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stem cell mis-regulation

The Missouri Feds Indict a physician’s assistant/clinic operator (and recently elected State Rep) for Stem Cell fraud (and other things). Should the Private Stem Cell Crowd be worried?

The Missouri Feds Indict a physician’s assistant/clinic operator (and recently elected State Rep) for Stem Cell fraud (and other things). Should the Private Stem Cell Crowd be worried?

Earlier the week, it was widely reported that the feds indicted a woman operating a couple of regenerative medicine clinics for all kinds of fraudulent and illegal conduct.

Here is an article about it. fraudindictmentarticle

If you want to go deeper, here is the indictment. derges_indictment_0

It seems like she was way off the reservation for many reasons. First and foremost, she did what I think is the riskiest thing for any health care practitioner to do, namely promote an unapproved treatment for COVID. Nothing will get you in trouble with the feds faster than that, and even if your product is natural like a bunch of herbs.

Second, she was promoting a “stem cell” treatment even though the product she was administering had no stem cells. (It was some kind of amniotic mixture made by the University of Utah for commercial distribution, and that’s another story for another day).

Worse for her, she was actually told that by the University of Utah that the product had no stem cells (or any other kind of cells for that matter). That means she knowingly falsely represented over the internet and TV the product she was administering. The feds take a dim view of that and call it “wire fraud” (because of the use of the internet and TV transmission lines).

Then there was the fact that she was writing prescriptions for controlled substances for patients she had not seen (she was DEA registered) because she was the only physician’s assistant at the clinics to be DEA registered. In addition to being charged criminally for that, I am sure that the DEA will move to revoke her registration certificate.

So what’s the lesson for the regenerative medicine community from the case?

For starters, don’t promote stem cell treatments for COVID and don’t lie about what is in your product.

Beyond that, I actually don’t think this case means much for most of the regenerative medicine community because this individual (allegedly) did so much wrong.

The folks who maybe should be worried are those of you who are marketing stem cell products with dead stem cells, and there are many reports about that happening in the community, especially amongst the non MD stem cell providers.

If you are one of these folks, you might be taking some solace in the fact that you don’t know or don’t believe the stem cells in what you are selling are dead/not viable.

Wasn’t the Missouri woman’s problem that she was told by the manufacturer that the product has no cells?

Yes, that is true, but let me introduce you to a nasty tool in the federal prosecutors’ toolbox and it’s called the deliberate ignorance jury charge. Basically, you can’t stick your head in the sand like an ostrich and claim you didn’t know. The deliberate ignorance charge supplies the element of knowledge in the absence of proof of direct knowledge in a federal felony charge which requires knowledge as an element of the offense. It is especially applicable in the health practitioner setting since there is a duty to know. For health practitioners and their defense counsel, it’s a tough one..

Still and all, the federal criminal apparatus has heretofore not been a major player in the stem cell field. The criminal boys and girls (meaning the US Attorneys Offices’ Criminal Division and the FDA’s Office of Criminal Investigations) have mostly left it to the federal civil apparatus.

Mostly I say, because you only hear about the cases which result in indictments. FDA criminal attorneys handle investigations which don’t result in indictments, and that’s not something which gets talked about much for obvious reasons, but there have been such investigations in the past, and I suspect it is still on the the criminal boys’ radar screen, as they continue to watch for egregious cases like this Missouri one.

Also, I don’t think this case will have much if any impact on the autologous crowd and especially for the utilizers of bone marrow. For those folks, it is all about the advertising claims and the recent action is more from the state AG’s offices than the feds.

Or so I see it.

Rick Jaffe, Esq.

 

California FDA Stem Cell Case Adjourned Again

California FDA Stem Cell Case Adjourned Again

Although the Pacer docket does not reflect it yet, I have heard from a client who is in communications with one of the parties that the FDA’s case against the Cell Surgical Network and Drs. Berman and Lander has been adjourned again, this time until early May.

