After almost 23 years and $47 million in fines, the blood services operation of the American Red Cross (ARC) is no longer under a consent decree with oversight by the federal government.
To get out from under a 1993 court order, which was amended in 2003, the ARC had to demonstrate five years of sustained compliance with federal Food and Drug Administration (FDA) regulations, which occurred at the end of October.
There had been no significant failures to comply with the law, the regulations and the consent decree, so the FDA did not object to a request by the ARC’s managers to have a court vacate the decree, according to a spokeswoman for the agency. The U.S. District Court for the District of Columbia on Dec. 4 vacated the consent decree under which ARC has been operating since 1993.
Blood operations have been strengthened and improved through the feedback and guidance of the FDA, which was the goal of the consent decree, according to Kathy Waldman, senior vice president of Red Cross Quality and Regulatory Affairs. “Over the last several years, the Red Cross developed a more robust, world-class system by evaluating and monitoring our compliance performance across multiple indicators,” she said in a statement to The NonProfit Times. “This system includes comparing performance between facilities throughout our national network to consistently benchmark for improvement. With ongoing oversight and support, these new processes are now integral to how we operate,” Waldman said.
The lifting of the consent decree was mentioned in another scathing ProPublica story released yesterday, citing an internal email on Dec. 5 sent by President and CEO Gail McGovern to Red Cross staff. The Red Cross issued a statement after the ProPublica story appeared.
The FDA requires blood establishments to adopt and strictly follow multi-layered safeguards to protect and enhance the safety of blood products at each step of manufacturing, according to the spokeswoman.
Since 2003, the FDA imposed more than $47 million in fines on the ARC for failure to comply with the law, FDA regulations and the consent decree. Fines levied have been for a variety of issues, according to the FDA, including but not limited to:
The Biomedical Services Division accounts for about 37 percent of the blood products used in the United States, collecting 5.3 million – of the 14.3 million units nationwide – from 3.1 million donors.
The ARC has seen declining blood collections in recent years, leading to layoffs within the Biomedical Services Division late in 2013 and into early 2014. It collected 6.5 million units of blood in 2009 compared with 5.3 million last year. The division employed about 18,000 people at the time of the layoffs, which reduced the workforce by about 360, or 2 percent. Today, the division employs fewer than 16,000 people.
While the Biomedical Services Division still accounts for almost two-thirds of overall revenue for the Red Cross, it’s still at historic lows. In 2014, program revenue from Biomedical Services dipped below $2 billion ($1.889 billion) for the first time since 2002. Overall revenue was less than $3 billion ($2.974 billion) for the first time in a decade.
The Washington, D.C.-headquartered Red Cross is in the midst of a restructuring called “Vision 2017,” a three-year effort started last year to reduce 5 percent of its 26,500-strong workforce and consolidate 96 regional chapters into 62 regional chapters.
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