On the Value of the Umbilical Cord Blood Supply

Several public cord blood banks are struggling financially, and the question remains as to whether additional allocations of funds to them are justified.

To estimate the social benefits of public cord blood bank inventory net of cord blood banks' operational costs.

We used publicly available data from the Health Resources and Service Administration on the number of annual cord blood transplants as well as the patient age distribution in 2010, and the survival estimates between 2008 and 2012 for the several diseases treated by cord blood transplantation. Data on aggregate annual costs to the cord blood industry for recruitment, processing, and storage were obtained from published work. We used estimated increases in life expectancy due to treatment using umbilical cord blood and value for life-years gained to estimate the social benefits of the public cord blood inventory annually.

We found that the annual social benefits of between $500 million and $1.5 billion outweigh the current operational annual costs of running cord blood banks of $60 to $70 million by a significant margin.

We estimated that the annual social benefit of having a cord blood system far outweighs its costs, by more than an order of magnitude. Thus, the social benefits of maintaining the US public cord blood banking system at the present time far outweigh the costs of collecting, storing, and distributing cord blood. This suggests that there is a potential justification for government intervention to align social benefits and costs. Nevertheless, simple fixes may produce unintended consequences, and so a careful design for subsidies is needed.