The American Red Cross risks millions of dollars in fines under an agreement announced yesterday with the Food and Drug Administration to remedy what the FDA called "chronic" problems in the organization's testing, handling and tracking of donated blood.
Until now, the Red Cross has strenuously opposed fines, saying they would siphon money from its mission and noting that it has spent $300 million since 1991 on blood safety upgrades.
FDA Commissioner Mark B. McClellan said the fines create an added incentive to improve.
The Red Cross has been under a court-supervised consent decree since 1993 to eliminate safety problems in its blood program. However, the FDA has repeatedly cited the Red Cross for continued violations at its national headquarters and regional blood collection centers, but it could not fine the organization under the terms of the decree. An inspection last year at the blood collection headquarters in Arlington, for example, found falsified records, retaliation against employees who reported problems and poor inventory controls, the FDA said.
McClellan said the Red Cross's acceptance of the new plan signals fresh cooperation. But he also said the FDA intends to suggest additional "management changes," which he did not detail, to foster a culture that "encourages safety" and increases oversight by senior Red Cross officials.
The Red Cross agreed to the new terms because it believes it can operate with "a minimum or no fines," said spokesman Phil Zepeda, adding that the blood program is financially stronger than in previous years.
The Red Cross also has new leadership. In August, Marsha Johnson Evans became its president and undertook discussions about blood operations with federal officials, McClellan said. The new deal must be approved by a federal judge, but both sides announced it yesterday.
The Red Cross provides about 45 percent of U.S. blood supplies -- about 6 million pints a year -- collecting from donors and selling the blood to hospitals. It spends about five times as much on its blood business as it does on disaster relief. Revenue from blood sales has tripled in the past decade.
The Red Cross could be fined as much as 1 percent of its annual blood revenue -- $1.9 billion -- in the first year of the agreement, escalating to a maximum of 4 percent by the fourth year. The plan also includes fines of as much as $50,000 per incident if the Red Cross releases blood that could cause a serious health problem and various fines for failure to monitor unsuitable donors, re-releasing unsuitable blood that had been returned to the Red Cross or violating operating procedures.
The Red Cross could dispute any fine in court, but McClellan said he hopes disputes could be resolved without bringing in a judge.