Blood on the Campaign Trail
In the spring of 1995 the American Red Cross launched a new advertising campaign for its national blood drive. The campaign included at its center a television public service announcement that depicted an American flag billowing in the wind. As a voice off-camera issued a dire warning -- "When the blood runs out, so does life" -- the red stripes began to fade from the flag until only the stars remained.You're not likely to see this particular announcement or the posters that went with it, however. After thousands of dollars had been spent, the ad campaign was quietly discontinued because the president of the American Red Cross, Elizabeth Hanford Dole, ruled that it was too controversial. Several weeks after the aborted campaign, her husband, Bob Dole, then the front-runner for the 1996 Republican presidential nomination, announced his support of a constitutional amendment to ban desecration of the American flag.Alone, yanking the flag ad might be viewed as a minor case of Bob Dole's presidential politics influencing a small decision at Elizabeth Dole's Red Cross. But a three-month investigation by The Nation has discovered that the flag incident was just one example of a troubling pattern: A series of political conflicts has steadily affected Red Cross decision-making in vital public health areas, such as protecting the nation's blood supply from disease and training young Americans in how to protect themselves from AIDS.* The Nation investigation found that shortly after her appointment to head the $1.7-billion-a-year charity, Mrs. Dole assembled a special team of longtime political advisers. Their job was to vet important Red Cross actions, both managerial and scientific, with a political sensitivity to what might help or hurt Bob Dole's presidential ambitions.* When her husband was scrambling for the backing of the Christian Coalition prior to the Republican primaries, Mrs. Dole ordered her allies to rewrite an AIDS prevention manual to cater to Christian right orthodoxies about homosexuality, premarital sex and condom use. Also shoring up Bob Dole's standing with the Christian right, Elizabeth Dole took to the hustings while in office at the Red Cross to give frequent speeches about her born-again Christian commitment.* Back at Red Cross headquarters in Washington, Mrs. Dole recommended at-large seats on the Red Cross's prestigious board of governors to Senator Dole's political contributors and longtime backers, including Inez Andreas, the wife of wealthy agribusiness executive and Dole superbooster Dwayne Andreas.* Mrs. Dole's special team interfered in day-to-day Red Cross decisions, frustrating the charity's professional staff and contributing to an exodus of many senior technicians, volunteers and other crucial personnel. Under this politicized leadership, the Red Cross's much-touted "transformation" program to assure a safer blood supply has fallen short of its goals and behind schedule.* The Red Cross has been in a running battle with the Food and Drug Administration, the federal agency charged with overseeing it, over the charity's handling of the nation's blood supply. To force corrective action, the F.D.A. has imposed a legally binding consent decree setting a strict timetable for ending sloppy practices. On the stump, Bob Dole has vowed to fire F.D.A. Commissioner David Kessler -- and has been joined by Mrs. Dole at campaign rallies that bashed the F.D.A. as too powerful and overreaching. Simultaneously, in Congress, Dole has sponsored and pushed Republican legislation to clip the agency's wings. One of the G.O.P. bills targets the F.D.A.'s ability to regulate the blood supply.Though currently on a leave of absence to work on her husband's campaign, Elizabeth Dole's intent to return to the Red Cross helm -- even if he wins the presidency -- presents another potential conflict of interest: U.S. President Dole could be in a position to sign into law Republican legislation that would let Red Cross president Dole off the hook.THE IMAGEIn February 1991, when the Red Cross board of governors persuaded Elizabeth Dole to head the nation's largest and arguably most cherished charity, they considered her a savior. The American Red Cross was in possibly the worst crisis of its 110-year history. Founded in 1881 by Clara Barton, the organization gathers and distributes about 45 percent of the 13 million units of blood collected annually in the United States, and it assists victims of 68,000 disasters a year. But in 1989-90, the Red Cross had been taking a beating in the press over the way it had performed during the California earthquake and Hurricane Hugo. It had been the subject of a scathing Congressional hearing that called into question the safety of its blood supply, and it was grappling with falling blood donations, rising blood-testing costs and increased F.D.A. regulation. Health professionals were also turning to the Red Cross to train America's youth in safe-sex practices. Facing these challenges, the board of governors, a fifty- member voluntary