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The field of reproductive technologies has become a fast-growing and profitable economic sector, says Debora Spar of HBS. 'Parents choose for different traits, clinics woo clients, and specialized providers earn millions of dollars.' (Staff photo Stephanie Mitchell/Harvard News Office)

Spar takes on boom in baby biz

Harvard Business School professor delves into 'commerce of conception'

By María Cristina Caballero
Special to the Harvard News Office

Debora Spar has spent the past five years exploring a world that few want to admit even exists. Her book, "The Baby Business: How Money, Science and Politics Drive the Commerce of Conception," is a hard-edged analysis of a $3 billion industry that most prefer to think of in greeting-card verses, not the language of economic analysis. Making and having babies, after all, is driven by deep-seated emotions. Spar - the Spangler Family Professor of Business Administration at Harvard Business School - strips away the sentiment to point out that advances in reproductive medicine have created a lively market for babies, despite the denials of authorities and the difficulty for most to conceive of a child as a commercial product.

The field of reproductive technologies has become a fast-growing and profitable economic sector. "Parents choose for different traits, clinics woo clients, and specialized providers earn millions of dollars," Spar points out. Some pay up to $100,000 to produce what others make for free. She doesn't judge if this market is either good or evil, but hopes to start a public debate about the need to establish governmental oversight.

Spar initially came to the controversial topic almost by chance. Someone asked her while she was on a tour for her previous book about the Internet ("Ruling the Waves" [2001]) what technology would next unleash a new cycle of market creation, exuberance, and then, eventually, demands for regulation. She responded that it would be in the area of biotechnology, and particularly in those areas that dealt with the basics of human reproduction. The fact that, after having two biological children, she and her husband decided to adopt a 6-year-old child helped her research. "Adoption is just the flip side of reproductive technology: Both are ways for acquiring children through market means," she says. Spar became interested enough in the topic to begin to do some deep study.

What are the main sectors of this controversial market? Spar points first to in vitro fertilization. In 2001, nearly 41,000 children in the United States were born as so-called "test-tube babies." Other growing sectors include the contracting of surrogate mothers and the selling of eggs and sperm. In 2002, roughly 6,000 children sprang from donated eggs; almost 600 were carried in surrogate wombs. Spar found that in the baby market, eggs cost more than sperm - $4,500 versus $300 on average - and $50,000 versus $2,950 for the top end of the market.

Furthermore, there is an increasing demand for "designer babies." Technologies such as pre-implantation genetic diagnosis (PGD) are unregulated. Doctors can now remove one or two cells from an eight-cell embryo in a test tube and can tell the parents its gender and test for certain genetic defects. The parents then choose which embryos they want transferred. "You could select sperm from banks listing their donors' SAT scores and hobbies. You could purchase eggs from a woman of your choice. You could expect to choose your desired characteristics and pay extra dollars for Ivy League eggs, or a docile surrogate," Spar notes.

Among other areas directly or indirectly related to the burgeoning baby business are fertility drugs, stem cell research, research on human cloning, and the vast number of cross-border adoptions - in 2003, Americans adopted 21,616 children from abroad. Each of these areas - or "market segments" - has spawned legions of consultants, lawyers, and advisers.

Who are the clients? According to the Atlanta-based U.S. Centers for Disease Control, 12 percent of U.S. women between the ages of 15 and 44 - around 7 million - experienced infertility in 2002. In addition, an estimated 10 - 15 percent of adult men are infertile. One in every eight couples is unable to conceive children by natural means. Other potential clients are gay couples who want children.

The baby industry, Spar notes, expanded beneath the radar of most business analysts. This is, she says, partly because clients generally recoil from the notion that their families are - at least in part - the result of "market activity." In addition, there has been little call for governmental regulation of this new and unique business.

The development of the baby industry took off, says Spar, in 1978 with the birth of Louise Brown, the first test-tube baby. Today desperate couples go through round after round of in vitro fertilization (IVF) at an average cost of $12,400 per try, even though the success rate hovers around 27 percent and drops as low as 9 percent if the woman is over 40. Those who do give up can turn to adoption, along with about 120,000 other U.S. families each year, paying out up to $35,000 per child.

A few countries have recently passed laws that constrain the use of reproductive technologies. Italy passed legislation that prohibits sterile, gay, or single adults from using donor eggs or surrogate mothers. In Germany, egg transfer of any sort is illegal, as are surrogacy and treatments that involve manipulating the human embryo. The United States maintains a controversial ban on federal funding for embryonic stem cell research.

But brokers capitalize on regulatory gaps. In Germany, all eggs removed from a woman must be transferred back inside her: But in Russia, these same eggs can be sold or bartered. In the United States, Louisiana refuses to recognize the validity of any surrogacy contract, whereas California has built a thriving commercial industry around surrogacy agreements.

Spar formulates compelling questions: "Should we, as a society, prohibit women from selling their eggs, their wombs, their embryos, or their children? Should we allow parents to select traits of their children? And who, in a world of fluid boundaries and invisible trade, gets to decide? Will people protest when two lesbian mothers use cutting-edge techniques to conceive a child that is biologically 'theirs'? Will ethicists object when women in Cambodia bear infants for middle-aged lawyers in New York?"

Spar says the business of babies needs a regulatory framework in order to define rights, lower prices, and expand access. One of her primary concerns is the lack of clear property rights in current law: "Who owns human embryos? Do clinics? Do parents? What are the rights and responsibilities of sperm donors, and of the children conceived through donor sperm?"

Unlike many European countries, the United States has no national policies on the use of IVF or on the creation and destruction of human embryos. So how would Spar propose to establish a regulatory framework? "First, we should think about the kind of information that is most important to us - such as health data, or cost data, or comparative studies of clinical success rates, or adoption placements - and then provide these data through public sources," she says. "The second is cost. We need to be very up front in discussing what these costs are, and which pieces of them should be borne by society, rather than by the parents themselves."

What about equity? "As a society, we need to think about what fairness means," Spar says. "Is the ability to reproduce a basic human right? Is it part of medical care? And does it extend to all people, regardless of their age, sexual preference, and health condition? Once we get even a rough consensus around this issue (even if it is forged at a state level) we can begin to craft policies that make sense. Where should we draw the line on what kinds of children people can create, and what kinds of technology they can employ? We've already said no to reproductive cloning."

Spar points to Britain's Human Fertilisation and Embryology Authority (HFEA), the quasi-governmental agency that oversees all aspects of reproductive technology and trade in that nation, as a potential model. The HFEA "licenses and monitors all IVF clinics, sets price caps for egg donation, and assesses applications for PGD." Germany, on the other hand, apparently still haunted by the memory of Nazi experiments, allows no human egg transfers, surrogate mothers, or PGD.

Spar acknowledges that the medical technologies behind the baby business come with "Solomonic choices" and moral dilemmas. Americans, she emphasizes, should soon decide as a society just what we consider acceptable in the baby trade.

María Cristina Caballero is a fellow at the Center for Public Leadership at the Kennedy School of Government.

Copyright 2007 by the President and Fellows of Harvard College