Update on the FDA’s Stem Cell Injunction Cases

Update on the FDA’s Stem Cell Injunction Cases

Watching a federal civil case progress is usually about as interesting as watching grass grow, except that grass grows faster. It’s been around three months since the FDA filed permanent injunction actions against the country’s two most notorious stem cell clinics/networks, California Stem Cell Treatment Center/Cell Surgical Network and US Stem Cell Clinic and network.

The most interesting thing about the cases so far is what hasn’t happened. The FDA has not filed a motion for a preliminary injunction in either case, and there is no indication in the record of either case that the defendants have voluntarily stopped treating patients with what the FDA claims is an illegal treatment. (I’m not in direct contact with either defendant or their counsel, so I can’t say whether or not there has been some private agreement, but I doubt there has been, because the community would have heard about it.)

If these clinics are still treating patients, then since it could take at least another year before the district court makes a decision, that leads me to conclude that that the FDA is in no particular hurry to shut them down. That would be consistent with the FDA’s stated policy when it issued the final guidance documents that it would give some of the private stem cell clinics as long as three years to come into compliance with FDA law, meaning obtaining an IND to treat patients. Of course that would mean that the for-profit clinics couldn’t charge for the stem cells, unless the clinics obtains FDA permission for cost recovery of the actual cost to treat each patient. (Yea, like that’s going to happen.)

So let’s look at the grass and see what’s grown so far

California Stem Cell Treatment Center

The defendants put in their answer, but it doesn’t say much

A defendant served with a federal civil complaint has to put in an answer which responds to the factual allegations and at least lists the legal and equitable defenses. Federal practice adopts what is called “notice pleading,” which means that neither the complaint nor the answer have to tell the complete story or provide all the details of the claims or defenses. When the plaintiff is the government and is trying to stop a defendant like here, invariably the government lays out its case in detail, both for the benefit of the judge, and to start the process of trying to convince the defendant to give up before trial.

In criminal cases, defendants oftentimes hide the ball, meaning they don’t tell the prosecutors what their theory of the defense is. For example, we just learned yesterday at the opening argument that Paul Manafort’s defense to his money laundering and tax evasion case is to blame his underling, Rick Gates. You can do that in criminal cases because there is almost no discovery and a defendant doesn’t have to file a written answer explaining how the case will be defended. He just announces “not guilty” at the arraignment (the reading of the criminal charges in the courtroom).

In civil cases, there is little if any hiding the ball, at least if the plaintiff’s counsel is competent and does proper discovery. And there’s really no reason to hide the ball in an injunction case, since there is no jury and the judge makes the decision.

So how did the California Stem Cell Treatment Center answer? It was pro forma. It denied the material and inculpatory allegations and/or said they were legal conclusions not requiring an answer. The answer listed some conclusory defenses, like lack of subject matter jurisdiction over the procedure because it is an exempt “same day surgical procedure,” and raised the ever present but meaningless violation due process defense. It also raised a Tenth Amendment claim, which I assume in this context means that the procedure is governed by the state law via the medical board. It also raises the patients’ right to privacy. I wish them luck with that. I’ve unsuccessfully trying to get various courts to acknowledge that right for twenty-five years. Other than gun rights, the courts have not been excited about expanding constitutional rights. The Supreme Court had the chance in 1979 to create a patient’s constitutional right to unapproved Laetrile treatment in the Rutherford case, but Justice Thurgood Marshall, writing for the court, refused to even consider the right based on a thin technicality.

What isn’t in the answer is the defense story or argument. As indicated, that’s certainly not required in an initial answer, but still, this is a high profile case, involving serious and important legal and policy issues which effect many millions of people. The case is going to be watched by everyone in the field, both for and against private stem cell clinics. I was hoping that the extremely formidable and high power legal team would come out swinging for many reasons, not the least of which is that there may only be one person needed to be convinced. I think it was a wasted opportunity to start making the case, especially since cases like these are not linear; they are multidimensional. And I speak from some experience.

A scheduling conference is set for October where discovery parameters and deadlines will be set. Until then, and thereafter, we’ll probably be watching the grass grow. The only way it will get more interesting is if the FDA changes its mind and moves for a preliminary injunction, or the defense realizes they are going to have to do something different than just competently and cautiously respond to government papers.

The US Stem Cell Clinic/Network case

The defendants acknowledged receipt of the papers (service, in legal parlance) in early May. In early July, three days before their answer was due, the defense lawyers (2 big time law firms and at least six lawyers have already appeared in the case) asked for a month’s extension to file an answer because the lead counsel firm was very busy, had scheduled vacations and couldn’t find the time to do an answer in two months. The judge wasn’t happy about it or the proffered excuses. She didn’t give them the full month, but gave them almost three weeks. Their answer is due August 3, 2018. I hope they go big and strong.

So far, seems to me that both cases are off to a slow and weak start. I’m hoping this changes because right now, for better, but mostly for worse, these two cases are the tip of the FDA’s spear aimed at the hearts of people wanting stem cell treatments outside of clinical trials. I hope these folks are up to the challenge.

Rick Jaffe, Esq.

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