Blood Ties

Will stockpiling children’s umbilical cord stem cells protect them from disease later in life? An entire new industry—and fearful new parents—are banking on it

In December I drove down to Del Mar to attend a baby expo across from the racetrack. The point of a baby expo is to introduce new parents to all the baby products on the market, a good many of which are designed to prey on parents’ fears. The hall was filled with the sounds of people trying to sell pregnant women things like leashes and ultrasterile nipples and fetal heart monitors and crib sensors that shriek if one’s baby doesn’t move for 20 seconds. There were also some teenagers in frog costumes, though it was not clear why. I was there to meet a salesman named Dan Hale. He’d come to convince expectant parents to cryogenically freeze the blood from their baby’s umbilical cord on the grounds that it might be used one day to grow new bone marrow if the child contracted leukemia. Or perhaps to generate a new kidney or a new heart. To this end Hale had set up a gigantic photograph of a smiling blond baby head and a fishbowl full of chocolates and was calling out to the passerby, “Hello, friends! Are you having fun? Would you like some chocolate? Have you heard of cord blood?”

Hale works for a cryobank in Santa Monica called Family Cord Blood Services. It’s a division of California Cryobank, one of the oldest and largest sperm banks in the world. Lots of men in Los Angeles know the name because over the years thousands of UCLA students have sold sperm there. Around the time the United States invaded Iraq, the media ran stories about all the departing soldiers banking sperm there for fear they’d be exposed to chemicals that would sterilize them or cause birth defects in future children. The company was founded in 1977 by two doctors named Cappy Rothman and Charles Sims. Rothman is a urologist who specializes in male fertility, and Sims is a pathologist with a background in blood banking. According to the company’s Web site, the loss of a man’s ability to father children has a shattering effect on his self-esteem. Rothman and Sims wanted to eliminate the indignity by freezing the sperm of men about to undergo medical procedures that might leave them sterile. There were a few sperm banks in the late ’70s, but they hadn’t yet caught on. At the time, doctors wanting to treat a couple’s male infertility problems often did so by asking medical students who looked vaguely like the husband to donate their semen. By providing something less willy nilly, the doctors built a lucrative business for themselves. Sims and Rothman opened an office in walking distance of UCLA, then branches near Berkeley, Stanford, and Harvard. In 1994, the company expanded its offerings to include frozen embryos. Then in 1997, Sims and Rothman decided to go into cord blood banking. The idea was symmetrical if nothing else. First they would help create life; then they would save it if anything went haywire.

Sims and Rothman weren’t the first private cord blood bankers. By the time they entered the field, cord blood banking was becoming a highly speculative venture. The industry is based on the discovery in the mid-1980s that cord blood contains hematopoietic stem cells, which are responsible for generating new blood. This discovery caused excitement in the early ’90s after a series of pediatric transplants proved that cord blood could cure certain forms of sickle-cell anemia and leukemia. One reason for the excitement was that these diseases were previously thought to be curable only by bone marrow transplants, for which there is a perpetual shortage of donors. Since cord blood banks didn’t yet exist, the cord blood for the recipients had all come from siblings, many of whom were conceived for the express purpose of harvesting their umbilical cords. The publicity surrounding these so-called spare-parts babies is how many Americans first learned of cord blood stem cells, and it was instrumental in launching the private cord blood industry. Since 1992, more than 20 cord blood banks have opened, some bearing mawkish names like Gene-Angel, CureSource, LifeBank, Securacell, and Newborn Blood Banking. The pitch of the private cord blood bankers is that if cord blood stem cells can cure a few rare diseases today, then surely they’ll cure Alzheimer’s and paralysis tomorrow, so parents who love their children should pay thousands of dollars to bank their blood as a form of “biological insurance.”

Four million babies are born each year in the United States, and the competition for their umbilical cords can sometimes be brutal. Long before these children are delivered, their parents are inundated by literature from private cord blood banks. This literature appears in maternity shops and gynecologists’ offices and in baby magazines and on baby Web sites and tends to feature gurgling infants and misleading statements that suggest that cord blood can cure most anything. On one Web site, for instance, the baby has flashing messages over its face that sag “What if you could save her from Alzheimer’s? Or a stroke?” Nearly all offer “limited-time-only” discounts. A few display prominent Visa and MasterCard logos. Such antics have given the industry a bad name. They have also been tremendously successful. Last year nearly 80,000 babies had their cord blood banked, and the number is said to be growing by an annual rate of 20 percent. Which is why Dan Hale, who has sold many things in his life, most recently software and food products, had come to Del Mar and was shouting over the din, “Stem cells are the building blocks of life, and who knows what’s coming down the pipeline in terms of what those cells can do. Everything about it points to wow!”

