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Author: Richard Jaffe

Can a doctor recommend medical marijuana for a five-year-old in California?

Can a doctor recommend medical marijuana for a five-year-old in California?

That’s the question that will be answered in a California medical board case I am trying this week in downtown Los Angeles.

Back in 1996, California became the first state to allow for a doctor to recommend medical marijuana for patients with serious medical conditions. There was a lot of confusion initially as to what was required to issue the recommendation without getting into board trouble. The California law (called prop 215) by its terms granted physicians immunity from prosecution or even investigation based on their writing a medical marijuana recommendations. (Because it is a schedule I drug, it can’t be technically “prescribed.”).

Notwithstanding the immunity, doctors were prosecuted by the board for writing these recommendations. The administrative law judges, the medical board and the courts allowed for these prosecutions on the theory that if a doctor doesn’t follow standard medical procedure in making the recommendation, he or she is subject to discipline. To some it’s a very subtle distinction, but it does reflect the state of the law in California. Basically a physician has to go through the same kind of analysis and procedure to make the recommendation as he/she would for any other therapeutic recommendation. That means, a history and physical appropriate to the mental condition, informed consent, a treatment plan, follow up, and adequate medical records. Presumably, if the doctor does all that, then theoretically he or she shouldn’t be prosecuted or investigated, just because the treatment recommendation was medical marijuana.

Here are the facts of the case being tried this week

A father brings his son to see the physician. The father is a long-standing patient and has a prop 215 medical marijuana letter from the physician. He explains that the school has told him that his child is so disruptive they’re not going to let him back unless he’s put on medication. He is also disruptive at home. The physician examines the child, obtains history from the father, and observes the child for around 20 minutes, and then agrees to write the recommendation. The father signs a detailed informed consent, and the physician has typed medical record evidencing the history and exam, and states as the diagnosis probable bipolar/ADHD. (back in 2012 they didn’t have any better diagnostics possibilities)

The parents give the kid a small cookie with some marijuana in it before school each day.

miracle of miracles, the child is no longer disruptive in class and he becomes a model student. But it wears off towards the end of the day, so the school requests that the child receive a second dose after lunch.

The rub

The school doesn’t know the kid is on MM. The father naively goes to school and gives the teacher a MM cookie and asks that it be given to his child.

You guessed it!

The school freaks out, call the sheriff’s department, which opens up a criminal investigation of the father. It also calls CPS (child protection service) which obtains a temporary removal order for all four kids. The mother then takes the kids out of state, and the sheriff’s office pursues criminal charges against the father. The father sues back. Eventually, the family returns, the CPS order is dropped, and the father settles with his prosecutors. But there was a lot of collateral damage. The parents get divorced. The child has to be involuntarily committed for a few days because of rage and aggression (he hasn’t been on MM since it was originally given to him several years before his commitment), and he’s diagnosed with a newly established medical condition. All the kids and the father now live with his parents. The father is now being prosecuted for cultivation. The child is still on bad shape because the parents are refusing Ritalin or other drug therapy, and the doctor won’t write another MM recommendation.
(And by the way, the cops file a complaint against the doctor with the medical board.)

Those are some tough facts. Our experts think that all this harm was caused by the overreaction of the authorities. The Board of course blames the doctor. Neither of the Board’s experts appear to have any experience with small children (they are family practitioners) and neither think MM should be used for anything, because of insufficient peer review literature support.

We one of the country’s leading MM experts, Jeff Hergenrather, M.D. and a physician who ran the UC PACE program for physician training and rehabilitation. Doesn’t seem like a close case expert-wise.

There’s also the little matter that the case may have been filed 8 days after the statute of limitations expired. In fairness, I did spend some time resisting providing medical records (like over two years), but the statute of limitations is a harsh mistress.

Anyway, it should be an interesting case. If any of my friends happen to be in downtown LA this week, stop by: Office of Administrative Hearings, 320 West Fourth Street, Suite 630; Tomorrow (Wednesday) through Friday.

I’ll bring the popcorn!

Rick Jaffe, Esq.
rickjaffeesquire@gmail.com
www.rickjaffeesquire.com

Is CBD Oil Legal?

Is CBD Oil Legal?

The CBD oil business has exploded in the last couple of years. I was at an integrative medical conference in New York City back in February and I asked a few CBD oil vendors whether their product was legal. They all assured me that their product was legal, some claiming that it was legal because it contained less than 0.3 percent THC, while others said it was legal because it contained no THC. That didn’t sound right to me. I have a friend who distributes CBD oil and I recall looking into the legality a year or two ago, and I recall the feds did something or other which got the CBD oil and hemp industry up in-arms, and I also recalled that two California counties shut down prominent CBD oil manufacturers. At the conference several of my practitioner friends asked my opinion about using it in their practices and/or distributing it. So I decided to take a harder look at it.

Note that there is some biological confusion in the regulatory field because both legal hemp and illegal marijuana carry the same plant nomenclature, (Cannabis sativa L.) As I understand it, the difference between the two is a result of breeding and the use the male, non-flowering plants (for hemp) and female flowering plants for marijuana.

The Regulators

The DEA (drug enforcement agency) regulates narcotic drugs and other dangerous or addictive drugs. The primary statute is the Controlled Substances Act (“CSA”). The CSA and its implementing regulations create five categories or schedules of drugs, roughly corresponding to the level of addiction potential. Drugs available for prescription are listed in schedules 2 through 5. (the statute uses roman numeral designations) Schedule 1 is reserved for drugs with supposedly no medical value whatsoever, like heroin, LSD and marijuana. Schedule 1 drugs are illegal to sell or use, at least under federal law.

As you know, many states have laws on marijuana and some also specifically regulate CBD oil. However, technically, federal law preempts state law on these drug issues, though there have been few or no recent federal enforcement actions challenging state marijuana laws.

So what is Marijuana under the CSA?

According to Section 802 (16) of the CSA:

“The term “marihuana” means all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin.

Such term does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination.”

Marihuana is a schedule 1 drug. However, if the cannabis product is made from the mature stalks, fiber, oil or cake made the seeds of such plant … then it’s not marihuana and is not an illegal schedule 1 drug.