I have lost count of how many times it has been adjourned, but it’s been at least three and maybe four or even 5 times.  It is certainly starting to look like the trial will not go forward until the pandemic is fully in control, and no one thinks that is going to happen by May.

However, according to media reports, that won’t happen until the country hits herd immunity through vaccination, and that’s not expected to happen until the late summer or fall (and that assumes the as yet untested notion that the current vaccines will be at least 50% effective against the new COVID strains). So, in short, expect another delay in May, with a rescheduled September ish date, and then it’s probably 50-50, one more delay (at least). Another data point to follow is when the federal courts allow jury trials. You would think when they allow potential jurors into courts, they’ll allow attorneys, paralegals, and witnesses to do live bench trials.

What that means is that the Eleventh Circuit’s decision in the Florida US Stem Cell case will come down before California District Judge Bernal issues his decision (if he ever does). Technically, federal appellate decisions are only binding on the district courts in that circuit, but they are considered persuasive authority for other district courts in other circuits, meaning district courts in other circuits have some leeway to distinguish or not follow it for other considerations.

So the wait continues for the first post-limitation on federal judicial deference to the FDA’s interpretation of its own regulations case.

Rick Jaffe, Esq.

For the Same Surgical Procedure Autologous Stem Cell Transplant Crowd, Big Decisions are a-coming

For the Same Surgical Procedure Autologous Stem Cell Transplant Crowd, Big Decisions are a-coming

If you are in the business of providing autologous stem cell transplants during the same surgical procedure for therapeutic purposes, the next couple of months are going to be very consequential for you because of the decisions in the two big cases in the field.

The appeal of the US Stem cell case is now under consideration by the appellate court. Oral argument was held on January 13th. By some accounts, the judges gave the government a hard time. But you can judge for yourself. Here is a link to the 30-minute oral argument.

https://www.ca11.uscourts.gov/oral-argument-recordings?page=1 (its on page 2)

I have always thought that the FDA was in the wrong on the basic issue of whether under its regulations, MSC or SVF same surgical procedures were regulatable under the FDA’s new drug. And that’s for a pretty simple reason. I asked the FDA several times when I was pondering whether to issue what I think might have been the first opinion letter for a facility back in the early 2000s. I was assured a couple of times by different FDA personnel that as long as it was all done in the same surgical procedure (which precluded meaningful expansion/culturing of the cells), the FDA had no jurisdiction over the procedure.

But alas, things changed with the proliferation of these clinics and the increasingly shall I say aggressive advertising engaged by some. The FDA tried to reinterpret its position and tried to amend the regulations with a clever one-word change which it argued made it all subject to the New Drug laws. Since that time, there have been numerous warning letters, and of course, the final FDA’s guidance documents explaining why when a doctor removes a body part and reimplants it, somehow that body part gets transformed into an FDA regulatable drug which cannot be put back into you unless and until the FDA approves testing with other people whose more or less similar body parts are safe to put back into those other persons and does something helpful.  I felt that could only make sense to a regulator, bench scientists, or people who can’t see the forest for the trees.  But that’s just my opinion.

On the other hand, the feds and the states have what I consider to be a nasty doctrine called judicial deference to administrative agencies. It is what it sounds like, and it is a big reason why many complain about the power of the administrative state. To lawyers like me who practice before administrative agencies and/or challenge administrative findings in court, it is always an uphill and frustrating battle. Frankly, it is not a fair fight. And thus, despite believing that the FDA was wrong, under judicial deference to administrative agencies’ determination of the meaning of their own regulations, I thought the FDA would prevail in the US Stem Cell case and in the California case as well.

However, in the last few years, the increasingly conservative Supreme Court has taken notice of the issue, and slowly, a few judges starting writing dissents complaining about it. One or two of them have started to call for the elimination of the whole deference to administrative agency program (and here like in pandemic law, Justice Gorsuch is leading the charge).  But in the summer of 2019, the Supremes limited judicial deference to an agency’s interpretation of its own regulation to cases where the regulation is ambiguous. That’s a start but didn’t go far enough for the vocal minority.