body comprising prominent business and civic leaders, ordered a change at the top. After the charity's president resigned, it had been looking for a new leader for eighteen months when an executive recruiter, E. Pendelton James, who previously had served as Ronald Reagan's personnel director, suggested his old friend Liddy Dole.Elizabeth Hanford Dole is the only woman in U.S. history to have held two separate Cabinet posts in different administrations: Secretary of Transportation under Ronald Reagan and Secretary of Labor under George Bush. She has served as a Federal Trade Commissioner and as a consumer advocate, and she has been mentioned more than once in the past as a potential vice-presidential candidate. Gallup polls in both 1987 and 1990 listed her as one of the world's ten most admired women, along with Corazon Aquino and Mother Teresa."Elizabeth really dazzled us," recalls Marian Anderson, a longtime volunteer from Omaha who was head of the presidential search committee. "She's purposeful and articulate, and she also has that extra dimension that you don't often see -- a real sense of humanity." According to Anderson, whose husband is the retired publisher of the Omaha World-Herald, "Coca-Cola and the Red Cross are the two most recognizable symbols in the world, and we felt strongly that Elizabeth would be a fitting spokesperson for us."By all accounts, when Mrs. Dole became Red Cross president, she threw herself into the task with real fervor. She hired an impressive group of experts from the pharmaceutical industry, the blood-banking business, the military and the government to help straighten out the organization's problems. At the top of the list, Dole persuaded Fred Kyle, the former head of the worldwide pharmaceutical division of SmithKline Beecham, to come to the Red Cross at a substantial cut in pay to become the new senior vice president of biomedical services -- the top officer for that troubled division. She also brought over John William Thomas, former chief fund-raiser at the New England Medical Center, who became the Red Cross's new senior vice president for development; and Sharon Ritter Smith, former director of the charity's highly successful Oregon Trail chapter in Portland, who became the senior vice president of chapter services -- the division responsible for disaster relief, health and safety programs and other social services performed by the more than 1,600 Red Cross chapters.Dole also reshaped the board of governors with an impressive roster of names from the public sector and the corporate world. This was an important step because the board is responsible for approving all policy decisions as well as all salaries greater than $50,000. Dole brought in a new chairman of the Red Cross, Norman Augustine, the C.E.O. of giant defense contractor Lockheed Martin, and a new chairman of the board of governors' finance committee, retired Air Force Gen. William Usher, also an executive with Lockheed Martin. She handpicked the at-large members on the board and recommended other members whom the chapters subsequently elected. (The Red Cross board also includes eight members appointed by the President of the United States.) On the surface, her Red Cross tenure couldn't look rosier. When she took her leave last year, Mrs. Dole said, "I have a continuing concern for at-risk youth and I believe, both as First Lady and president of the Red Cross, I could help the country rekindle its spirit of volunteerism and philanthropic giving."In a farewell press release, and subsequently in the media, she was given credit for luring top talent to the charity from the private sector, strengthening the Red Cross board, launching a radical "transformation" program that cleaned up the country's blood supply and generally running a tight, nonpolitical ship, which included working out a modus vivendi with the F.D.A. The New York Times's Douglas Frantz recently credited Dole with reinvigorating the Red Cross and said that she "refurbished its coffers with millions of dollars from corporate donors" and "centralized control in Washington." Frantz referred to the "marketing arm" she created, and said she "adopted other tactics more often associated with business than with charity."In fact, a look at documents from the Red Cross and the F.D.A., along with scores of interviews with former and current Red Cross staff members and volunteers, uncovers a story far more troubling and significantly less sanguine than the publicity Dole generated through these moves.THE TRANSFORMATIONIn 1988 the American Red Cross had signed a voluntary agreement with the F.D.A. to fix its error-plagued blood program. But the charity continued to have problems, and it became the subject of a Congressional hearing in 1990and 1991. As Gilbert Gaul reported in The Philadelphia Inquirer, by April 1991 the Red Cross had begun to plan an overhaul of its blood program that executives hoped would meet the F.D.A. standards.Mrs. Dole's special team strongly urged her to announce the program formally in a major press