The DEA has issued several clarifications basically saying that CBD oil which is made from the flowering and other parts of the Cannabis sativa L plant is included in the definition of Marihuana, so it is a schedule 1 drug.

So what’s all this talk about .3% or no THC?

Some countries use the amount of THC to distinguish between legal hemp and illegal marijuana.

In the U.S., the .03 percent THC cut-off is only used in a recent farm bill for hemp. The bill basically defines hemp as a cannabis product which has less than .3% THC.

However, the bill and its hemp definition doesn’t overrule or modify the definition of marihuana in the CSA, and the bill only applies to agriculture research into what is called hemp in the bill.

Here is the law.
https://www.deadiversion.usdoj.gov/schedules/marijuana/m_extract_7350.html.

So anyone who is telling you that their CBD oil is legal because it contains less than .3% THC or no THC, is confused or misleading you.

As shown above, it’s not how much THC is in the product, it’s the source of the product; i.e. the part of the plant used which determines whether the product is illegal marijuana or a legal hemp based product.

What about some federal lawsuit by the Hemp Association? Didn’t that make it legal?

Short answer no. The Hemp Association, filed a federal lawsuit last year, Hemp Industries Association, et al, vs DEA, et al, challenging some abstruse classification issues creating a marijuana extract classification for international reporting purposes. The Hemp group claimed that it effected a reclassification of things like CBD oil from legal to illegal. The DEA argued that CBD oil has always been illegal, as evidenced by its recent clarifications to the public. I read the briefs and even listened to the oral arguments. I thought the case was a loser. The 9th Circuit recently denied the Hemp group’s petition.

So federally it’s simple, isn’t it?

If the product you’re selling or using is coming from the stalks, oils . . . it’s legal, otherwise it’s not. At least according to the DEA and under federal law, which the federal government believes supercedes or preempts state law to the contrary.

What can change things?

The good news is that the CBD oil proponents haven’t been sitting on their thumbs. In late April 2018, a new hemp farming bill was introduced in Congress. Here it is:

https://www.congress.gov/bill/115th-congress/senate-bill/2667/text/pcs?overview=closed&format=xml

It would do what the old farm bill didn’t actually do, namely set the threshold of legality of cannabis products at the .3% of THC. Meaning, irrespective of the part of the plant being used, if the product has less than .3% THC, it’s not a schedule 1 drug and is legal.
We’ll see how far the bill goes.

What else is in the horizon?

Pres. Trump is making noises about legalizing marijuana. That might make the farm bill moot, since if marijuana isn’t a schedule 1 drug, well that would make a lot of people happy and should resolve the CBD oil legal problem.

(Complicating things is the fact that CDB oil is illegal in some states, so you’ve got the whole federal vs. state thing in reverse if the feds make marijuana legal.)

So what does that all mean to the practitioners and resellers of CBD oil?

Good question; see the sequel to this post anon.

Rick Jaffe, Esq.
www.rickjaffeesquire.com
rickjaffeesquire@gmail.com

Federal “right to try” is law! Now what?

Federal “right to try” is law! Now what?

Last week, Pres. Trump signed the federal right to try law. So what happens next? Meaning, who is it going to affect and how big of a difference is it going to make in the lives of the terminally ill and those without any other therapeutic option.

Why a federal law was needed?

As most of you know, a majority of states have already passed a right to try law. The problem with just having the law on a state level is that the state laws were inconsistent with federal law, in the same way as state medical marijuana laws are inconsistent with the federal DEA drug laws.

But the inconsistency was much more impactful in the prescription drug context, because as I and others in the field have said, the drug companies wouldn’t want to anger the FDA by providing their investigational drugs in violation of federal law, even it was supposedly legal under a state’s law.

A good rule to follow for a drug company seeking FDA approval is not to piss-off the agency which has all but unreviewable power to grant, deny or delay marketing approval. A federal right to try law technically obviates the inconsistency. So for drug companies which wanted to provide investigational drugs beyond clinical trials and expanded access, an important impediment has been removed, in theory at least. (And as discussed later, it’s not clear to me why any drug company wants this law or will use it.)

What are the requirements?

Here is the new statute:
https://www.congress.gov/bill/115th-congress/senate-bill/204/text?q=%7B%22search%22%3A%5B%22S+204%22%5D%7D&r=1

Patient eligibility: the law applies to a person with a “life-threatening disease or condition,” which the FDA defines narrowly as “where the likelihood of death is high unless the course of the disease is interrupted and “where the end point of clinical trial analysis is survival.” (21 CFR 312.82). It is interesting to note that this regulation also defines “severely debilitating” as a disease or condition that causes major irreversible morbidity.” But the law doesn’t apply to people with conditions like MS or any other severely debilitating diseases or conditions, since the likely result of MS and other seriously debilitating diseases is not death, and the purpose or clinical trial analysis is not survival in these types of clinical trials.

The bottom line is that the law does really only apply to patients who have a terminal illness and who have no other treatment options. Think metastatic cancer and maybe ALS (and I’m sure there are other diseases, but I’ll leave that to the docs to figure that out.)

The law also prohibits the doc certifying the terminal condition from receiving direct compensation for the drug manufacturer. And of course, proper informed consent is required, but that always a requirement with investigational drugs.

Requirements for the drug

Most importantly: the drug has to have gone through an FDA approved Phase I clinical trial. Phase 1 is usually a small toxicity study, the goal of which is to make sure that the drug isn’t too toxic to administer to patients at the expected therapeutic dosage.

Phase 1 studies do not have to show efficacy; however, a drug which shows zero efficacy might not create much enthusiasm from the sponsoring drug company to justify the cost of further study. And I would think that most people might want to see at least some benefit, however small, from a study, or at least some anecdotal evidence of some positive result. My sense is that many drugs which have passed through phase 1 can show at least some marginal improvement in some subjects. This is the case despite the fact that the overwhelming majority of post phase 1 drugs don’t get approved. (And there are a lot of reasons for that, including the obvious that the drug doesn’t work, or doesn’t work in a high enough percentage of subjects).

