The Orange County Register, April 16, 2000

The Body Brokers: Part 1- Assembly Line
Donors don't realize they are fueling a lucrative business

By Mark Katches,
William Heisel and Ronald Campbell
April 16, 2000

American businesses make hundreds of millions of dollars selling products crafted from donated human bodies, even though it is illegal to profit from cadaver parts, an Orange County Register investigation found.

Cadaver skin puffs up the lips of fashion models at $1,050 a shot. Dentists use ground bone about 200,000 times a year to treat their patients. Glossy catalogs advertise 650 products made from body parts.

A single dead body yields raw materials worth tens of thousands of dollars to businesses whose stock is traded on Wall Street and to nonprofit agencies that obtain the parts for them, records and interviews show.

Nowhere in the country are grieving families told that their gifts fuel a fast- growing industry predicted to hit $1 billion within three years. Neither are the millions of Californians who put a pink dot on their driver's licenses indicating their willingness to donate body parts.

"People who donate have no idea tissue is being processed into products that per gram or per ounce are in the price range of diamonds," said Arthur Caplan, a professor at the University of Pennsylvania's Center for Bioethics.

The products enhance millions of lives, according to industry trade groups. Cadaver tendons help athletes return to the playing field. Slings crafted from human skin solve bladder troubles. Corneas prepared for implant allow the blind to see.

About 20,000 dead Americans became part of this manufacturing cycle in 1999, four times the number of bodies used for vital-organ transplants. The tissue trade now generates about $500 million annually.

"There is a profit," said Michael Jeffries, chief financial officer for Osteotech Inc., a leader in the bone business. "It's not an evil thing because the profit is put to good use."

But trade in body parts has sparked questions from donor families and medical ethicists about ties between companies that sell body parts and nonprofit organizations that solicit them. The tissue banks act as middlemen for their corporate partners.

Families are led to believe they are giving the gift of life. They are not told that skin goes to enlarge penises or smooth out wrinkles, or that executives of tissue banks -- nonprofit groups that obtain body parts -- routinely earn six-figure salaries. The products are rarely life-saving as advertised.

"I thought I was donating to a nonprofit. I didn't know I was lining someone's pocket," said Sandra Shadwick of Burbank, whose brother died two years ago. Shadwick gave her brother's remains to a Los Angeles tissue bank. "It makes me angry. It makes me appalled. If it's not illegal, it ought to be. It's certainly immoral."

Industry leaders say donations would plummet if families knew their gifts generate profits. One consequence would be a potential drop in the supply of vital organs.

"If donors were told at the time about profits, they wouldn't donate," said Jan Pierce, director of the Intermountain Tissue Center, a Salt Lake City nonprofit bank.

The Register began its investigation last November after allegations that the head of the Willed Body Program at the University of California, Irvine, profited from the sale of donated body parts.

After interviewing hundreds of people and reviewing thousands of pages of documents, the newspaper found that donated bodies follow one of two paths. They become either research subjects or raw materials for medical products that are sold commercially for profit.

It is more likely that body parts will be made into products.

It Starts as a Gift

The story begins with private acts of charity. California residents can indicate their intent to donate their organs and tissue on their driver's licenses. In addition, the industry aggressively recruits donors through Internet spam, billboards and television commercials. Government grants help pay advertising costs.

The efforts are working. The number of donors increased 172 percent nationwide over the past five years, the American Association of Tissue Banks says.

Nonprofit tissue banks from Santa Ana to New Jersey screen possible donors and remove body parts. Up to 20 bones and tendons are harvested along with 4 square feet of skin and the whole heart. In some cases, eyes, veins, jawbones, ribs and the spine are taken. Bone is replaced with common PVC pipe to keep the body's shape for open-casket funerals.

The tissue banks then sell the body parts to companies that make products used by doctors and dentists. The tissue banks and companies share revenue.

