The Private Stem Cell Field Moves On; Maybe This Time They’re Be Smarter or More Cautious

The Private Stem Cell Field Moves On; Maybe This Time They’re Be Smarter or More Cautious

With the recent Summary Judgment decision in the US Stem Cell case, my prediction is that the fat-based stem cell business will slow down and eventually cease to be a thing.

Here is the judge’s decision

Lawyers will tell potential entrants into the field that a federal judge has held the use of autologous fat-based products to be illegal, at least pending and barring a different result in the FDA’s companion case in California. However, I do not think that is likely.

As to the existing MSC/SVF practices, hard choices have to be made, especially for those not associated with the US Stem Cell network and who currently operate below the state and federal radar screen: Continue with business as usual, or stop and move on to the next thing.

Because of the FDA’s operational practices and limitations, I do not see it as a major deterrent to existing fat-based clinics, at least not until the expiration of the 3-year grace period the FDA granted the industry when the stem cell industry guidance documents were issued in late 2017. Presumably, the small, under-the-radar clinics will have until late 2020 to come into compliance (which they will never be able to do, so read, go out of buisness).

For sure, the FDA will continue its enforcement activities, especially against the US Stem Cell affiliates, and then against the California stem cell affiliates if there is a summary judgment in that case. However, if a clinic is making money and getting good feedback from the patients about results, some may decide to continue with the product and model, at least until the end of the 2020 grace period.

I menitoned state radar screen because some of the state attorney general’s offices are starting to become players via consumer protection laws,following the FTC’s widely reported multi-million dollar consent agreement against a California stem cell operation back in October, 2018.

Here is the FTC’s announcement of the settlement.

That case, and others that might follow might make some of these clinics rethink their position, or at least clean-up their websites, and that would be a very, very good idea. State (and federal) consumer protection target the clinics where it hurts, their pocketbooks. I would expect these types of actions might be a bigger factor than even the FDA, in the short to medium term. In large part because this is low hanging fruit for the AG’s and results in easy and favorable PR. Many AG’s are looking at what’s next, and the common job path is AG, then Governor or senator, then who knows.

And the states have other tools to deal with the MSC/SVF model, which they are starting to use.

Sooner or later, the entire MSC/SVF field is going to move on (and many in the field already have done so). My work has given me the opportunity to review the MSC/SVF operations, documentation and adverstising practices. I hope the players creating the new business model do not make the same mistakes as were made in the MSC/SVF model. But, I am guessing that the same forces which drove the soon-to-be-old model, will also drive the new one, and the same mistakes and same government reactions will surface. But we’ll see.

Rick Jaffe, Esq.

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