conference only three months after her arrival to give the impression of action, to buy time with the F.D.A. and to score a significant public relations victory. Not bothering to consult field personnel in advance, Mrs. Dole called a news conference on May 20, 1991. Asserting that "because of the AIDS epidemic nothing short of a transformation is needed," she announced "beginning today a five-part transformation program to be implemented over the course of the next two anda half years." Its centerpiece: "We will temporarily shut down every Red Cross blood center throughout the nation. We will do so in stages, region by region, for eight weeks at a time." During the shutdown, Dole promised, staff would be retrained and new computer systems would be installed to track donors and double-check blood samples.Dole also talked about permanently shutting down many of the more than fifty blood-testing laboratories and consolidating them into a few select labs, increasing quality control and replacing the twenty-eight separate computer systems with one national computer system that would maintain records of the medical history and test results of donors. She declared that the Red Cross would spend some $120 million on the sweeping reorganization, and she described the plan as "the most dramatic and far-reaching public safety step the Red Cross has taken in its history." The announcement had the intended short-term effect. Representatives John Dingell, who had been one of the most vocal critics of the Red Cross, told The New York Times, "This is evidence that the new leadership of the Red Cross takes the issue of blood safety very seriously and has the courage to face up to the problems they have had in the past." And Dole's speech generated glowing editorials in newspapers around the country. But executives in the blood industry had a different opinion of the transformation program. "Shutting down all of our blood banks for eight weeks would have caused total chaos in the medical community -- it simply couldn't be done," says Tony Dombroski, principal officer of the Northeastern Pennsylvania Region of American Red Cross Blood Services.Don Thomson, then the director of the Red Cross Greater Ozarks Blood Region, first heard about the transformation program on National Public Radio while sitting in his room at a San Diego hotel, where he was attending a national conference of the Red Cross. "No one had bothered to tell us about the transformation program before Mrs. Dole announced it to the world, even though it would involve massive layoffs," says Thomson, whose former Red Cross region spanned thirty-nine counties, including parts of Arkansas, Kansas and Missouri. "This was the first in a series of major decisions which Mrs. Dole announced first and planned later."In other words, the transformation program (the brainchild of Dr. Jeffrey McCullough, Kyle's predecessor as senior vice president of biomedical services; McCullough was already working on it when Dole arrived) was prematurely launched for political rather than public health considerations. When asked, McCullough, now professor of laboratory medicine at the University of Minnesota Hospital and Clinic, denies feeling rushed by Dole's decision to announce the transformation while planning was still in process, and even says that members of the special team, particularly Will and Goldfarb, "brought a valuable perspective to our discussions about the blood supply." But he left shortly after the announcement, and Dole hired Kyle to replace him."Kyle found out that the transformation program was more show than substance, and that this grand scheme to shut down the blood banks simply wasn't very practical," recalls Jim MacPherson, executive director of the Council of Community Blood Centers (C.C.B.C.). "The Red Cross wound up not shutting them down, because they couldn't have collected enough blood to make up for the shortfall."Meanwhile, the Red Cross corporate headquarters began to generate scores of press releases crowing about the transformation program. But instead of buying time from the F.D.A., the bold statements promised more than the organization could deliver in two years, and that began to have disastrous consequences. "Elizabeth's announcement may have set the clock running at the F.D.A., and when we couldn't meet the two-year deadline for transformation, they came after us," says Buzz Braley.Indeed, in 1993, two years after Dole's announcement of the transformation program, the F.D.A. cited the Portland, Oregon, Blood Collection Center for improper procedures. Most of the criticism was for minor clerical errors and failure to follow strict federal guidelines, according to Braley. "To allay the fears of the people of Oregon, a blue-ribbon panel of experts from the local area, including doctors and hospital executives, analyzed the procedures at the center and declared it safe," he says. "No tainted blood was ever released in Oregon, and no one at the Red Cross was seriously worried about the blood supply." But the local press was