The testicles continue to produce sperm, but they are broken down and absorbed by the body. Much fluid content is absorbed by membranes in the epididymis, and much solid content is broken down by the responding macrophages and re-absorbed via the blood stream. Sperm is matured in the epididymis for about a month once it leaves the testicles. Approximately 50% of the sperm produced never make it to the orgasmic stage in a non-vasectomized man. After vasectomy, the membranes increase in size to absorb and store more fluid; this triggering of the immune system causes more macrophages to be recruited to break down and re-absorb more of the solid content.
Furthermore, the weight of the evidence regarding prostate and testicular cancer suggests that men with vasectomy are not at increased risk of these cancers.
The rate of pregnancy depends on such factors as the method used for the vasectomy and the length of time that has passed since the vasectomy was performed. The reversal procedures are frequently impermanent, with occlusion of the vas recurring two or more years after the operation.
Source: Wikipedia > Vasectomy
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