Penn-Jersey relied on three principal strategies for covering shortages: purchases from other blood banks, emergency appeals for blood made through the local media and special blood drives on Saturdays following holidays.

This summer, for the first time in years, Penn-Jersey officials purchased $20,000 worth of advertising to promote donations during vacation months and holidays, when collections traditionally fall off. The blood center also has begun to offer its telephone recruiters small bonuses for increasing collections.

The result: Donations in July surpassed those by the Red Cross' Los Angeles blood bank, and Penn-Jersey was not forced to make an emergency appeal following the Labor Day holiday.

PHOTO (1), 1. Dr. William C. Sherwood; Director of the local Red Cross blood center, CHART (1), 1. Blood bought by Penn-Jersey to cover shortages (SOURCE: Penn-Jersey Regional Blood Services; The Philadelphia Inquirer)

They had sold their blood plasma to the Community Blood and Plasma

Center at 1201 Race St., a commercial facility that collects plasma for a manufacturer of plasma medicines based in Vienna, Austria.

The center tested the blood for the AIDS virus and until 1987 notified in writing anyone who tested positive, according to a company executive. But that year, the center stopped mailing these notifications after a city-funded AIDS group objected to the way it was being done.

Eugene A. Timm, head of U. S. operations for the Austrian manufacturer, Immuno AG, said the center "bowed to the request from the local (city) health office not to send out such letters."

"We never suggested that they stop informing donors, only that they do so in a humane and compassionate way," said Dr. Louis van de Beek, medical director of Philadelphia's AIDS Activities Coordinating Office. "This is a terribly unfortunate choice they made. A choice of tremendous health consequences."

It was also a choice the center could make because there is no federal regulation requiring blood banks to notify donors who test positive for AIDS.

The Food and Drug Administration, the federal agency responsible for the safety of the American blood supply, recommends notifying donors but leaves the decision up to the blood banks and plasma centers.

That kind of hands-off attitude is not uncommon at the FDA. When Timm informed the agency in May 1988 that the Race Street center had resumed mailing AIDS test results, FDA officials accepted his word for it. An inspector did not return to the plasma center to verify the statement until half a year later.

Even that was an improvement, though: The FDA did not inspect the center at all between May 1986 and April 1988.

What was discovered at the Philadelphia plasma center is typical of the loose government supervision under which the blood industry operates. A yearlong Inquirer investigation found time and again that, even in matters of safety, government regulators have dragged their feet or turned over important decisions to the blood industry.

Item. The FDA did not require an AIDS test on donated blood until Jan. 5, 1988, almost three years after the first test for detecting AIDS antibodies in blood came into use in March 1985. In the interim, the FDA recommended its use. But some blood banks delayed using it and others did not test thousands of pints of blood already in their inventories.

Item. The FDA is only now developing proposed quality assurance standards for the required tests for AIDS, more than four years after the tests were put into use. Even so, the proposed standards fail to cover four tests now used by blood banks, including one used to confirm that a person has AIDS.

Item. The FDA's workforce was cut sharply during the early 1980s, at precisely the time AIDS was threatening the blood supply. Inspections of blood-collection facilities were reduced in 1983 from once a year to once every two years (annual inspections have since been restored). In Pennsylvania, large dog kennels are inspected three times a year.

Item. The FDA now has 900 inspectors to keep track of 2,424 blood banks and plasma centers. By comparison, the U. S. Agriculture Department has 7,200 agents conducting on-site inspections of the nation's 6,300 meat and poultry plants.

Item. The FDA is a paper tiger. It has no authority to fine blood banks that violate federal safety standards. And while it can suspend or revoke operating licenses, in the last four years the FDA has imposed those sanctions only 33 times - an average of eight times a year.

Item. Many FDA inspectors are ill-trained to detect problems in computerized, high-tech facilities. Some inspectors still have not been trained to interpret results of AIDS tests, four years after blood banks started using them.

Item. The FDA has relied heavily on the blood industry in setting safety standards. In 1984, the agency rejected use of a test that some experts said could have identified nearly 90 percent of the blood donors at high risk for AIDS. The agency based its decision on recommendations from two industry-dominated advisory groups.