“The American Society of Pediatrics opposes private cord blood banking except for children who are born into families with a history of fatal diseases.”

When people bank their baby’s cord blood with Family Cord Blood Services, they are given a temperature-controlled kit with a sterile blood bag. Once the child is delivered and the umbilical cord cut, the obstetrician drains the cord blood, seals it in the sterile bag, packs it back in the kit, then calls a medical courier, who delivers it to California Cryobank’s headquarters east of Bundy. The building is a nondescript two-story cement affair. Its only distinguishing feature is a 30-foot-high white tank in the parking lot that pipes liquid nitrogen into the building’s cryogenic storage area, where all the sperm and embryos and cord blood lie frozen in rows of giant stainless steel tanks. At present there are 60,000 units of sperm, a few thousand frozen embryos, and 10,000 units of cord blood. According to Marla Eby, the company’s PR woman, quite a bit of the cord blood belongs to celebrities, though she wouldn’t provide their names because of confidentiality agreements. From time to time, some of the parents who bank their child’s cord blood come by to visit, but they’re not allowed to open the tanks, of course.

California Cryobank’s interior is bright and full of baby pictures. The company has done its best not to appear cold or futuristic despite the preponderance of laboratories and stainless steel tanks. It is particularly proud of the cryogenic storage area, which is painted pale blue and has windows that let in lots of light and give it a wholesome dairy feel. The storage room is also designed to withstand severe earthquakes. Prospective customers sometimes worry that their child’s cord blood will be destroyed in a quake. Recently a saleswoman got a call from a man in the Midwest who wanted to know what would happen to his child’s cord blood if California fell into the ocean, and she had to explain that he’d have much bigger problems to worry about because a tsunami would be coming his way

Often these earthquake fears are planted by competitors in other states, according to California Cryobank’s president, a pale Finnish man named Kaj Rydman. “But we don’t ever reciprocate with things about tornadoes and hurricanes and floods,” Rydman told me. Family Cord Blood Services prides itself on never stooping to the level of other cord blood banks, some of which refer to their rivals as “just freezers.” “Competition can get nasty in the cord blood business,” said Eby. “Things are much more collegiate on the sperm bank side.”

Eby and Rydman took me to the laboratory where technicians were processing cord blood just in from Georgia and Mexico City and Burbank. After the cord blood arrives, Rydman explained, the stem cells are extracted and placed in stainless steel cartridges the size of cigarette packs and put in one of the tanks, where they are stored at minus 321 degrees Fahrenheit. No one knows exactly how long cord blood keeps, although the oldest cord blood in the world is 20 years old and has been found to be viable.

The lab is across the hall from the sperm donor cubicles, all of which are appointed in cherry wood and contain a large sink, a video monitor, and a stack of Penthouse magazines on which someone has written “Property of California Cryobank” in thick black marker. The company also provides soft-core DVDs, but they have to be checked out at the front desk, Eby explained, because donors want to take them home. It’s especially important for the sperm bank customers to bank their child’s cord blood, she added, since the biological father will never be around to donate his tissues. The company puts Family Cord Blood coupons in all its sperm bank enrollment kits.

Family Cord Blood Services charges $1,595 for the first year and an annual storage fee ranging from $85 to $105. The price drops considerably if fees are paid in advance. The longest payment plan is for 20 years. It is presumed that the child will have grown up by then and can make his or her own payments. When people don’t pay their storage bills, the company sends them letters threatening to thaw out their cord blood, though it’s never actually done so, Rydman said, because it might be unethical. Of the 10,000 units banked so far, only 1 has ever been defrosted for medical purposes, but it was too late to save the child.

Rothman and Sims have their offices on the second floor. I met with Sims, who is in his seventies and has bright white hair and pink skin and giant posters of stem cells in his office. Sims told me that when he and Rothman announced they were going into cord blood banking, some of their colleagues were appalled. The two made the announcement at the 1997 American College of Obstetricians and Gynecologists meeting in Las Vegas, and some of the attendees called them “fakes and rip-offs” and said they were taking advantage of vulnerable parents. Sims had expected this reaction. He and his partner had debated the virtues of private cord blood banking for years, and he had been one of its biggest detractors. He felt the claims about cord blood’s potential were too wild and the premise of private banking too troubling. “I thought it might be something frivolous,” he said. “Kind of like the scientific equivalent of plastic surgery—something for the worried well-to-do.” But the more he examined the cumulative evidence of the cord blood studies, the more he felt they should take a gamble. Some of the decision was based on science. Some of it was based on the fact that he and Rothman already had a bunch of cryogenic tanks and other people didn’t. “We knew the barriers to entry would be high for our competitors and that if we waited until the rest of the world was ready, it would be too late,” he said. “Everything that’s happened since then has supported that initial decision.”