The post phase 1 drug must also be in active development and not be on a clinical hold.

Requirements of the drug sponsor/manufacturer

There are three requirements imposed on the sponsor, two are simple: the drugs have to be properly labeled as investigational, which is easy because the drug was already given in a phase 1 study and the drug label had already been approved by the FDA. (A small change in the label might be required.)

Second, the sponsor can’t promote the safety or efficacy of the drug, but a sponsor is not allowed to do that in clinical trials either. So the sponsor doesn’t have to do anything different from its actions (non-actions) in the clinical trial.

Third, the sponsor at most can recover the direct costs of the drug provided to the patient, but that’s a narrow and parsimonious amount of money. I read the statute as not requiring an accountant’s certified statement supporting the cost recovery which is the case when a sponsor wants to cost recover for patients in clinical trials. The bad news (for the drug company) is that the direct costs for each patient is likely to be an insignificant number as it doesn’t include the drug’s development costs. So I don’t see many drug companies charging for the investigational drug.

Protections for the sponsor/prescriber

If the sponsor and prescriber follows the law, they can’t be sued for simple negligence, but they can be sued for alleged reckless or willful misconduct, gross negligence or an intentional tort under state law. Practically speaking, that’s not all that much protection since it’s easy to allege facts which show more than simple negligence. But it’s something.

Reporting results of the right to try use

The manufacturer or sponsor has to provide an annual summary of the use and serious adverse events. (Adverse events don’t require a causal connection to the drug, just a temporal association.)

Can the FDA use the serious adverse in evaluating the sponsor’s new drug application?
Yes, but only if the FDA determines that the use of the data is critical in determining the safety of the drug. That’s pretty broad. I would expect that if the drug is producing many serious adverse events, beyond what was reported in the results of the regular clinical trials, these data will be carefully looked at by the FDA.

The good news for sponsors

The statute specifically states that drug manufacturers do not have to provide investigational drugs pursuant to the law, and can’t be liable for not doing so.

Why is that good news for them?

I am hard pressed to think why any manufacturer involved in clinical trials would agree to provide its drug under this law. All I see is downside. The patients likely to want its drug are probably a lot sicker than the subjects it selected via entry criteria to get the drug on the study. The sicker the patient, the more serious adverse events which may or may not have been caused by the study drug, but as indicated, adverse events aren’t about causation, just a temporal association. Drug sponsors try to stack the deck in their favor by treating the healthiest patients than can with the condition. Why stack the deck the other way?

I can only think of two circumstances where that would make sense.

First, the results of the phase 1 study are so spectacular and the company lacks the funds to do further clinical studies. It might make sense to push a lot of people onto the treatment to amass more spectacular data.

Second, a sponsor/manufacturer is a physician and the business model involves providing an investigational drug to patients. But that’s a very rare model in the U.S.

The bottom line is that I don’t think many drug companies will voluntarily use this law. Frankly, if I was asked to advise a company about it, I’d tell them not to do so other than the two above circumstances because I just see downside. I know that sounds harsh, but the main job of a drug company developing a new drug is getting it approved. Anything that helps that process should be pursued. Anything that doesn’t, could hurt, or distracts from approval shouldn’t.

The law ends with something I’ve never seen before, a section entitled “Sense of the Senate.”

It’s so strange, I’ll let it speak for itself:

“SEC. 3. SENSE OF THE SENATE.
It is the sense of the Senate that section 561B of the Federal Food, Drug, and Cosmetic Act, as added by section 2—
(1) does not establish a new entitlement or modify an existing entitlement, or otherwise establish a positive right to any party or individual;
(2) does not establish any new mandates, directives, or additional regulations;
(3) only expands the scope of individual liberty and agency among patients, in limited circumstances;
(4) is consistent with, and will act as an alternative pathway alongside, existing expanded access policies of the Food and Drug Administration;
(5) will not, and cannot, create a cure or effective therapy where none exists;
(6) recognizes that the eligible terminally ill patient population often consists of those patients with the highest risk of mortality, and use of experimental treatments under the criteria and procedure described in such section 561A involves an informed assumption of risk; and
(7) establishes national standards and rules by which investigational drugs may be provided to terminally ill patients.”

I’m not sure what it means or why its in the bill, but I like.

Congrats to the Goldwater Institute and all the supporters who made it happen. Hope it helps, and from my perspective, it’s moving in the right direction.

In case you folks are looking for the next thing. Maybe access to some foreign approved drugs for terminal or severely debilitating conditions.

Rick Jaffe, Esq.
www.rickjaffe.com
rickjaffeesquire@gmail.com

Criminal prosecution was not a concern or consideration in Regenerative Sciences’ decision to stop treating patients in its case way back then

Criminal prosecution was not a concern or consideration in Regenerative Sciences’ decision to stop treating patients in its case way back then

In an earlier post discussing the decision making facing the US Stem Cells and California Stem Cell Treatment Center folks, I discussed the Regenerative Sciences case in which the district court granted the government’s summary judgement motion to bar the company from providing its expanded stem cells to patients (which decision was affirmed by the Court of Appeals.) I related that the company agreed to stop treating patients with the contested procedurevery early on, pending the outcome of the injunction case. I opined that because of the lawsuit result, it was the right decision, and made the counterfactual speculation that that might have been the reason the principals weren’t indicted. This was made to make my point that the two stem cell companies facing injunction actions also face the prospect of criminal prosecution.

Paul Knoefpler’s blog about my post quoted one of Regenerative Sciences’ attorneys pushing back on my counterfactual speculation, stating that the prospect of criminal prosecution was never in the lexicon or under discussion with the government or discussed internally. That lawyer reached out to me directly and asked that I delete that part of the post.

I’m going to have to respectfully decline to do so. However, as he is a respected and credible witness to a historical event, his statement is important and here’s what he wrote to me:

“I was counsel in the Regenerative Sciences case, and I can assure you that there was never any discussion of criminal investigation or prosecution. It literally never came up; not once. The decision to halt the procedure involving culture expansion was both strategic and practical….”