Item. Critics say there is a revolving door between the FDA and the blood industry. Regulators leave the agency and go to work for blood banks, plasma manufacturers and trade groups. Once there, they can use their access to influence government policy decisions and protect their new interests, critics say.

"The FDA has over-relied on the blood bankers to set the minimum standards it has, and that has resulted in a trade-off between the health interests of consumers and the interests of the blood banks," said Ross D. Eckert, a professor at Claremont McKenna College in California and a member of an FDA advisory panel on blood.


Those health interests are increasingly at risk. A growing number of potentially life-threatening errors has been occurring within blood banks and commercial plasma centers.

The plasma facilities collect and process blood plasma into a number of finished products, such as Factor VIII blood-clotting concentrate and hepatitis vaccines. In addition, nonprofit blood banks collect whole blood and separate it into its various components - red blood cells, platelets and plasma.

Between 1987 and 1988, the number of recalls of suspect blood products more than tripled - to 101 recalls.

Thousands of pages of blood-bank inspection reports, FDA documents and confidential industry records obtained by The Inquirer depict an industry bordering on overload as it tries to collect, test and track more than 20 million blood products a year.

The records show that centers have released blood products that repeatedly failed tests for AIDS and hepatitis, have failed to follow their own requirements for testing and handling blood, and have relied on poorly designed computer systems that failed to meet federal standards.

In the last two years:

* In Los Angeles, a Red Cross blood center recalled 1,400 suspect blood products following what FDA investigators called a "systemic failure" to follow safe testing procedures.

* In Columbus, Ohio, a Red Cross blood center recalled 376 blood products that had been shipped to New York, Georgia, Florida and Switzerland. The suspect blood was distributed even though it had repeatedly tested reactive for the AIDS virus or had come from donors who had previously tested positive for AIDS.

* In Tyler, Texas, the W. E. & Lela I. Stewart Blood Center recalled 315 suspect blood components that repeatedly tested positive for hepatitis but were nonetheless labeled safe and distributed throughout Texas and Florida.

* In Charlotte, N. C., a Red Cross blood center recalled 1,617 blood products that tested positive for AIDS or hepatitis but had been distributed anyway. The blood center also failed to enter the names of suspect donors into a special computer registry of dangerous donors.

* In New York City, the New York Blood Center recalled nearly 12,000 vials of Factor VIII blood-clotting concentrate and other blood plasma products after they were manufactured from hepatitis-contaminated blood.

* And in Lincoln, Neb., the operating license of the Community Blood Bank was suspended in July for "numerous deviations" from federal safety standards, including release of blood "unsuitable for distribution" and failure to monitor "the reliability, accuracy, precision and performance of test procedures."

Industry officials point out that, to date, no one is known to have contracted AIDS from the suspect blood products released as a result of these errors.

Yet "the fact is there were a lot of units of blood that got out that shouldn't have," FDA official P. Ann Hoppe told a gathering of more than 200 blood-industry managers in San Francisco in April.


As a result of the growing number of errors, FDA Commissioner Frank E. Young announced in March 1988 that his agents would begin inspecting blood banks every year.

"Seeing a problem in an area we were concerned, I said, 'Wait a minute. We're not going to do an inspection every two years. That's inadequate. I want a profile . . . of all blood banks in a single year,' " Young said in an interview with an Inquirer reporter last fall.

He gave a similar explanation at a Senate hearing on April 21, 1988: "I do believe the blood supply is safe as it can be at this time. I would, however, like to be sure that a safe blood supply is made even safer by reducing human errors and making sure that the laboratory tests are done in a correct fashion under visual inspection of an inspector."

What Young did not say on either occasion was that until July 1983, it had been FDA policy to inspect blood banks at least once a year.

That policy was scrapped as part of the Reagan administration's sweeping deregulation efforts of the early 1980s - with the blessing of the blood industry and with Young's own tacit approval.

That information is buried among thousands of pages of government announcements of forthcoming hearings and changes in federal rules published daily in the Federal Register. On July 30, 1982, FDA officials published a proposed rule change to cut back blood-bank inspections from "at least once every year to at least once every two years."

