US Stem Cell Case Update; No breaking news but . . . .

US Stem Cell Case Update; No breaking news but . . . .

Per the Court’s scheduling order, the parties filed their pre-trial materials yesterday, March 29th, including what’s called the Joint Pre-trial Stipulation (“JPTS”) which lays out for the Judge what each party’s contentions are, lists disputed and agreed-to facts and legal issues. It’s about as good of a summary of the case as the judge or the public will get prior to trial.

Because federal court cases like this have tight scheduling orders, it’s not an infrequent occurance that the pre-trial materials have to be filed before the judge resolves dispositive motions (i.e., summary judgment), and or even as in this case, where the pre-trial filing deadline is earlier than the submission deadline for the final response (called a reply) in summary judgment. In this case, the summary judgment replies aren’t due until the end of next week.

I explain this because while the pre-trial filings give a road map to the scheduled trial, both sides are arguing in their summary judgment papers that a trial is not necessary. I think they are right, and I’ve predicted that the judge will agree with them on this point.

That all being said, the JPTS provides a clear and succinct distillation of each’s side’s position, both factual and legal, what’s agreed to and what’s not, and that makes the document invaluable for anyone involved in the private stem cell clinic business, as well as anyone opposed to them.

For the ADHD among you, here is the essence of the case, as taken from the Government’s statement of the case:

“Defendants are violating the FDCA in two basic ways. First, Defendants’ SVF product is adulterated because Defendants are not abiding by CGMP. FDA inspections of USSCC in 2015 and 2017 revealed serious and obvious CGMP violations by USSCC. CGMP requirements are designed to ensure that drugs (including biological products) have the identity, strength, quality, purity, and other attributes for safe and effective use. Here, the evidence shows that Defendants violated CGMP by failing to aseptically process their SVF product to prevent microbiological contamination or test the product for sterility and for the presence of endotoxins (which can cause fevers and other health complications), among other violations. Because Defendants’ SVF product is not manufactured, processed, packed, or held in compliance with CGMP, it is adulterated. See 21 U.S.C. § 351(a)(2)(B). Second, Defendants’ SVF product is misbranded. Under 21 U.S.C. § 352(f)(1), a drug’s labeling must bear adequate directions for use. If it does not, the drug is misbranded. Specifically: (1) the SVF product does not bear labeling that contains information required for adequate directions for use, as defined in 21 C.F.R. § 201.5; (2) the SVF product is an unapproved prescription drug that is not excepted from labeling requirements requiring directions under which a lay person can use the drug safely; and (3) it is currently impossible to draft adequate directions for use because there is no scientifically valid evidence to show that the SVF product is safe or effective for any indication.

Defendants do not dispute the evidence of these violations. Defendants admit that they use their SVF product to address patients’ symptoms of neurological, autoimmune, orthopedic, and degenerative diseases and conditions, which makes it a “drug” under the FDCA. See 21 U.S.C. § 321(g)(1)(B), (C) (“drug” includes all articles “intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease” or “intended to affect the structure or any function of the body of man or other animals.”). Defendants admit that FDA’s 2015 and 2017 inspections of USSCC found that their manufacture of the SVF product does not comply with CGMP. And Defendants further admit the relevant facts about the labeling of their SVF product and the required information that is missing. Nor is there any question that Defendants’ SVF product contains at least one component that has been shipped in interstate commerce. These undisputed facts establish that Defendants’ unapproved SVF product is an adulterated and misbranded drug under the FDCA. See 21 U.S.C. §§ 351(a)(2)(B) & 352(f)(1).”

The defendants’ statement of the case explains what they do and why they are right about their three defenses.

There is one other noteworthy thing which came out in the JPTS (and Defendant’s summary judgment papers).

You know how TV network shows sometimes have crossover episodes? You know when the the LA NCIS agents work a case with New Orleans NCIS agents, and the case spills over from one show to the other. Well we’ve got a crossover in this case. US Stem Cell’s primary expert witness is Elliot Lander, otherwise known as Defendant Elliot Lander in the Government’s parellel case in California against the Berman and Lander’s stell cell clinic and organization. It’s not surprising since the venerable Venerable law firm is involved in both cases. Still, it’s alittle disspointing, though not surpirsing to see the lack of third-party support for the defendants.

Of all the arguments made by the Government, I think the toughest one to overcome is the adulteration argument based on all the cGMP violaitons. In my view, it’s not financially feasible for a medical clinic to be cGMP compliant, unless the clinic is attached to a drug manufacturing facility. There have been only one or two guys in the country that have pulled that off (one of whom was my long time fomer client). I don’t think there is any private stem cell operation that could do that.

So, you’re the judge in this case, and both sides agree that the way the injected product is processed doesn’t meet the FDA’s manufacturing standards in part because of drug safety concerns embodied in regulations to protect the public against dangerous, adulterated products. What do you do? Tell the company to go with god, and hopefully the lack of compliance with the standards which govern safe drug processing won’t kill or hurt anyone, because of defendant’s three arguments about why the rules don’t apply to them?

To me, the only interesting part of this case is what the FDA does after a permanent injunction is entered. I have to believe that through discovery, the feds now have a list of all the affilate/co-investigators (and in the California case as well). Is a letter, a copy of the permanent injunction and a proposed consent agreement in the future of these co-investigators? What can these folks do, if anything, to protect themselves?

What action will the state medical boards take against some of these doctors once there is a federal court injunction holding that the procedure is illegal under federal laws, which are both civil and criminal violations. Most states have a law which makes a violation of state or federal law, a sanctionable violation of the state medical licensing act. I’ve had some success resisting this type of argument in the FDA context, but seems likely it will be employed when all the facts line-up.

And that’s what keeps me up at night about this case.

Here is the JPTS. It’s well-worth a close reading for anyone involved or interested in the field.



Rick Jaffe, Esq.

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