The Family Cord Blood Banking Act

The following was written by Dr. Frances Verter as a guest post for American Health Line's Blog, 25 July 2012:

The term “cord blood” is used for blood that is drawn from the umbilical cord and the placenta after a baby is born. Until recently, this afterbirth was discarded as medical waste. We now know that cord blood is a rich source of stem cells; just a few ounces of cord blood holds millions of adult, non-controversial, stem cells.

The first medical use of cord blood took place in 1988, when an American boy with a blood disorder traveled to Paris to receive a transplant of stem cells from his newborn sister’s cord blood. Since then, over 20,000 patients worldwide have received cord blood transplants to cure over 80 diseases. The FDA has approved clinical trials testing additional uses of cord blood stem cells to treat cerebral palsy, traumatic brain injury, hearing loss, and Type 1 diabetes. Cord blood banks have been established to separate the stem cells from cord blood and store them in liquid nitrogen, where they can be preserved for decades without loss of vitality.

The United States and many other countries have established national networks of cord blood banks that collect donations and preserve them for potential future use by transplant patients. Congress repeatedly has authorized federal funding to support these banks because public cord blood storage is an important component of health care policy. Transplants with stem cells from cord blood do not require an exact match between donor and patient, and thus enable more persons of minority or mixed racial heritage to get life-saving therapies.

Parents also have the option to preserve their baby’s cord blood in a family cord blood bank. In this case, the cord blood is reserved for their family use, and the parents must cover the costs of processing and freezing the stem cells, which are about $2,000 at an accredited bank, followed by an annual storage fee that is typically $125. Whereas the national network of public banks collects cord blood donations at less than 200 hospitals nationwide, parents anywhere can take advantage of family cord blood banking, if they are able to pay the cost.

The Family Cord Blood Banking Act (HR 1614) was jointly introduced by Reps. Wally Herger (R-Calif.) and Ron Kind (D-Wis.). The bill currently has the bipartisan support of 37 members of Congress. This important legislation would amend the IRS Code to allow individuals and couples to treat cord blood banking services as an IRS-qualified medical expense. This would enable families in any tax bracket to pay cord blood banking fees with tax-free dollars from a flexible spending account, health savings account, health reimbursement arrangements or under the medical expenses tax deduction.

Current tax laws do not treat cord blood banking as a medical expense because the stem cells are stored before their need has been established. However, unlike other medical therapies with cells that can be acquired at any time, the very nature of cord blood requires that the only time it can be processed and stored is at birth. Paradoxically, the IRS does treat the expenses associated with cord blood therapy as qualified medical expenses, so it is inconsistent to not cover the costs of harvesting cord blood for future use.

HR 1614 would make the cost of cord blood banking more affordable for a wider range of families.  Herger said, "This common-sense legislation will allow families and individuals to use their tax-free health dollars for a medical expense that can truly save lives." The bill is endorsed by the Coalition for Regenerative Stem Cell Medicine, which currently is comprised of 23 different disease and education advocacy organizations, professional societies, academic centers and individual researchers. PGCBF is on the steering committee of the CRSCM.

Families who wish to support the bill can look up their Congressional representative and send a message using examples on the CRSCM website.

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