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What many donors don't know: Their blood is sold

A lawsuit between Oklahoma Blood Institute and a Minnesota blood broker reveals details of the valuable blood business.
by Jennifer Palmer Modified: July 5, 2014 at 10:00 pm •  Published: July 5, 2014

Close to half a million dollars worth of donated blood is at the heart of a lawsuit between Oklahoma Blood Institute and a Minneapolis-based blood broker.

But it’s the details revealed in court filings and interviews about the high-dollar market for human blood and blood products that may come as a shock to donors, who give away the valuable product for free.

Donors often believe their blood is given to local hospitals, and all donations stay in the community — neither of which is true. A pint of blood in America sells to hospitals for $180 to $300, depending on the market, and expired blood often is sold to research laboratories, said Ben Bowman, chief executive of General Blood, the blood broker engaged in a legal tussle with Oklahoma City-based OBI.

OBI Responds:

>>Officials: Oklahoma Blood Institute is a trustworthy, effective partner (Published July 12, 2014)

Bowman’s company, formed four years ago, acts as a middleman between blood suppliers, like blood donation centers, and buyers such as hospitals and research laboratories.

It’s an unusual industry because the product is completely dependent on donors, who aren’t paid for their donation. Yet selling the blood — which technically is a pharmaceutical product—makes millions of dollars for nonprofit entities such as Oklahoma Blood Institute.

“We have a charitable side, which is trying to motivate people to do an amazing thing to help their fellow man or woman,” said Dr. John Armitage, OBI’s chief executive officer. “You turn that around: We are providing a drug. On the business side of what we do, the comparison is to a pharmaceutical company.”

According to tax forms filed with the IRS, OBI generated $85.6 million in the tax year ending March 31, 2013.

And its top executives are well paid. Armitage reported earning $421,561 from OBI that year. Numerous others were making six-figure salaries, including Chief Financial Officer Randall Stark, who reported earning $202,886, and Chief Medical Officer James W. Smith, who earned $273,597.

The organization has six vice presidents, all making $140,000 or more.

Armitage, who spoke with The Oklahoman on Thursday, says the compensation is fair and comparable to similar large, nonprofit companies in Oklahoma City.

On its tax form, OBI describes one of its key programs as managing the blood donations from more than 209,000 people each year. The blood is tested and processed by OBI, then distributed “to patients across the states we serve,” a task that cost $65 million but generated $75 million in the 2012 tax year.

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by Jennifer Palmer
Investigative Reporter
Jennifer Palmer joined The Oklahoman staff in 2008 and, after five years on the business desk, is now digging deeper through investigative work. She's been recognized with awards in public service reporting and personal column writing. Prior to...
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