The company referred me to a client named Barry Bruder, a mind-body therapist on the Westside who believes that everyone should bank their child’s blood. “It’s part of conscious parenting these days,” Bruder said. “I mean, God forbid one of my girls got a disease that stem cells could be harvested for. I couldn’t not give them that option. Even the Republicans are getting into stem cells these days. When Nancy Reagan stands up and says you got to support stem cells, you have to listen to her. I mean, if you don’t listen to Nancy Reagan, who can you listen to?”

Family Cord Blood Services is the fifth-largest player in the cord blood banking industry. There are also 50 or so public banks storing roughly 150,000 units. The reason there are so few publicly banked units, Sims says, is that cord blood has to be harvested at birth, processed, and stored, which is prohibitively costly (It is also inconvenient. Anyone wishing to donate cord blood in Southern California, for instance, would have to give birth at Children’s Hospital in Orange.) That could soon change. In December Congress passed a bill authorizing $186 million to fund the public cord blood banking system, which will surely increase the number of public banks. But Sims doesn’t worry about the competition. As the cord blood industry sees it, 30 percent of the population send their children to private schools, and it is reasonable to expect that just as many will opt for private storage. If true, the private cord blood banking industry will soon be generating billions of dollars a year.


At the expo Dan Hale, whom Family Cord Blood had recently hired as its director of outside sales, had set up shop just around the corner from the Brinks Home Security booth and the New York Life booth, which was handing out baby rattles with the company’s name on them. While we waited for potential customers, Hale, who is exceedingly chipper, explained that a cord blood pitch can be tasteless if handled incorrectly, and there are certain things you want to avoid. First, he never asks a woman if she’s pregnant, no matter how distended her belly. “A man can get in trouble for that,” he said. “Usually I just ask if they know anyone who’s pregnant, and they’ll say, ‘Well, I happen to be,’ and I’ll say, ‘Well, how about that!'” After that, he’ll ask if she’s heard of cord blood or stem cells. Since most women don’t know much about either, Hale invariably begins by telling them that cord blood stem cells are not like embryonic stem cells in that no dead fetuses are involved. “The term ‘stem cell’ is on the boat, so everyone attributes them together,” he says, “and it’s something my industry has to get over because ours are lovely and wholesome.”

Since we were close to Camp Pendleton, many of the women at the expo were military wives. Most looked to be in their twenties and said their military obstetricians had never mentioned cord blood. “Are you kidding? They don’t tell us anything,” said a pregnant blond woman who was accompanied by two little girls. Others said they had seen something about cord blood in the baby magazines or maybe on TV but were foggy on how it worked. Whereupon Hale would launch into his basic pitch, which went something like this:

“We used to just toss out the umbilical cord. It was considered refuse. But then we realized there’s this magical recipe sitting inside it called stem cells! I’m sure you’ve heard of stem cells. Now, what would I use those stem cells for, you ask? Right now there are 85 diseases we can treat with them. We had a boy in Florida with sickle-cell anemia who we helped get through the process. A lot of doctors are using them instead of bone marrow transplants. I don’t know how much you know about bone marrow transplants, but it’s a very painful process to donate. They actually have to saw through your hip. Well, cord blood banking makes all that unnecessary. You don’t have to worry about donating for a loved one. Because right there in the bank you already have cells that are a perfect match for your child and a good match for a sibling and maybe even for other people in the family tree!”

It was noisy in the convention hall, and most of the time Hale would have to shout to be heard over the Gerber baby food demonstrations and the raffles. “Now, there is a cost to it, of course,” he’d go on. “But for 20 years that’s a kind of peace of mind and confidence. Especially for African Americans,” he’d say if any were present. “They’re the hardest people to match because of all the mixing that’s gone on. As a result, last year we had to the tune of 10,000 people we couldn’t help. And they perished. They passed. So I’m about that fun selfish thing—just taking care of your family. Hence our name, Family Cord Blood Services.”