That decision came a month after the district court in the US Stem Cell case issued its summary judgment ruling granting the FDA’s request for a permanent injunction on the grounds that the FDA law and regulations make SVF (stromal vascular fraction) a drug, and that was in part based on the fact that the FDA said so in its Guidance documents, in other words, judicial deference to the all-knowing (or at least all-powerful) FDA.

You all know by now that California District Judge Jessie Bernal took a different view and held that as long as the SVF removed was the same SVF reimplanted that it would not be subject to FDA oversight under the SSP (same surgical procedure) exemption under 21 CFR 1271.15, or at least so he thought and expressed in his opinion denying summary judgment.

Well folks, on Tuesday, January 26, 2021, the FDA’s injunction trial will start against Cell Surgical Network. All the pre-trial paperwork has been on file for many months.  It seems like the trial will take place by Zoom, but that’s more of an assumption on my part since I have not seen anything official about that in the docket. Since the paperwork is already on file (including the parties’ proposed findings of fact and conclusions of law), and because the judge has already ruled on the core issue, I wouldn’t expect him to take too long to issue his decision. I would say inside of 30 days, maybe 45 at the latest.

There is another factor that might propel the judge to issue a quick decision, namely the fact that the Eleventh Circuit Court of Appeals will be issuing its decision on the US stem cell case in the next couple of months. District Judge Bernal may want to give his views on this core issue before the appellate court does and might prefer that the appellate court reacts to his decision, rather than the other way around, given the fact that his is the “inferior” court.

If one of the two court cases resolve in favor of the stem cell transplanters, of course, look to a resurgence of these facilities offering and further aggressively advertising of these services.  That will lead to further action by the state AG’s against these facilities under state consumer protection laws, and possibly by the FTC, though it has not been a significant player in the space. I would guess the FTC is allowing the FDA to clean-up the field via the warning letters.  If both stem cell transplanters lose, then the field will just stick to the new HCT/P’s being used like bone marrow and other more exotic products which are a half step ahead of the FDA (for now).  Either way, I do not see any major restriction on the field, in the short to medium term, and as suggested, I think things could open-up big time if one or both decisions hold that these same surgical procedures are not regulatable by the FDA, But (and there is usually a but), even if that happens, that might just switch the battle to the medical boards, which is probably where the fight should have always been.   And on and on it will go.

Rick Jaffe, Esq.

 

 

 

 

 

 

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.

 

 

 

 

 

 

 

 

The FDA’s California stem cell case has a new trial date, sort of

The FDA’s California stem cell case has a new trial date, sort of

When last I reported on the FDA’s injunction action against the California stem cell treatment operation, the judge had adjourned the July trial date because of the recent alarming uptick in COVID-19 cases in the area. The court ordered the parties to confer and come up with a new proposed date in November or thereafter.

The defense’s response to the order was unusual. It attempted to seek an earlier remote video trial. The judge was not prepared to do that just yet, but after further discussions, a few days ago, he issued an order setting a new trial date for November 10, 2020. HOWEVER, the judge ordered a telephone conference on October 19, 2020, to determine whether “1) [the] trial . . . can safely be conducted in-person, consistent with public health guidance; and/or 2) trial can fairly and reliably be conducted through remote appearances by witnesses and counsel.” Meaning, it is not at all clear that the trial will go forward on November 10th.

We already know that the Defendants want to go forward with a remote video trial. My guess is that the FDA might be reluctant. Based on the judge’s decision denying the FDA summary judgement, (the details of which I explained in a previous post, and here is that post: https://rickjaffeesq.com/2020/01/28/stem-cell-shocker-cali-federal-judge-denies-the-fda-summary-judgement-and-orders-a-trial-in-the-cell-surgical-network-case/ )
the judge agrees with the defense’s position that the procedure removes and reimplants the same thing, namely SVF. Hence the procedure is covered by the same day surgery exception. Therefore, it is not subject to the FDA’s regulatory authority. In short, the FDA is going to have to change the judge’s mind. I would speculate that the feds think they have a better chance of doing that in a live trial. If so, that would suggest that the feds will hold out for a live trial.