He indicated what those strategic and practical reasons were, but I don’t feel comfortable relating them in this post, only because I haven’t asked his permission. The part I quoted was what he already told Knoefpler on the record.
(personal communications from Andrew Ittleman to me 5/25/18)

I take Mr. Ittleman at his word that there was never any discussion of criminal investigation or prosecution in the decision making process.

That being said, my point was a counterfactual, and while the criminal talk might not have come up in the early part of his case, my lexicon is in part shaped by my representation of what I think was the first doctor using cord blood for therapeutic purposes back in 2002-2003, and the first doctor to be investigated by the FDA for doing so. In that investigation, the FDA explicitly mentioned criminal prosecution, and mentioned the felonies they wanted my client to plead guilty to. They also insisted that he stop treating patients because what he was doing was illegal.

I thought the government couldn’t prove its case, and told him he didn’t have to stop treating patients. I also advised him not to accept any plea. He was never indicted.

In 2006, after a two year investigation, the feds did indict this doctor’s former partners. The charges were wire fraud for fraudulently inducing patients to undergo an unproven cord blood/stem cell treatment, and the FDA trifecta of violations. Sensing what was coming, the pair fled the U.S. prior to the indictment. I worked on that case until my client’s untimely death.

I also had discussions with one of the defendants in the big Texas stem cell fraud case (the one on 60 Minutes). Ultimately, I didn’t get involved, but all the defendants were convicted/pled out.

The Regenerative Science case was different procedurally of course, but they were treating patients not in accordance with the stell cell regulation, 21 CFR 1271, because they weren’t following the same surgical procedure guidelines, (because they were expanding the cells over a period of time.) Even back then, I was advising clients that expanding cells was more than minimal manipulation. Even under the FDA’s prior looser interpretation of 1271, the Regenerative Science folks were on the wrong side of them, the violation of which does raise the FDA trifecta, which are both civil and criminal.

So while not deleting my counterfactual speculation about what didn’t happen as a result of the Regenerative Sciences folks deciding to stop treating patients, I accept and put out there that the issue of criminal prosecution was not a consideration in the company’s decision to stop treating patients pending the outcome of its injunction case with the FDA, and was not even a topic of conversation. And while I am happy to hear that criminal prosecution was not a topic or consideration in that case, I stand by my main point that it most certainly should be in these two current injunction cases.

Rick Jaffe, Esq.
www.rickjaffeesquire.com
rickjaffeesquire@gmail.com

Further thoughts on the defendants in the FDA’s stem cell injunction actions

Further thoughts on the defendants in the FDA’s stem cell injunction actions

My post about considerations facing the defendants in the FDA’s injunction cases,

http://rickjaffeesq.com/2018/05/17/hard-choices-stem-cell-

defendants-fdas-injunction-cases/

was discussed yesterday in the stem cell field’s big dog, the Niche, by Paul Knoepfler.

https://ipscell.com/2018/05/when-the-fat-stem-cells-hit-the-fire-will-clinics-sued-by-fda-opt-to-stop-soon/.

After reading it, a follow-up is in order.

A correction and follow up:

In my post, I said that both US Stem Cell and California Stem Cell Treatment Center had received warning letters. Knoepfler correctly pointed out that the California company had not received a warning letter from the FDA, just 483 inspection observations. I stand corrected.

BUT what the company did also get was a visit from federal agents who executed a search and seizure warrant, which removed the smallpox vaccine and presumably seized records.

See my original post on this and the warning letter to US Stem Cells.

http://rickjaffeesq.com/2017/09/22/sleeping-giant-awakens-fda-starts-final-push-eliminate-practice-medicine-stem-cell-clinics/

I haven’t reviewed the search warrant, but normally search warrants are issued in the name of a grand jury and is approved by a federal magistrate. As we all now know as a result of the Trump/Michael Cohen legal drama, an affidavit in support of the search warrant would have to establish probable cause that a crime was committed. (Affidavits in support of search warrants are normally sealed until after an indictment.)

So, the lack of a warning letter shouldn’t be all that comforting to the California folks, since it appears that some federal judicial officer has already agreed that the facts alleged in the affidavit constitutes a federal crime.

I think a 483 with a search and seizure warrant is at least the functional equivalent of a 483 plus a warning letter in terms of establishing intent, which is as stated, is the ticket to Felony land.

In fact, it’s arguably worse practically than a warning letter, since the both the OCI (the FDA’s office of Criminal Investigations) and the criminal division of the US Attorneys’ office are likely already involved in the case. These are government employees you definitely don’t want sniffing around your controversial stem cell business. (Again, on the assumption that the warrant was a standard federal criminal warrant.)

Follow-up on US Stem Cell public corporation status

Knoepfler suggested that I didn’t factor in US Stem Cell’s public company status in the decision tree on whether or not it should stop treating patients now.
Interesting point taken. Here’s my quick analysis:

The main difference between private and public companies is that public companies are required to file reports with the SEC, annually, and usually quarterly. The reports (10K’s and 10Q’s) give shareholders and the public at large the company’s financial information as well as disclose other material information which affect the company’s health and future. The information required to be disclosed comes from a variety of sources, including accountants and attorneys who do work for the public company.

As reported by the Knoepfler last month, US Stem Cells issued a press release:

“On or about March 1, 2018, the U.S. Securities and Exchange Commission (“Commission”), Miami Regional Office (“Commission Staff”), served a subpoena upon U.S. Stem Cell, Inc., which seeks production of certain documents and communications including, among other things, minutes and other documents relating to the Company’s board and audit committee meetings, financial statements, and press releases. The Commission Staff is conducting a formal non-public, fact-finding inquiry of U.S. Stem Cell, Inc. This investigation is neither an allegation of wrongdoing nor a finding that any violation of law has occurred. The Company is cooperating with the Commission Staff and has provided, and will continue to provide, information and documents to the Commission Staff.***”

Here is the link to Knoepfler’s article about this and other problems the company faces.

https://ipscell.com/2018/04/clinic-biz-us-stem-cell-reports-sec-subpoena-adding-to-uncertainty-on-its-future/

Having started my career in a wall street securities litigation firm, and having represented a few small, thinly capitalized public companies involved in controversial or innovative technologies, I have some experience with the decision-making which is going on right now at the company.