At this point most people would want to know the odds of ever needing to use the cord blood, and he would tell them that it was roughly 1 in 10,000 “That’s why some doctors are saying not to do it,” he’d say “They say your chances of needing it are a rarity. Okay, it’s true. But I liken it to having an air bag in your automobile. It’s there for your protection. Air bags used to be optional, and it took a certain type of person to see the benefits, and now they’re mandatory”

“There is reason to be excited about all of these experiments, he said, even if they’ve only been done in animals so far, because cord blood is about what might happen tomorrow.”

Recently Family Cord Blood Services and some of the other banks were sued by a man in Fullerton who accused them of making false claims. That suit was dismissed. But there are doctors who say the same thing. The American Society of Pediatrics opposes private cord blood banking except for children who are born into families with a history of fatal diseases. When I called to ask why, the organization referred me to two doctors. The first, a pediatric oncologist at UCLA named Stephen Feig, said of the private cord blood industry, “Your chances of needing it are practically zero. It’s a crummy investment.” The second was Joanne Kurtzberg, director of the Pediatric Stem Cell Transplant Program at Duke University and one of the most respected figures in the field of cord blood transplantation. “Private banks overstate their claims and frighten parents in an inappropriate way,” said Kurtzberg, who recited a long list of the industry’s misleading and inaccurate statements. Chief among them is that if a baby gets leukemia it can be saved with its own cord blood. “That’s totally bogus,” she said. “If your baby gets leukemia, you would never want to use its blood because that blood would likely be contaminated with leukemic cells.” She also took issue with the industry’s suggestions that cord blood can cure everybody in the family. There is only enough cord blood for one child, she said, because people need a certain quantity of stem cells per body weight, and there aren’t enough in the blood of one cord for an adult. Kurtzberg, however, is a proponent of public banking. One of the proven wonders of cord blood, she said, is that it’s half as likely to be rejected by non-related recipients as bone marrow, which means a publicly banked cord blood unit has a far greater chance of saving a life than one locked away in a private bank, where it almost certainly never be used.

Sims allowed that Hale went overboard with his assertion that children with leukemia can be cured with their own cord blood. But, he said, critics are missing the point. First, he said, the odds of needing a cord blood transplant are not infinitesimal. According to Sims, they’re closer to 1 in 2,700, but the odds improve significantly when you consider future medical breakthroughs and how many people in the family will have access to the blood over a lifetime. Scientists have grown heart muscle and brain tissue with cord blood stem cells. There is reason to be excited about all of these experiments, he said, even if they’ve only been done in animals so far, because cord blood is about what might happen tomorrow. “That’s where we part company,” Sims said of his critics. “They say because you don’t have need today you won’t have need in the future. But you don’t buy fire insurance after your house is on fire. You buy it because you might have one. That’s the premise of the cord blood banking industry, and if people want to pay for it that’s their right. People spend money on a lot of things. They buy big-screen TVs.”

After lunch the Del Mar baby show wound down, and one of Hale’s associates said that the pregnant women had all gone home to take naps. “That’s what pregnant women do,” she said. By the end of the weekend Hale had collected a hundred or so names for the sales department to contact.

Nearly everyone who had stopped by said they wanted to bank their baby’s cord blood but that they couldn’t afford it. A pregnant military wife who’d already given birth to a child with a cancerous kidney said she wished she could but that it was too much money to spend on something that might not happen. The pregnant woman with the two little girls said she wished she could do it, too, in case her next child had a defect. As she walked away, Hale’s colleague called after her that the company was offering military discounts and that it was running a special promotion of $345 off the first year.

“I’ll talk to my husband,” she called back.

“We hope to hear from you!” Hale’s colleague responded.

“All my friends are pregnant,” she shouted. “We’re a nation of pregnant women!”

When she was gone, Hale said he’d be spending the next week taking obstetricians out to lunch and telling them about “the latest and greatest” in cord blood banking. “Obstetricians are marvelous people,” he said. “We all had one in our life. I did and so did you.” Then he wondered about the wisdom of the air bag metaphor. “The girls are troubled with it,” he said of his colleagues. “They’re like, ‘Dan, I don’t know if that’s a good analogy.’ But I think it’s kind of interesting, if you think about how it was an option and now it’s mandated in every car. It’s a brilliant industry,” he went on. “It’s a loving industry.” Then he scanned the horizon for more customers. But by then all the pregnant women were walking through the parking lot with balloons and looking for their cars.

This feature originally appeared in the April 2006 issue of Los Angeles magazine