"This action will provide flexibility for the agency to reduce the inspection burden on a specific portion of the regulated industry," the announcement in the Federal Register said.

The blood industry supported the cutback, which took effect July 7, 1983. "The American Red Cross Blood Services supports the proposed rule . . . which would reduce the frequency of inspections," wrote Dr. Joseph P. O'Malley of the Red Cross.

Anyone who was not aware of the change could easily be left with the impression that the FDA was embarking on a tough new regulatory path in March 1988 - when, in fact, it was merely returning to an inspection schedule it had followed until July 1983.

Young acknowledged in the interview that had there been more frequent inspections, the problems in blood banks would have been detected sooner.

"What we're really doing is ferreting out problems that were probably there for some time," he said. "I'm not sure what 'some time' was."

Government records show that after inspections were cut in half in 1983, the number of recalls dropped for three years, then increased sharply in 1986, the year after testing for AIDS began.

The records also show that testing errors were occurring in blood banks and plasma centers even before testing for AIDS began in 1985. Those errors involved the release of products that repeatedly tested positive for hepatitis.

The government's slowness in responding to the AIDS threat to the blood supply is evident from a review of events:

At a July 1982 conference in Washington, it was disclosed that three hemophiliacs had contracted AIDS and dozens of other hemophiliacs had symptoms of the deadly disease that destroys the body's immune system. The hemophiliacs had no apparent risk factors except that they used large amounts of Factor VIII, the clotting concentrate made from plasma.

By December of that year, the number of infected hemophiliacs had risen to seven and the first case had been reported of a person - a 20-month-old infant - apparently contracting AIDS through a transfusion.

Less than a year later, the number of transfusion-associated cases of AIDS had risen to 31 and the number of infected hemophiliacs had reached 19.

Yet in June 1983, the FDA announced it was cutting the frequency of its blood-bank inspections.

By then, it had become evident that AIDS could be transmitted through blood transfusion or by using medicines made from plasma.

"By 1983, everything epidemiologically was pointing to a contagious agent that was probably blood-borne," said Dr. Bruce Evatt of the federal Centers for Disease Control and an expert on blood diseases.

Yet it would be five more years before the FDA required any testing of blood for the AIDS virus. By then, 60 percent of America's 20,000 hemophiliacs - 12,000 people - had been infected through contaminated blood-clotting medicine.

And as of July 31 of this year, 1,044 adults and children with hemophilia had developed the full-blown disease from clotting factor. In addition, 2,668 people had contracted AIDS from transfusions of tainted blood, according to the Centers for Disease Control.

Young provided several explanations for why the agency didn't move sooner. He said he moved quickly when he saw the number of errors committed by blood banks double between 1987 and 1988. "At that point, I said to myself . . . that it could not be business as usual."

In fact, the number of errors had been increasing for some time, government documents show. In 1985, there were 21 recalls by blood centers. In 1986, there were 51 - an increase of 143 percent.

Young also said the agency was forced to adopt a crisis-management style due to its limited cadre of inspectors and overall cutbacks at the agency dating to the Carter administration.

"We can't work with smoke and mirrors," Young said. "We've got an agency here that is responsible for $570 billion worth of industry a year - 25 cents on every dollar that is spent in the U. S."

The FDA, in addition to monitoring the blood supply, is responsible for assuring the safety of prescription drugs, imported fish and produce, medical devices, vaccines and cosmetics.

Young said that when a crisis develops in one area, he "shifts the agency's resources toward that problem. What we are constantly doing is moving resources around. But we only have (900) inspectors."

As a result of this strategy, the FDA is forced sometimes to disregard problems, Young said. For example, the agency stopped all inspections of medical-manufacturing facilities in Texas between 1986 and 1988 in order to examine problems in blood banks in that state, Young said.

And in March of this year, the FDA poured unprecedented resources into pinpointing two cyanide-laced grapes that were among 364,000 boxes of Chilean red seedless grapes unloaded at the port of Philadelphia. FDA inspectors found those two grapes in less than 48 hours.

When Ronald Reagan became president in January 1981, the FDA had 7,799 full-time employees. By 1987, the agency's workforce had been cut nearly 11 percent, to 6,963 full-time employees, government records show.