No Tests for Federal Law

A typical donor produces $14,000 to $34,000 in sales for the nonprofits, records and interviews show. But yields can be far greater.

Skin, tendons, heart valves, veins and corneas are listed at about $110,000. Add bone from the same body, and one cadaver can be worth about $220,000.

The National Organ Transplant Act, approved by Congress in 1984, banned profits from the sale of tissue. But no company or tissue bank has been prosecuted.

"The law has never been tested in court. Nobody has ever decided what is selling and what isn't," said Jeanne Mowe, executive director of the American Association of Tissue Banks.

Companies and tissue banks step around the law by charging marked-up fees to handle and process the body parts. They avoid billing for the tissue itself. The law allows for reasonable fees to cover processing costs without defining reasonable.

Tissue banks also avoid using the word "sales." But Judy Perkins, executive director of the University of California, San Diego, Regional Tissue Bank, calls fees a euphemism for sales.

The zeal to harvest tissue is underscored by the case of Heather Ramirez, a 19-year-old Arizona woman who died in an automobile crash.

Her parents accused the American Red Cross of stealing their daughter's bones, court records show. The family agreed to donate body parts, but expressly refused to give up the bones.

"Instead of having some closure after her death, it just became an unending saga," said the father, Greg Ramirez. "It was like she was dying over and over again."

The Red Cross, which has its West Coast tissue center in Costa Mesa, chalks up the mistakes to human error. "We are certainly deeply saddened by this," said Red Cross spokesman Mike Fulwider.

Business is Booming

The two largest for-profit companies in the tissue industry recorded a combined $142.3 million in sales last year, and each pays its chief executives more than $460,000 annually, records show.

The nation's four largest nonprofit tissue banks say they will generate a total of $261 million in sales this year. And prices are rising.

Patients pay $2,400 for a cornea at San Francisco's Pacific Eye Associates. The same eye center charged $1,000 four years ago.

Costs can vary by hundreds or thousands of dollars. An Achilles tendon at a Seattle bank sells for $865. Georgia's CryoLife Inc., a for-profit firm, charges $2,000 for the same product.

"I know hospitals that shop for bone like you would a can of beans," said Perkins of the San Diego tissue bank.

The revenue helps nonprofit banks cover perks and salaries normally associated with private business. A Register analysis of 50 of America's largest nonprofit tissue banks shows top executives earning an average of $135,000 a year. One Los Angeles bank paid its top official $533,450 in 1998 and provides him a BMW, records show.

Ensuring a Steady Supply

The biggest deal in the industry was struck 13 years ago. Osteotech opened its doors in New Jersey without access to bodies.

So the company spent $10 million to start a nonprofit tissue bank serving as its exclusive broker of human bones. The publicly traded company is now the nation's largest producer of bone products.

As for the tissue bank? The Musculoskeletal Transplant Foundation is the world's largest. The bank's chief executive, Bruce Stroever, predicts the industry will double, to $1 billion, by 2003.

"Osteotech couldn't go it alone and had to invent us," said Stroever, who earns $350,000 a year running the nonprofit. "Neither one of us would be here without the other."

In Florida, the opposite model occurred. The nonprofit University of Florida Tissue Bank spun off a private firm, Regeneration Technologies Inc., in 1998.

The nonprofit's top executive, Nancy Holland, doubles as the private company's vice president. She keeps both business cards on hand. The tissue bank and private firm share office space and phone lines. The nonprofit tissue bank sends bone to the for-profit firm.

"It's a matter of subterfuge if you're hiding behind a nonprofit," said ethicist and law professor Lori Andrews of the Chicago-Kent College of Law.

Holland said telling potential donors about profits and ties to companies would complicate the consent process. "We're already talking with someone who is in a state of grief, and we just thought it was too much information to impose on them at that time," Holland said.

Five months after the Register began asking questions, Tissue Banks International, a large Maryland chain, said that it plans to start telling prospective donors of for-profit links, but only in Southern California.