There might be another reason for the feds trying to delay the trial. Right now, there is a giant storm cloud over SVF and the California Stem Cell operation. I do not have any direct knowledge, but my experience tells me that kind of cloud is very bad for business. Since the FDA can read the tea leaves, it knows it has an uphill battle with this judge, and it will take the agency at least a year to get an appellate review of the district court’s decision. In the meantime, the FDA is continuing with its PR campaign on the illegality of this and other stem cell products and procedures. So, delaying this case might appear to the agency to have some benefit. But that is all speculation on my part. All we know for sure is that there is a new trial date, but in these uncertain times, it cannot be said that the case will actually be tried on that date.

Rick Jaffe, Esq.

Stem Cell Breaking News: Cali Stem Cell Trial Adjourned until Sometime After November

Stem Cell Breaking News: Cali Stem Cell Trial Adjourned until Sometime After November

Yesterday, California federal district court judge Jesus G. Bernal on his own adjourned the the FDA’s trial against Cell Surgical Network (“CSN”) and their owners Mark Berman and Elliot Lander. The parties were ordered to meet and confer about a new trial date to take place after November, 2020. The trial had been scheduled to commence on July 28th. Because of my deep interest in the case, I have been checking the Riverside Ca. Covid-19 numbers and once the numbers started to rise, and based on what has been happening in California in general (which is another area of interest and which I write about), I was pretty sure the the judge would have to knock the case off the docket. This is too big and too important to do via Zoom, and the judge really had no choice. Too bad, as this is for sure the most important stem cell case in the country right now, and in general, and for reasons having to do with my stem cell work, I was really hoping to get some clarity, or more specifically, another ruling similiar to the judge’s seminal summary judgement decision.

For my own needs, I have recently reviewed some of the pre-trial filings in the case, and in particular the proposed findings of facts and conclusions of law filed by the parties. (Findings of fact and conclusions of law are the main documents filed in a bench trial. In a jury trial, the parties would file proposed jury instructions. But in a bench trial, the findings of fact and conclusions of law are what the parties expect to show fact wise, and what they argue how the law applies to the facts, and of course, present the proposed outcome. In case you were wondering, there is no federal (7th Amendment) right to a jury trial in cases in which the relief is equitable, like injunctions and declaratory judgments).

CSN’s findings and conclusions, prepared by Venerable’s LA office’s team headed by Celeste Brecht are about the best I have ever seen in an FDA case (or maybe in any case). They clearly lay out CSN’s position in the case. If you want to understand exactly what the defendants did and why they think all of it is legal, and how the FDA improperly used industry guidance procedures to substantively change the law without going through the proper and required procedure, then read this document. (I know I am being alittle redundant, but I just love saying how the government acted improperly; it’s a defense lawyer’s thing, and spoiler alert, I’m not done yet!) Here it is.

csnproposedfindings

This document also cogently and succinctly lays out the evolution of the same day surgical procedure exception, from whence MSC/SVF procedures were considered 21 CFR 1271.15 EXEMPT, to the FDA’s illegal transformation of the procedure and a person’s body part into an illegal, unapproved, adulterated and misbranded drug.

In all my years doing this law thing, this one action, (and did I mention that it was illegal and improper?) is the single stupidest thing I’ve ever seen. Your body part removed and reimplanted during the same surgical procedure is a drug! In my opinion, this is perhaps the most extreme case of over regulation and lack of common sense that I have ever seen in the field.

For a long time, I thought the FDA would get away with its improper transformation, and that this case would reach a similiar result as the US Stem Cell case in Florida, because of the deference federal courts are required to give federal agencies like the FDA when it interprets its own regulations. However, in 2019, (after a few Justices gave some heart warming hints), the Supreme Court came out with a couple decisions which limit deference to laws and regulations which were ambiguous. This might well prove to be the death-knell of the FDA’s decade plus effort to (improperly) rewrite the the same day surgical exception.