running stories about the F.D.A. finding, and John Heubusch of the special team, pointing out that the Doles didn't need the negative publicity, recommended firing the director.Kyle, who declined to comment for the record, was asked to fire the Portland center head but refused on the ground that the director (who was ultimately forced to take early retirement) was being made a scapegoat. Braley and others in the industry say that Kyle became increasingly disillusioned. "Fred Kyle had had a distinguished career in the pharmaceutical industry, and he came to the Red Cross at a tremendous cut in pay because he thought it was a noble cause," says MacPherson of the C.C.B.C. "We began to hear that Kyle was disgusted with the way things were going at the Red Cross and especially the micro-management by Mrs. Dole's personal advisers and consultants." Kyle couldn't get Dole to make decisions without her team's input, adds Braley. "She tended to use her personal advisers as her sounding board for issues involving the blood banks, when she should have used Kyle and his medical experts." With lack of clear guidance from corporate headquarters, the transformation program began to lag further and further behind schedule, and to run millions over budget.THE CONSENT DECREEIn spite of these problems, by 1993 the Red Cross's biomedical division had begun to make some of the changes called for in the transformation program. Although the much-heralded idea of shutting down blood centers had ultimately been abandoned, the organization had begun to consolidate some of the testing laboratories, to upgrade its computer system and to provide additional training for the staff at the many different blood banks. But the F.D.A. still wasn't satisfied."We continued to find extreme unevenness in the performance of the regional Red Cross blood banks, and the organization wasn't taking advantage of its best regions and using them to set an example for the others," says Jane Henney, a former F.D.A. regulator who today is vice president of health sciences at the University of New Mexico. "The informal arrangement we had had with the Red Cross clearly wasn't enough to get them to take matters more seriously. Ultimately, we had no choice but to take them to court."At 6:30 on a spring night in 1993, a fax machine in the corporate counsel's office of the Red Cross began receiving a rather lengthy document. The thirty-two-page consent decree stated that the Food and Drug Administration had just filed suit against the American Red Cross in Washington district court accusing the organization of broad regulatory violations in its blood centers. The document set timetables for a far-reaching overhaul of the blood centers, and it said that criminal charges would be filed against Red Cross executives if the organization did not make those changes in the allotted time. Heading the list of those whom the F.D.A. held legally responsible was Elizabeth Dole.According to a former vice president of the Red Cross, Mrs. Dole quickly called Representative Dingell and Secretary of Health and Human Services Donna Shalala to reassure them that the blood supply was safe. Meanwhile, Karen Lipton, the former Red Cross general counsel, along with Kyle and other officials, negotiated an alternative version of the consent decree with the F.D.A. -- one that omitted Dole as a defendant and didn't hold her senior staff legally responsible for failing to meet the terms of the agreement. But the decree still imposed -- and continues to impose -- tremendous reporting and training requirements on the Red Cross. It stipulates that all the different regions, and even the thousands of Red Cross bloodmobiles, have to operate under a single set of standard operating procedures. It also charges the Red Cross for the costs of all subsequent F.D.A. inspections that the regulatory agency conducts to evaluate compliance with the decree."The F.D.A. was pushing us so hard at that point, we actually talked about getting out of the blood business altogether," recalls Lipton, who is now the C.E.O. of the American Association of Blood Banks. According to a well-placed source privy to the negotiations, "Elizabeth became extremely concerned to the point of paranoia about our failing to meet the conditions of the decree -- and especially how that would look for her politically."Because of that concern, Dole asked a member of her special team, Michael Goldfarb, and the senior vice president of the Red Cross's national operations group, retired Gen. William Reno, to begin an investigation of the biomedical services division, even though that division had just spent thousands of dollars on an internal audit that found no safety problems in the Red Cross blood supply."Elizabeth asked her own team to go behind the scenes to find out where the money was being spent, and why certain projects weren't completed," says Braley. She didn't tell Fred Kyle about her decision until the review was about to begin."Kyle and his staff had no choice but to resign," Braley adds. "The review came