Although some industry financial figures are made public in dense reports filed with the Internal Revenue Service and Securities and Exchange Commission, key details are not revealed. The American Red Cross won't say how much it pays Irvine-based Edwards Lifesciences Corp. to market heart valves that the Red Cross recovers. "Those things are considered proprietary," said Red Cross spokeswoman Blythe Kubina.

Beverly Hills physician Steven Burres founded Fascia Biosystems and sells trademark cadaver thigh tissue to cosmetic surgeons. He refuses to name his tissue-bank suppliers. "If I was building antique chairs, you wouldn't care what lumberyard I got my wood from," he said.

Tissue banks contend most donor families do not want details. Steve Oelrich, sheriff of Alachua County, Fla., agrees. He donated tissue from his teen-age son, who died in 1995. "There are two things I don't want to know about this thing. One is the financial part, that they sell this and the hospital buys that. And I don't want to visualize what they do to your child," Oelrich said.

Man Helps 422 Patients

Tissue banks mine parts for 50 to 100 patients from a single cadaver. After John Tabachka died in 1998, doctors implanted parts from the Pittsburgh- area volunteer firefighter into 422 patients. "If he couldn't help you in life, he'd help you in death," Tabachka's widow, Sally, said.

The products can make a big difference to recipients. When Jim Muth, 47, blew out his knee, the Yorba Linda man paid $7,500 to get tendons from a 19-year-old cadaver. "They sell these things like nuts and bolts now," Muth said. "They're just another part of the tool box." A year later, Muth is swimming, biking, walking and hopes to be running soon.

Government to the Rescue

Strict federal laws ban any buying or selling of hearts, lungs, livers or other organs needed for transplant.But the government has helped boost profits in the tissue trade. The Clinton administration adopted rules in 1998 requiring hospitals to notify organ agencies of all deaths. That makes it more likely that families will hear from a tissue bank within four hours of a loved one's death. The rules are designed to increase the number of organ transplants.

But organ donors rose by less than 1 percent in 1999, according to the Association of Organ Procurement Organizations. The big beneficiaries are tissue banks and companies that showed gains in donors of as much as 40 percent, records and interviews show. The reason for the disparity: Organs can only be harvested from donors who are brain dead but whose heart and other organs are still functioning. Once the heart stops, organ donation is ruled out. Tissue still can be recovered.

The government is trying new methods to increase organ and tissue donations. Last fall, Vice President Al Gore announced $5 million in grants to organ and tissue agencies. Several grants target minority communities, which lag in donation.

Like many politicians and government officials, Gore said he was surprised by the size of the tissue trade. "I did not know that the amount of money involved was as large as you have pointed out," said Gore in a recent telephone interview.

In Orange County, Chief Deputy Coroner Jacque Berndt explained why she doesn't charge the Orange County Eye and Tissue Bank to use the county morgue. "They're a nonprofit, and their funds are limited in that sense," said Berndt, before learning the bank is part of a chain paying its chief executive $283,882 a year.

Berndt also was unaware of the Santa Ana bank's corporate ties. The bank's Executive Director Larry Hierholzer said he ships skin to New Jersey- based LifeCell Corp. and heart valves to Georgia-based CryoLife. Both companies are publicly traded and have developed trademark products.

Berndt isn't the only coroner unaware of the business ties. "I didn't even imagine this was such a high-paying business," said Sgt. Sharon Housouer, Imperial County's chief deputy coroner, who was approached by another tissue bank last year requesting access to her morgue. "It shocks me, but it really doesn't surprise me. I'm a cop. Nothing surprises me anymore."

*Register staff writers Liz Kowalczyk and Susan Kelleher contributed to this report.

*Copyright 1999 The Orange County Register

*Copying of this material is free for non-commercial educational and research use. Unless explicitly stated, copyright of this material is owned by the author and/or sponsoring organization, and/or newswire services. (taken from Pro-Life E-News.)

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