Stem Cell End of the Year Legal Update

Stem Cell End of the Year Legal Update

As those in the field remember, in the fall of 2017,  with greatest of largesse, the FDA proclaimed that it would exercise its enforcement discretion and give all but the most egregious/dangerous private stem cell clinics three years to come into compliance with its view that autologous based stem cells, even if administered during the “same surgical procedure” were in violation of the FDA’s revised interpretation of its 21 CFR 1271 regulations.

The FDA’s reimaged view of its power to regulate surgical procedures transmogrified these clinics from 1271.15 exempt from FDA drug regulation into dangerous and evil promoters of unapproved, misbranded, and adulterated drugs, subject to warning letters and civil injunction actions.

The elegance of the transformation was that the FDA only had to change one word in the stem cell regulations. The fact that the FDA may not have had to power to revise its governing regulations, has not yet been litigated, but it will be, most likely next year with the trial of the FDA’s case against the Cell Surgical Network and its founders Mark Berman and Elliot Lander.

But this trial will be very different from the summary judgment disposition in the US Stem cell case in large part because we no longer live in a world of Chevron deference to an administrative agency’s interpretation of its own regulations. It is now a fair fight in terms of judges analyzing and interpreting FDA law and regulations. and that is most unwelcome news for the FDA.

Speaking of the Cell Surgical Network case, as you know, it has already been put off twice (at least).  It had been set for November but was adjourned for the same pandemic reason as it was previously adjourned. Right now, it is set for later in January, with a pre-trial conference in early January. Here is the judge’s November order putting the case off.  031134257294.

The trial will obviously not go forward live and in-person in three weeks, so the only question is whether the defense can convince the court to hold a videoconference trial. I have it on good authority that the defendants are anxious (if not giddy) about getting on with the trial, as well they should be given the judge’s decision denying the FDA summary judgment. While I don’t think the defendants will necessarily be completely exonerated, given the judge’s summary judgment decision, as long as he doesn’t change his mind, I expect the judge to exonerate them on the principle charge and hold that SVF is an exempt surgical procedure under 21 CFR 1271.15, and deny the FDA’s request for a permanent injunction stopping them from administering the treatment, so long as it doesn’t include anything else in it.

So far, the judge has been reluctant to hold a video trial. I don’t see why he would abandon that reluctance now and hold a video hearing in January, given what is happening with increased cases, hospitalizations, and deaths. So, for the reasons I didn’t think the case would go forward in November, I’m going with that it’s not going to go forward in late January either.

Beyond that case, the FDA continues to send out warning letters, and the clinics keep on finding more exotic tissue products to administer to keep one step ahead of the FDA’s enforcement actions. I am not aware of any newly filed injunction actions. Given the pandemic, it wouldn’t shock me if 2021 turns out to be quiet on the FDA front save for the relatively cost effective warning and untitled FDA letters.

This is playing out pretty much as I have expected. As I have often previously said, the FDA does not have the resources to eradicate the private stem cell field. There are market forces at play that are far more powerful than one overtaxed federal agency. The demand for these services is just too great. More importantly, apart from one spectacularly stupid clinic, the safety profile of the treatments doesn’t lend itself to the FDA amassing broad public support for its efforts. The longer these clinics (including major hospitals) use these treatments, the more people will continue to use their own body parts for conditions refractory to other forms of treatment, regardless of what the FDA tries to do. (and, for understandable reasons, it doesn’t seem to be trying all that hard now.)

I think this will continue throughout 2021. By late 2022, I think we’ll have some appellate court authority to resolve what I expect to be the conflicting decisions between Florida and California courts (again, assuming the California federal judge does not change his mind). I hear that the Ninth Circuit (which is where the California stem cell case will be heard on appeal) now has a conservative majority, because of all the federal appellate judges Trump has appointed. Conservative judges are typically more pro personal freedom over one’s own body, (at least as long it does not involve a fetus).

Between the lessening impact of Chevon deference to administrative agencies, and the fact that the FDA probably did not have the authority to amend its regulations, there is a fairly good chance that the California judge’s approach will prevail on appeal. If the California case reaches the Supreme Court, I expect and predict the six conservative justices, and in particular, Alito and Gorsuch to be strong advocates for a person’s freedom to use his/her own body parts without government interference. Look to Gorsuch to write the majority or a separate concurring opinion, and it will be strong and clearly draw a line in the sand of where the Government cannot go.

In short, expect more of the same in 2021, with the California case pushing back on the FDA’s current view on autologous same-day surgical procedures for the above reasons.

Beyond the Feds

Lately, chiropractors are getting into the stem cell space, ownership wise. I think that is unfortunate, at least for public perception reasons. Plus, I hear a lot of talk about dead cells in these chiro-owned operations, and that is very disturbing. I have considerable experience in the MD/DC format. I could have made a ton of money setting up these chiro owned stem cell clinics. However, it is just too easy for these operations to run afoul of state and federal criminal statutes, so I stay away from the MD/DC legal set-up business.  I give them all the same answer: “Stay in your own lane.” As evidenced by how popular these chiro/MD stem cell clinics have become, other attorneys have made a different decision.

In 2020, we have had some state attorney general action against private stem cell clinics in the form of consumer protection/deceptive trade practices cases against clinics.  That will surely continue, somewhat, but we live in difficult times and they will have their hands full and the pandemic will probably slow things down, at least in terms of new cases.

I think the big issue in 2021 will be whether states can use the FTC’s adequate substantiation requirement under the FTCA as a grounds for liability in a state consumer protection case, in the absence of a statute which does not specifically allow adequate substantiation as a basis of liability under a consumer protection law. I don’t think they can, and more to the point, that is the position I will be taking in my New York stem case filed by Leticia James. By April, I should have some indication of whether I am right or wrong.  So, stayed tuned.

LIke all of you are thinking, let’s hope for a better next year.

Rick Jaffe, Esq.

 

 

 

 

 

 

 

 

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