There are two big reasons the SEC would investigate a very small public company like this: The second reason is possible stock price manipulation. That’s not likely since the company’s stock is probably thinly traded.

The first, and more likely reason is disclosure issues in the reporting documents, and more likely still, press releases, and specifically the possible inaccuracy thereof.

Let’s just say that the company’s business model (and future revenue stream) has arguably been in some doubt since at least the issuance of the FDA’s draft stem cell guidance documents, and arguably in serious doubt since the FDA’s warning letter and the final guidance documents.

There is often a battle between the company and its outside lawyers about how much to disclose and how bleak a picture to paint when bad stuff/things with potential negative consequences happen. Usually a compromise is reached, but the compromise is often less than absolute, perfect disclosure that would maximally protect the company (and the lawyer).

This company and its founder have a lot of enemies out there. Something I’ve seen very often is that the enemies of promoters of unapproved medical interventions use government investigating authorities to attack these businesses. The vehicle of choice is the state medical boards, but when the feds have jurisdiction like in this case, it’s a no-brainer. I’d bet someone in the stem cell mafioso filed some kind of complaint with SEC about alleged false and misleading press releases and required filings.

The other shoe that hasn’t dropped yet

My prediction is that the SEC inquiry/investigation and the FDA injunction action are not the end of the story. There’s more to come.
Either agency action alone would be blood in the water. Together it’s like putting a thousand tons of chum in the water and hoping that the sharks won’t show up in shark infested waters.

The sharks being the plaintiffs’ class action securities lawyers. They are like ambulance chasers only worse, in that they tear apart companies, rather than take money from large, greedy insurance companies. (I still hate insurance carriers.)

These lawyers work on a contingency fee, and so they like to do as little work as possible for maximum gain. One of the best techniques to effectuate this maximum payout for the minimum work ratio is to let other people do their work and apply pressure. There’s no better applier of pressure than the federal investigatory agencies. An adverse finding by an agency like the SEC or the FDA does most of the work on a plaintiff’s liability case. I have been in this situation many, many times and it is not pleasant for the company. It feels like the world is closing in on them.

So, my guess is that if the complaint wasn’t filed by or with the support of one of these plaintiffs’ firms, the combination of the SEC and FDA’s actions is going to make the company a target too good to pass-up.

So, what does all that mean for US Stem Cells?

Up until the FDA litigation, I’m guessing that the company’s insurer has paid the freight on its legal fees and payouts in the several settled malpractice actions.

Normally, FDA litigation costs are not insurable. Neither are SEC investigations, and neither are fraud securities claims filed by private parties (directors might be covered under directors’ insurance policies).

The company is facing massive legal fees over the next year or two, at least in the high six figures. That’s an important consideration. And since the company’s principal is not a medical doctor, there’s no falling back to a straight medical practice which is the option that the principals of the California company have.

The even more important consideration is what effect stopping/continuing will have on the SEC investigation and the likelihood of the plaintiffs’ bar going after the company.

It’s a complicated calculation, like playing multidimensional chess (a la Spock). We’ll see what they decide and I’ll have more to say later.

Rick Jaffe, Esq.
www.rickjaffe.com
rickjaffeesquire@gmail.com

Hard choices for the stem cell defendants in the FDA’s injunction cases

Hard choices for the stem cell defendants in the FDA’s injunction cases

As recently reported, the FDA filed permanent injunction actions against the two highest profile stem cell clinic/operators, US Stem Cells Clinic and Cell Surgical Network/California Stem Cell Treatment. See my post at http://wp.me/p7pwQD-dz

As an FDA attorney who has worked on civil and criminal stem cell investigations and cases, I can tell you that these defendants are facing a major decision: whether to stop treating patients during the pendency of the permanent injunction action.

Here’s what I believe to be the decision tree/analysis:

Factors weighing in favor of stopping operations pending the judge’s final decision:

1. The FDA can seek a preliminary injunction barring treatment pending the outcome of the case

The FDA has not yet moved for a preliminary injunction, but of course it can do so.My guess is that the FDA didn’t give either clinic advance notice that it intended to file the permanent injunction action, and that the FDA decided to file first then discuss with the operators their ceasing operations pending the judge’s decision on the permanent injunction. I would guess that these discussions are currently going on now or has just concluded. If they agree to close down, expect a FDA press announcement soon.

To obtain a preliminary injunction, the government has to prove 1. Likelihood of success of on the merits, 2.irreparable injury, and 3. balance of equities in favor of the government and the injunction pending a final decision.

These are flexible standards. Regrettably, recent case law is on the government’s side, making it likely they can show likelihood of success on the merits.

Both complaints cite cases of actual harm in the form of side effects the some patients. That will present a challenge to the operators, but it’s not insurmountable.

As to the balance of the equities, again it’s a challenge but there are arguments to be made in support of the operators.

A preliminary injunction motion is a mixed blessing. The advantage is that it’s a dry run, in that will give the operators a sense of the judge’s thinking early on in the case. If they lose, they could decide to fold up their tents, which will save them big bucks as opposed to trying a long and expensive permanent injunction case. The downside of course is losing, and that means operations stop, and there are other negative consequences explained below.

In my mind, the government’s threat of filing a preliminary injunction, while serious, should not be a determining factor in deciding whether to stop operating.

2. Potential criminal prosecution

This is where the rubber meets the road. The government is claiming that these operators are introducing into interstate commerce an unapproved new drug, and that the drug id adulterated and misbranded. These are both civil and criminal violations. And here’s where it gets interesting.

The FDA criminal statutes are both misdemeanors and felonies. The difference is intent or knowledge that what you’re doing is illegal. Based on the operators’ prior receipt of the warning letters in late summer 2017, and more importantly, the fact that the operators are now being charged with FDA violations in a civil action, well that goes a long way towards proving they had intent or knowledge that what they are doing is illegal.

And that puts the operators in Felony Land!