Figures were not available for inspectors. However, Young said that the agency corps of inspectors was "downsized" 22 percent between 1977 and 1984 and that the FDA was unable to hire needed specialists due to the overall cutbacks.

At present, the FDA has just six computer experts nationwide who can be called on when the agency uncovers an industry problem linked to computers. Most FDA inspectors are considered "generalists" and are responsible for many different industries.

Most generalists go through a one-week training course in blood banks. During training they are taught how to use a checklist when they inspect a blood bank or plasma center. About 2 1/2 hours of training are spent on what to look for when blood banks are computerized.

"It's not a lot. I admit that. But we give them a checklist for them to follow," said Mary Ann Tourault, a top FDA consumer-safety officer. "We haven't quite gotten there, but we're pedaling as fast as we can."

Tourault said FDA officials recently began going into the field to train inspectors how to interpret tests for AIDS - four years after blood banks started using the test.

"I did have a job before AIDS," Tourault said. "I don't know what it is anymore. We're trying to keep up with everything and get it out into the field as soon as we can. It's been a very, very difficult job. We're drowning."

Young supported the use of generalists as inspectors. "I would strongly defend that an inspector of a blood bank should be a generalist. And there is a lack of understanding on the part of some blood-bank people as to what to anticipate in this. If they are expecting the level of a resident of hematology to walk in there, that's not going to happen at all.


Some experts say the country would benefit from a single national clearinghouse through which blood banks could move blood.

Centers experiencing chronic shortages could arrange for long-term contracts. Centers with inventories could sign up to sell that blood. And it would be overseen by government regulators, who would monitor distribution and price.

Blood would truly become a "national resource."

Three separate attempts to form such a system since the mid-1970s have failed - primarily because blood bankers were unwilling to relinquish control. The government, for its part, failed to impose a national system for exchanges, citing a lack of consensus in the industry.

So instead, today there are four separate blood exchanges - run by the American Red Cross, the American Association of Blood Banks, Blood Centers of America Inc. and United Blood Services Inc. Scores of other blood banks buy and sell blood, sometimes by word of mouth.

The American Association of Blood Banks charges 55 cents for each unit of blood that moves through its exchange. Red Cross officials declined to say how much they charge. However, one blood center administrator said clearinghouse charges increased the price of blood he buys from the Red Cross by $7 a pint.

In 1987, the American Association of Blood Banks reported that its clearinghouse handled 168,195 pints of blood. The Red Cross said 474,000 pints moved through its system. The other two organizations handled a total of at least 50,000 pints. It is not known how much was traded on the spot market - but it was clearly tens of thousands of pints.

"A lot of blood moves outside the blood exchange," said Barbara Young, director of the American Association of Blood Banks' clearinghouse. "We don't like it. But that's just being proprietary."

Debate continues about the need for a national exchange.

"I don't think it makes any difference," said Gilbert Clark, president of the American Association of Blood Banks. "Blood is being shared resourcefully. I don't think the public is being disserved."

James L. MacPherson, executive director of the Council of Community Blood Centers in Washington, disagreed. "The informal system we have today is probably stretched to its limit," he said. "There is no national resource-sharing, no entity out there promoting a concept of a national community."

"To me, it's a crying shame that we have so much costly duplication," said Hayle B. Randolph, president of Blood Systems Inc., a nonprofit blood collector in Arizona that runs its own exchange.

What would it take to get a national system?

"A crisis in the blood supply," MacPherson said.

In fact, there has been a crisis: AIDS. But instead of promoting a national system, blood banks continue their rivalries.

"Would we like to have more people who are trained in laboratory medicine who could do inspections? Absolutely. We're moving more and more to specialists."

FDA officials are currently preparing what they call a "unified memo" on AIDS that will consolidate all the agency's previous recommendations. Among them is a new recommendation that blood banks and plasma centers notify donors who test positive for AIDS.

The notification recommendation comes more than four years after the blood industry began to test donors for the disease.

"That's true. We are adding it in the informed consent. You should be told when you give blood now and test positive," said Joel Solomon, who became director of the FDA's Division of Blood and Blood Products in 1988.