as a direct slap in the face. Going behind people's backs to find out what they were doing totally demoralized the troops." With more than 14,000 employees and several million volunteers in the biomedical services division, the director's resignation also created chaos in the chapters."Between the consent decree, all of the changes we were being asked to make and all of the turmoil in national headquarters, morale within the Red Cross reached the point of crisis," recalls blood services regional officer Tony Dombroski. "All around the country, doctors and nurses and lab technicians left the organization. We saw a mass exodus of all of the best staff who had worked at the Red Cross who really knew blood banking."Karen Lipton became the interim chief of blood services, and during the eight-month search for a chief, the F.D.A. frequently voiced concerns about the lack of stability in the organization. Says Lipton: "To be in a position of trying to run your business while someone is looking over your shoulder is very difficult. Just imagine if you're working in a situation where there's an internal review going on, and the people in charge of it don't want you to make any major changes until they're done and they've made certain recommendations. But meanwhile you're operating under a consent decree, so you have to get certain things accomplished within a tight period of time. We had a hard time filling the director's position, because it's a no-win job." By the time Elizabeth Dole took her leave, not just Kyle but also Lipton and John William Thomas, the senior vice president for development, had resigned as well.According to Brian McDonough, a veteran of the Red Cross and its new executive vice president and chief operating officer for blood services and biomedical services, the Red Cross has so far spent at least $162 million on the transformation program, and it will not be completed for at least two to three more years.In 1995, the last year for which Elizabeth Dole had responsibility, the blood division reported its largest deficit ever-$113 million, after losing $50 million the year before. This resulted in an $84 million loss for the Red Cross, the largest in its history. To finance the major deficit, national headquarters has borrowed $11 million from blood services regions; more than $60 million from the chapters, including a substantial sum from the disaster relief fund, which was recently repaid; and $22 million from the pension reversion fund. It has also responded the way many organizations respond when they're looking down the barrel of a major deficit: It froze wages, cut its staff by more than 5 percent and raised prices on the blood products it sells to hospitals.Although F.D.A. Commissioner Kessler has praised the Red Cross for making progress in addressing its problems, in a 1994 letter to the organization, obtained by The Nation under the Freedom of Information Act, the F.D.A. continued to express concern about the Red Cross's blood banks. In the letter, associate F.D.A. commissioner for regulatory affairs Ronald Chesemore called the Red Cross's proposed quality assurance program "unacceptable" and the changes in its computer systems "inadequate," and said the "ARC has not adequately addressed several critical areas of operation." Soon after that letter, in 1995, Senate majority leader Bob Dole introduced legislation to curb the power of the F.D.A. Coincidence? Maybe. A conflict of interest? No doubt about it.This year, Bob Dole's close ally, Senator Nancy Kassebaum, is pushing a bill specifically targeting the F.D.A.'s regulatory duties, while House Republicans are advocating a more extreme bill that would allow the blood-banking industry to hire its own private contractors to inspect blood banks. The same bill allows the pharmaceutical industry to hire its own consultants to test the safety of drugs and other medical devices, and would take away the F.D.A.'s power to review computer programs used by blood banks -- a particular concern of the American Red Cross, which has spent millions of dollars trying to satisfy the F.D.A.'s requirements and still hasn't completed its computer revamping.A new internal F.D.A. assessment of the Republican legislation, obtained by The Nation, states that the "F.D.A. would be unable to protect the nation's blood supply" if the House version became law. "F.D.A.'s current enforcement powers to act against violative blood banks would be limited, and the agency could not even force the recall of contaminated blood. Also, blood processing and handling organizations would be able to inspect themselves, in lieu of current F.D.A. inspections."Because the nation's principal blood banks belong to the Red Cross, the legislation would benefit that organization more than any other blood-banking group. If Bob Dole reaches the White House, he will be in a position to sign a Republican- passed bill that would protect his wife's organization from legal liability and federal regulation.Reprinted with permission from the July 1, 1996 issue of The Nation.