And once you’re in the land of felonies, that makes it more likely that the criminal division of the US attorney’s office will get involved, because they are basically “felony factories”, meaning they typically don’t prosecute cases involving only misdemeanors, because most people who plead or get convicted of misdemeanors get probation. (And what’s the fun of that for the prosecutors!) But most people who get convicted of felonies go to jail.

Of course, the operators can take the position that they are entitled to assert their legal defenses in the civil case. However, their lawyers are surely telling them that to do so creates a risk of criminal prosecution and a greater risk of actual incarceration upon conviction. That’s a tough thing for most successful doctors and business folk to risk.

Which is probably why when the FDA filed a permanent injunction action against Regenerative Sciences and its physician owner, Chris Centeno, he decided to stop treating patients with his expanded cell, stem cell procedure pending the outcome of the case. Turned out he made the right decision since he lost both at the district and appellate court levels. I suspect that no criminal charges were brought against him in no small part because of that decision.

Factors weighing for not closing down pending the end of the case:

1. There’s been no decision by a judge yet, and everyone is entitled to present a defense.

2. Their case is different from Chris Centeno’s case in the following ways: ____________,_______,______ (the defendants will have to fill in the blanks.

3. These folks are very, very motivated to seek vindication. Both Berman and Comella have been quoted in the stem cell press as expressing a high degree of motivation and belief in the righteousness of their actions, and caving-in just might not be in their DNA.

4. And here is the biggest factor and the consideration which could carry the day if they decide not to close down pending the outcome of the case:

Both operators have networks of physicians or franchisee physicians providing stem cell treatments throughout the country. (And that’s a big part of the reason why the FDA chose to go after these two first).

I don’t know the details of how these folks operate, but there are many physicians in the United States who treat patients with stem cells associated with these two operations. I suspect, but don’t know for sure whether they supply any stem cell products or supplies to their networkees/franchisees. But if they do, then agreeing to stop operations now might cause the cessation of all the associated clinics. (Hey these Feds aren’t so dumb!) Because the decision could involve so many other people involved in business with them, I think this could be the dispositive factor, if either or both decide not to close their operations right now. One way or the other, there might be some collateral legal/liability issues between the operators and their networkees.

What happens if they don’t close down now?

The decision to remain open during the pendency of this permanent injunction case will certainly have consequences. There is discovery in a civil case, and the defendant should expect to be deposed. There is no Fifth Amendment privilege in a civil case, so the defendants are going to have to answer every question fully, or ultimately, their formal answer to the injunction complaint will be stricken by the court and judgment will be entered against them.

On the other hand, if they do answer questions, the answers will be admissible in a criminal case, whether or not they take the stand in a criminal trial. This is just another wrinkle to what has to be a very hard decision.

Having defended medical mavericks for a long time, my guess is that at least one of them (and probably both) is going to stay open, but we’ll see. It would be hard to overestimate the impact of these cases as they wind their way through the courts.

Rick Jaffe, Esq.
www.Rickjaffe.com
rickjaffeesquire@gmail.com

Texas Medical Board to patients needing stem cells (and the Texas legislature): Drop Dead!

Texas Medical Board to patients needing stem cells (and the Texas legislature): Drop Dead!

Last year, the Texas legislature passed landmark stem cell legislation (HB 810). The law didn’t open the floodgates for every physician who wanted to inject patients with stem cells. However, it did allow patients to access their own stem cells (as well as other people’s stem cells), under controlled circumstances, namely the procedure had to be performed in a high level facility (an ambulatory surgical center or hospital), and it required university type IRB (institutional Review Board) approval.

Here is the Texas law:

https://capitol.texas.gov/tlodocs/85R/billtext/pdf/HB00810F.pdf#navpanes=0

As the bill was winding its way through the Texas legislature, a few Texas senators (probably doing the bidding of the Texas Medical Association and/or the Texas Medical Board (“TMB”) tried to kill the bill by adding requirement that the procedure had to be FDA approved, i.e., part of a clinical trial.
(I pointed this and other flaws in the bill in a post. See: http://wp.me/p7pwQD-a )
Let’s just say that my comments were not appreciated.

The whole point of the law was to allow people to receive stem cells even if they were not part of clinical trials or under FDA approved special exception. Obviously, by re-imposing the clinical trial/FDA approval requirement, the law would be meaningless. Fortunately, the clinical trial requirement was dropped from the final bill.

But………..

There was one other provision in the bill that was particularly worrisome to me: that the TMB was given carte blanc to promulgate rules implementing the stem cell statute.

I’ve been litigating cases before the TMB for 30 years and have interacted with dozens of board members. They are very conservative medically, and most don’t believe in physicians practicing beyond established clinical guidelines. So I was very concerned when the Texas legislature gave the TMB unfettered discretion to set-up rules for stem cells. I said so publicly, subtly in my past posts(see the end of this post, http://wp.me/p7pwQD-ab) and much more bluntly in private conversations with the patient advocates shepherding the bill through the legislature. Let’s just say my concerns were not well-received.

But my long (and hard-fought) experience with the board members and the Board’s legal staff was telling me that the Board was going to be very reluctant to implement the statute as the legislature intended. In fact, the relative ease in which the opposing Senators gave up the FDA clinical trial requirement made me suspect that they simply decided to pass the bill knowing that the Board would kill it, or at least never let it be implemented as the rest of the legislature intended.

So what’s in the Board rule?

On March 26, 2018, the TMB published its proposed rule on HB 810, the stem cell law as well as regulations implementing the Texas “right to try” law (I’ll deal with the right to try regulations in a separate post).