"I don't know why it wasn't done before. I wasn't here then. What happened before I can't speak to," Solomon said.

But the recommendation is just that. It will not carry the force of law, as a regulation does. If a blood bank or plasma center chooses to ignore it, it can do so with immunity.

In May 1986, an FDA agent spent three days inspecting the Community Blood and Plasma Center on Race Street. According to a report the inspector later prepared, he found several deficiencies, none of which appeared to be life-threatening.

They were serious enough, however, that a report was written and given to officials at the center pointing out what needed to be corrected.

An inspector did not return to the facility until two years later, on April 5, 1988. That was when FDA investigator Richard E. Harrison found that donors with positive test results for AIDS were not being notified, as required by the center's own standard operating procedures.

"The SOP calls for letter notification to all donors found reactive," Harrison's report notes. "I found that this facility has not sent notification letters to such HIV (Human Immuno-deficiency Virus, the AIDS virus) positive donors . . . since as far back as 5/21/87."

Documents describing the inspection do not indicate how many plasma donors tested positive for AIDS in the period examined by Harrison. A company official said it was "only a few." However, during the three days Harrison spent at the center, he reported seeing at least two such blood donations being destroyed by workers.

During a discussion with the FDA agent following his inspection, center officials conceded they "should have been sending out the letters as required," according to Harrison's report.

"I pointed out . . . that waiting for all donors to come in and then notifying them was not the best way to do it as, given the inconsistent attendance of donors and the high dropout rate, some positive HIV test donors might not come in again for a long while or even ever again and would thus remain uninformed," Harrison's report says.

The Race Street center is one of 16 that collect plasma from paid donors for Immuno-US Inc., a subsidiary of Immuno AG, a large, for-profit plasma manufacturer in Vienna.

On April 25, 1988, FDA officials asked a representative of Immuno-US what the company was doing to correct the problem at its Race Street operation.

On May 6, the company's president, Eugene A. Timm, responded: "Letters are now being mailed after verification of lab results."

In explaining why the center stopped mailing notices, Timm wrote, "This is because our local center management bowed to the request from the local Health Office not to send out such letters."

Richard Dice, executive director of Community Blood and Plasma Inc., said in an interview earlier this year that the Race Street center was contacted by an official from the Philadelphia Health Department "in mid-1985. My recall is the Health Department called us and frankly told us not to report positive test results to the donors. I thought it was some doctor with the Health Department. I can't recall his name."

Former and current administrators at the city Health Department could not recall contacting the plasma center in 1985. However, Dr. van de Beek, director of the city's AIDS Activities Coordinating Office, said a representative of his office did contact the plasma center in 1987.


Dr. van de Beek said at least one donor who had received a letter from the plasma center and "was considering suicide" turned out, after additional testing, not to have AIDS.

"It became apparent to us there was an incredible threat to the health of individuals receiving information in this fashion," he said.

"We basically told them (plasma center officials) that there was a much more compassionate way to do this. What these people really need at a time like this is a hug. They need medical care. This is not something you learn about by mail," van de Beek said.

He also insisted his group did not tell the plasma collection center to stop notifying donors by letter - only that it be done after proper testing and that those who tested positive for AIDS should be brought in for counseling.

"That (the decision to stop sending letters) is the first I've heard of that," van de Beek said. "(With proper notification) those individuals who are infected could get life-saving therapies and get information that could save the lives of other people."

FDA officials, meanwhile, accepted Timm's April 1988 explanation that letters were again being sent to donors testing positive for AIDS and filed it away.

"We have placed this material in this facility's file and its contents will be verified at the time of the next inspection," a compliance officer informed Timm in a letter dated May 17, 1988.

And while a subsequent inspection found that letters were indeed being mailed, the inspection did not take place until November 1988 - six months later.

The FDA has never told blood banks and plasma centers that they must inform donors who test positive for AIDS. In October 1985, the U. S. Public Health Service recommended notifying donors and referring them to doctors for an evaluation. But these recommendations were never made into law.


The FDA has been slow to formulate requirements covering the use of computers by blood banks - in part, due to its own lack of expertise - or to develop proficiency standards covering tests used for AIDS and hepatitis.