Here is a link to the entire revised rule on investigational treatments:
http://www.sos.state.tx.us/texreg/archive/April62018/Proposed%20Rules/22.EXAMINING%20BOARDS.html#30

Here is a pdf of just the stem cell part of the proposed rule.
SUBCHAPTER B

But it’s a statute and thus pretty boring, so I’ll just relate the part which kills the stem cell law:

“(d) Stem cell treatments which are under investigation in a clinical trial and being administered to human participants:
(1) may be administered or provided to eligible patients with qualifying terminal illnesses or severe chronic diseases as defined by the executive commissioner of the Health and Human Services Commission; and
(2) must be done in compliance with applicable law.
(e) In order for a patient to be eligible to receive treatment with investigational stem cells, the eligible patient must:
(1) be enrolled in a clinical trial investigating the use of adult stem cells in humans;”

As previously stated, the whole point of HB 810 was to make stem cells available to patients outside of clinical trials. There is no need for a law that says patients can enroll in clinical trials, because that’s already the law. The point is to allow clinicians not doing clinical trials to administer stem cells outside of clinical trials.

Well why can’t a clinician just start a clinic trial and administer stem cells to his/her patients?

The answer: because it’s illegal (or so says the FDA). Physicians can’t give non-FDA approved drugs (which the board rule calls “investigational drugs”) to patients except in an FDA approved clinical trial. If they do, they are violating the FDA’s trifecta of introducing an unapproved drug into interstate commerce, and providing a misbranded and adulterated drug to patients. That’s the thrust of the recent injunction actions that I wrote about in my last two posts. (And it’s a nonstarter for the average clinician to do a clinical trial; it’s a quantum level more work and money than any clinician or clinic can do (unless your name is Burzynski).

And remember, the TMB’s proposed rule states that the stem cells being administered to patients in clinical trials must be done so “in compliance with applicable law.” There’s no more applicable law than the FDA law and regulations on clinical trials.

I think there are other problems with the TMB rule regarding IRBs which will make compliance practically impossible for university level IRBs, but that’s secondary to the fact that the proposed TMB rule limits stem cell access to patients on clinical trials performed “in compliance with applicable law,” which was exactly the law before Texas legislature passed SB 810!

Way to go TMB! The stem cell Mafioso is breathing a sigh of relief.

The good news, if there’s any, is that that this is just the TMB’s proposed rule. Public comments are allowed. Here is the number for more information:
(512) 305-7016.

There might be a public hearing sometime in the future. To state the obvious, there’s more work to be done by the folks who are advocating for access to stem cells outside of clinical trials.

Rick Jaffe, Esq.
www.rickjaffe.com
rickjaffeesquire@gmail.com

The FDA’s injunction complaints against US Stem Cell Clinic and California Stem Cell Treatment Center

The FDA’s injunction complaints against US Stem Cell Clinic and California Stem Cell Treatment Center

Yesterday, May, 9th the FDA filed complaints seeking permanent injunctions in Florida and California federal courts against the two highest visibility U.S. stem cell operations. For the interested, here are the complaints.

comella

bermancomplaint

What’s in the complaints?

It’s pretty much as I said in yesterday’s post. The two complaints are substantially identical and no doubt prepared in Washington, primarily by the FDA with input from Main Justice (or vice versa).

Both entities were inspected by the FDA, after which they received 483 inspection observations indicating Good Manufacturing Practices violations and the fact that they were illegally manufacturing unapproved new drugs which makes the products adulterated and misbranded under federal law.

The clinics responded with basically the same legal argument that the FDA didn’t have jurisdiction to regulate them because they were doing a surgical procedure/just practicing medicine which the FDA cannot regulate.

The FDA then issued warning letters rejecting the lack of jurisdiction argument. That was back in late summer 2017. Since that time, both companies continued their rejection/defiance of the warning letters via public statements about the FDA’s lack of jurisdiction over their clinics’ medical practices.

It was just a matter of time.

The complaints go through the FDA standard argument that the products are drugs and biological products, and not covered by the same surgical procedure exemption (21 CFR 1271.15, which I’ve discussed in many of my previous posts:
See my post at: http://wp.me/p7pwQD-bB )

The complaint against US Stem Cell points out that the solutions the company uses to separate the fat from the stem cells and to wash the product are labeled for “research purposes only” and “not for human therapeutic use.” Ooops! (While that’s mostly just CYA on the part of the suppliers, it won’t sit well with the federal judge, and I predict, the suppliers’ limitation language will be in the judge’s final opinion.)

The complaint against California Stem Cell Treatment Center points out that its stem cell product (actually stromal vascular fraction (SVF) contains a small pox vaccine, Vaccinia Vaccine, Live, which carries a black box warning “designed to call attention to serious or life-threatening product risk, including swelling of the heart tissues, brain or spinal cord.” Yikes! Expect a lot of discussion about that in the summary judgement papers.

Both complaints relate serious adverse events associated with the products, which in the case of US Stem Cell are the notorious three cases of blindness (or partial blindness) resulting from injecting the SVF into the eyes of patients (a practice which US Stem Cell mercifully doesn’t do anymore, according to its co-owner).

So what’s next?

The good news is that there is no motion for a preliminary injunction which means that the cases will take some time, months, at least. The companies will file an answer raising all their arguments. A scheduling conference with the judge will be held, and the government will press for setting up a summary judgement briefing schedule.

The companies need to do something different, because we know how summary judgement proceedings go in this type of case; just ask Chris Centeno and the Regenerative Science folks. So defendants, try something different. Searching for a factual issue would be the place to start. There’s only heartache and loss in summary judgement in this kind of case, followed by an affirmance by the Circuit court. (Here is the legal precedent what has to be worked around, https://caselaw.findlaw.com/us-dc-circuit/1656447.html )

So do something different!

Rick Jaffe, Esq.
www.rickjaffe.com
rickjaffeesquire@gmail.com

Hot off the press: The other shoe drops on stem cell clinics

Hot off the press: The other shoe drops on stem cell clinics

The Washington Times reported today that the FDA has filed permanent injunction lawsuits against the two most high profile U.S. stem cell clinics.
Here is the article:
https://www.washingtontimes.com/news/2018/may/9/doj-moves-shut-down-two-stem-cell-clinics/

Both of these clinics received FDA warning letters last year indicating that their operation violated federal law. Today’s action by the FDA in the logical and inevitable conclusion of the FDA’s multi-year effort to eradicate stem cell clinics using autologous stem cell treatments.

See my end of year post, laying out what the FDA did on stem cells and what’s coming:
http://wp.me/p7pwQD-cf

In many of my past posts, I’ve lamented that the initial target of the inevitable FDA action would be the Florida clinic made infamous by causing partial blindness in three patients, and yes, that is one of the two clinic sued by the FDA today. The other was the stem cell network run Mark Berman and his partner. They stand accused of, among other things, using a toxin as part of the stem cell treatments.

I haven’t read the injunction papers yet, but it’s a safe bet that the FDA is arguing that the therapy is 1. an unapproved new drug, 2. misbranded and 3.adulterated. Dollars to donuts the FDA is also going to cite numerous violations/inadequacies with the manufacturing facilities/processes or in FDA speak, cGMP (current good manufacturing practices) and GTP (good tissue practices).

Challenging times are ahead for the two clinics as well as other high profile stem cell clinics who are on the FDA’s radar screen.

More after I’ve looked over the injunction papers.

Rick Jaffe, Esq.
www.rickjaffe.com
rickjaffeesquire@gmail.com

The CME certification powers-that-be go after the other big dog in Integrative Medicine

The CME certification powers-that-be go after the other big dog in Integrative Medicine

The original version of this Post incorrectly stated that IFM’s CME status was revoked by the ACCME. THAT WAS INCORRECT! Sorry about that.

However, the highly respected Institute for Functional Medicine (IFM) has had some issues with its CME course accreditation, via the Family Practice physicians’ group. It’s complicated, so see my post at:
http://wp.me/p7pwQD-d3

Previously, the ACCME had initiated revocation proceedings against other organizations.
See:http://wp.me/p7pwQD-9q

The ACCME has taken on the other big dog in the IM (Integrative Medicine) community: A4M, or more specifically, its subgroup, the Metabolic Medical Institute (“MMI”).
A4M isn’t itself ACCME accredited; it partners with an independent ACCME accredited entity. Recently its accrediting partner, Global Education Group sent a warning letter to practitioners who attended a learning activity entitled Module IV: A Metabolic and Functional Approach to Gastroenterology, that took place September 14-16, 2017 in Chicago, IL.

Here is the warning with the “corrected” information and recommendations:

“As an accredited ACCME Provider, Global Education Group strives to provide cutting-edge, innovative, quality accredited CME content to our learners. This activity you attended did not meet with our high standards of excellence. Of particular note, some of the information presented at Module IV: A Metabolic and Functional Approach to Gastroenterology did not meet the ACCME’s Clinical Content Validation requirements, which requires content include recommendations involving clinical medicine to be based on evidence that is accepted within the profession of medicine with adequate scientific justification. As such, we advise you to proceed with caution regarding the implementation or treatment approaches that were discussed and/or recommended during this activity.

Patient safety is critical. As such, we are providing you with FDA/Government guideline sources regarding treatment and testing concerning gastrointestinal dysfunction and disease. For information regarding appropriate and safe approaches for the problems or symptoms presented during this symposium, please consult the list of scientifically validated sources below:

Appropriate Stool Testing to Establish Effective Intervention:
DPDx – Laboratory Identification of Parasites of Public Health Concern. (2016, May 03). Retrieved April 6, 2018, from https://www.cdc.gov/dpdx/diagnosticprocedures/stool/index.html

Humphries, R. M., & Linscott, A. J. (2015). Laboratory Diagnosis of Bacterial Gastroenteritis. Clinical Microbiology Reviews, 28(1), 3-31. doi:10.1128/cmr.00073-14

Barr, W. & Smith, A. (2014). Acute Diarrhea in Adults. Am Fam Physician, 180-189.

What Is a Stool Culture? (2017). Retrieved April 16, 2018, from https://www.webmd.com/a-to-z-guides/what-is-a-stool-culture#2

Use of Vitamins & Health Supplements:
American College of Medical Toxicology and The American Academy of Clinical Toxicology. (2015). Retrieved April 16, 2018, from http://www.choosingwisely.org/societies/american-college-of-medical-toxicology-and-the-american-academy-of-clinical-toxicology/

Evidence-Based Clinical Practice Guidelines:
AHRQ’s National Guideline Clearinghouse is a public resource for summaries of evidence-based clinical practice guidelines. Retrieved April 8, 2018, from https://guidelines.gov/

Additionally, please utilize this link which includes recommendations from the Choosing Wisely campaign, organized by discipline/body system. This resource provides key clinical recommendations for physicians that promote best practices and help avoid unnecessary medical interventions. The campaign is sponsored by the American Board of Internal Medicine Foundation, including several medical specialty societies.

If you have additional questions or concerns, please contact Global Education Group at 303-395-1782 or cme@globaleducationgroup.com “

More to Come

A4M and the IFM are the two biggest and institutionally most successful IM organizations on Planet Earth. By going after them, it’s pretty obvious that all IM groups are going to be hit with the same DE legitimization tactics, namely CME revocation process for those groups who are direct ACCME accredited, pressure on the accrediting partners like here, plus forcing the seminar providers to publish retractions of IM clinical guidelines based on lack of evidence based support. So if you’re an IM group and haven’t been contacted by the ACCME or your accrediting partner, my guess is that you will be.

What to do about it?

I’ve previously advocated for group consultation and joint action by all the IM groups, but now I’m not so sure. I think there’s going to be some survival-of-the-fittest action that will come into play in the intermediate term. The smarter, more agile groups will figure out how to make their content more resistant to these ACCME challenges.

Having gone to IM conferences for several decades, frankly, I think that some content providers don’t go a good enough job in conveying the importance or context and meaning of the information/studies being talked about. As much as it pains me to say it, there might possibly be some small element of truth supporting the ACCME’s position in some cases. But, I think those kinds of problems are resolvable by creative solutions and more and smarter internal oversight and clearer standards.

So what’s the big takeaway from the all these ACCME’s actions?

The days of any health care professional saying anything they want in a CME accredited seminar are over or coming to an end. Like it or not, those that don’t realize it won’t be providing CME accredited courses. Those who do and can adapt to the new oversight environment will survive and even prosper.

Richard Jaffe, Esq.
www.Rickjaffe.com
rickjaffeesquire@gmail.com