While blood banks have used computers for years, it was not until this month that specific FDA requirements governing computers were issued. They mandate that blood banks must be able to show that their systems perform consistently and accurately. And while the agency has drawn up a proposed rule requiring blood banks to have independent outside auditors review the accuracy of their testing, a top FDA official conceded she "didn't know what we will do if someone fails the program."

The FDA recently provided an answer. Officials announced in June that they "would work closely" with any blood center that fails the testing program "to improve the quality of its performance."

In March, the FDA published a notice in the Federal Register indicating that its inspectors would not even ask to see "reports of any internal audits conducted by an (outside) firm to determine compliance with its own quality assurance program when the quality assurance program is required by regulation."

"FDA will not review or copy reports and records that result from audits and inspections of a written quality assurance program," the agency said in a June notice in the Federal Register clarifying its position.

In other words, an independent audit might find potentially dangerous problems in a blood bank. But unless the FDA knew about the problems beforehand, agency officials would not ask to see the audit records.

That approach reflects the extraordinary trust the agency places in the industry's willingness to regulate itself.

Indeed, the FDA often relies on the industry for advice.

The close relationship between the agency and the industry is reflected in many of the actions taken by the FDA's Blood Products Advisory Committee.

Formed in 1980, the committee's charter calls for it to advise the "commissioner in discharging his responsibilities as they relate to assuring safe and effective biological products and related medical devices."

Until recently, committee members were almost exclusively blood-bank officials and medical researchers. As of May, 10 of the committee's 11 voting members came from the blood industry or were physicians and/or researchers. The chairwoman, Dr. Louise J. Keating, is the director of the Red Cross blood bank in Cleveland.

The committee includes a consumer representative and an official from the commercial plasma industry, but neither is allowed to vote.

"Even today, it remains what I call an Old Boys' Club," complained Thomas Asher, chairman of a California company that sells specialized blood products. "It's insular to a fault and it's very protective of its own self-interests."

In its June 1988 final report, the Presidential Commission on AIDS warned against this close government-industry relationship, saying it fostered "a relationship that presents a significant opportunity for conflicts of interest."

In April 1988, Eckert, the Claremont McKenna College economist, was appointed to the committee. "Clearly, there hasn't been enough diversity," he said in an interview. "My appointment is a step in the right direction, but there needs to be a lot more done."

While the committee's charter directs it to offer advice, in practice it does much more. It helps shape policies affecting the collection, distribution and testing of blood. Moreover, a review of more than a dozen hearings since 1982 shows that its recommendations are rarely rejected by FDA officials.

For instance, the FDA turned to the committee in 1983, when it was trying to decide whether blood banks should be required to use a test for identifying high-risk donors for AIDS.

Studies at the Centers for Disease Control, made public at a widely attended meeting in Atlanta in January 1983, had showed that nearly 90 percent of AIDS patients and others considered at risk of developing AIDS had antibodies in their blood indicating a history of hepatitis. Thus, CDC officials reasoned, in the absence of a specific test for AIDS, a test for hepatitis - known as the hepatitis B-core antibody test - could be used to identify those at high risk for AIDS.

In other words, by using a laboratory test that detects the hepatitis B-core antibodies, blood banks and plasma centers could identify and exclude blood donors who also were at risk of having or developing AIDS.

"To some of us (at CDC), what should have been done was relatively clear," Evatt said. "We were recommending using the test."

While CDC officials could recommend it, they did not have the regulatory power to require the test. That authority belonged to the FDA. And there, officials turned to the industry for direction.

In December 1983, the Blood Products Advisory Committee met on the campus of the National Institutes of Health near Washington to debate the issue. During the long and sometimes heated session, it became apparent that even though the antibody test could identify donors at high risk for AIDS, not to mention hepatitis, many representatives from the blood industry objected to its use.

Because it was not a specific test for AIDS, they argued, its use would result in the exclusion of some safe donors and of many homosexual donors who had a history of hepatitis but not of AIDS. It was argued that in cities that depended heavily on gay blood donors, such as San Francisco and New York, use of the test could seriously reduce local supplies.

Another argument was that it would be too costly. In addition to an estimated $3 for the test itself, there would be added expenses to recruit new replacement donors, several blood-bank officials said.

Near the end of the meeting, Michael Rodell, a representative of the plasma industry, suggested that a task force be formed to further study using the antibody test. The advisory committee unanimously agreed with the suggestion, a transcript of the December hearing says.

It is notable that, at a meeting the evening before the Dec. 15 meeting, the plasma manufacturers decided to request that a task force be formed.

According to a memorandum prepared a few days later by an official of Cutter Biologicals Inc., the largest U.S.-based plasma manufacturer: "This proposal was one that had been agreed upon by all the fractionators (plasma manufacturers) the previous evening. The general thrust of the task force is to provide a delaying tactic. It was generally agreed that core testing would eventually become a requirement."

"I never heard of that (meeting)," said Dr. Dennis Donahue, who was director of the FDA's Division of Blood and Blood Products from 1980 to 1986 and played a key role in many of the agency's decisions.

Donahue was one of two non-industry members of the task force that was formed to study the hepatitis B-core antibody test. Six of the other nine members were from the plasma industry and three were from blood banks.

In May 1984, the task force issued its findings, saying it could not reach a consensus. Citing many of the same arguments made five months earlier, a majority of the task force opposed requiring the test. Three members, including Donahue, favored requiring it.

The minority position paper drafted by Donahue's group noted that AIDS cases were doubling every six months and that voluntary steps to exclude high-risk donors were not working in all cases.

"In the absence of a test for the presence of the causative agent of AIDS, the only means of reversing this trend is to more effectively identify plasma donors who are members of high-risk groups," the position paper argued.

Donahue said recently that while he believed his approach was logical, "The fact of the matter is, there are two sides to every argument."

The FDA accepted the view of the industry-dominated task force and did not require the test.

While the FDA declined to take action, some blood banks and plasma centers started to use the hepatitis antibody test on their own. The reasons: public pressure and competition. Among them was Cutter.

In the same memo that described the task force's delaying tactic, the Cutter official privately wrote his colleagues that "the anti-core testing would add a further measure of confidence in product safety at a relatively low cost for the products involved."

Even before the December 1983 meeting of the Blood Products Advisory Committee, Cutter officials began implementing the test at their collection sites.

"We recommend that the implementation of core testing be accelerated to the maximum degree possible to obtain a competitive advantage in the marketplace," says a Dec. 19, 1983, internal company memo. "We made no mention of our plans to the others."

By June 1984, three of the five largest blood banks in northern California were using the test, usually in response to pressure from patients, hospitals and doctors.

The FDA seemed to go to unusual lengths to downplay these developments. In April 1984, the agency released a statement reading in part:

"On the basis of the information available to date, it is possible that screening tests other than anti-core may ultimately prove to be more predictive and generally useful in improving the safety of blood and blood products. It would therefore be unwise to adopt anti-core testing to the exclusion of other screening tests."

In other words, until there's a better test, don't do anything.

In February 1986, the Blood Products Advisory Committee finally recommended using the hepatitis B-core antibody test - but only for screening out donors with a history of hepatitis.

The FDA accepted the recommendation. Even though the test is now used by almost all blood banks, the regulatory agency still does not legally require it and has no standards governing its use.

Read on to Part 3 - Fear of AIDS Spurs Change

PHOTO (5), 1. Ralph Mitchell leaves the Race Street plasma center, where he gives blood. (The Philadelphia Inquirer / VICKI VALERIO), 2. The Philadelphia plasma center, which collects plasma for an Austrian company, offers bonuses to frequent donors. (The Philadelphia Inquirer / CHARLES FOX), 3-4. In 1983, the FDA cut blood-bank inspections from once a year to once every two years. Red Cross supported the reduction. (The Philadelphia Inquirer), 5. Frank E. Young; FDA commissioner: Agency hurt by cutbacks, CHART (2), 1. Recalls of blood for safety reasons (SOURCE: Boyd C. Fogle, FDA; The Philadelphia Inquirer), 2. Tests on blood (The Philadelphia Inquirer)

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