So getting back to Venerable’s findings of fact and their succinct history of the FDA’s regulation of this issue, here it is:

“Regulatory History of the SSP Exception
6. Until 1997, the FDA exerted little to no control over human cellular and tissue-based products.
7. In 1997, the FDA introduced Guidance providing that:
the agency would not assert any regulatory control over cells or tissues that are removed from a patient and transplanted back into that patient during a single surgical procedure. The communicable disease risks, as well as the safety and effectiveness risks, would generally be no different than those typically associated with surgery.
(Ex. 88 (emphasis added).)
8. In 2001, the FDA then promulgated the Same Surgical Procedure Exception (“SSP Exception”) based on the 1997 Guidance.
9. The SSP Exception exempts from any FDA regulation:
[A]n establishment that removes HCT/P’s from an individual and implants such HCT/P’s into the same individual during the same surgical procedure.
21 C.F.R. § 1271.15(b).
10. The FDA has not amended the SSP Exception since its promulgation.
11. HCT/Ps are defined as “articles containing or consisting of human cells or tissue that are intended for implantation, transplantation, infusion, or transfer into a human recipient.” 21 C.F.R. § 1271.15(b).
12. In 2014, the FDA released a draft guidance that sought to create ambiguity in the SSP Exception. (Ex. 89.)
13. The draft guidance proposed substantive changes that interpret the SSP Exception to exclude surgical procedures that would otherwise qualify for exemption by requiring that the patient’s transplanted HCT/P be implanted in its
“original form,” which is very narrowly defined and otherwise limits the types of surgical procedures that would fall within the SSP Exception. (Id.)
14. The “original form” language is not included anywhere in the regulation, see 21 C.F.R. § 1271.15(b). Instead, the SSP Exception unambiguously states that a tissue or human cell is not a drug if it is removed from an individual and then re-implanted in the same individual.
15. The FDA adopted the draft guidance, which was improperly signed by Ana Abrams, in December 2017. (Ex. 87.)”

Ahh, this is music to my ears and will be to many in the stem cell field (on this side of the fence anyway). Only thing that’s needed is the judge’s signature. But alas, that can’t/won’t happen until sometime after November. We’ll all have to stay tuned until then.

Rick Jaffe, Esq.

Stem Cell Shocker: Cali. Federal Judge Denies the FDA Summary Judgement and Orders a Trial in the Cell Surgical Network Case

Stem Cell Shocker: Cali. Federal Judge Denies the FDA Summary Judgement and Orders a Trial in the Cell Surgical Network Case

Ok, let me get this out of the way up front. I predicted publicly and privately that the California federal court judge would follow the reasoning and result of the Florida federal judge who granted summary judgement to the FDA and issued a permanent injunction barring the Florida stem cell operation from using its SVF (stromal vascular fraction) product in humans.

I am very happy to report that I was wrong, (at least for now and until there is a trial).

Here is the judge’s opinion

stemcelldecision

The bottom line is that the California federal judge found a disputed issue of fact which requires a full trial. The issue of fact and how the judge got there is important and could foreshadow a result which the FDA and the stem cell institutional mafioso won’t like.

So, what is the issue of fact?

Here is the judge’s words and they are short and simple:

“The parties dispute whether the SVF Procedure alters the SVF cells (citation to brief omitted). Because both parties have submitted competing evidence on this point, there is a triable issue of fact and summary judgement is not appropriate.”
(Order at last page).

Why is it important/critical/dispositive whether or not the SVF Procedure alters the SVF cells?

The FDA argued that the procedure creates an unapproved, adulterated and mislabeled new drug.
The Defendants argued that they are doing a surgical procedure which falls under the single surgical procedure (“SSP) exception to full drug regulation of HCT/P’s under 21 CFR 1271

If the SSP exception applies then the FDA loses. If it does not, the FDA wins.

Here is how the judge phrases it:

“While the SSP exception could apply to a procedure that removes SVF cells by removing adipose tissue from a patient and implants only extracted SVF cells back into the same patient, it only applies if those cells remains unaltered.”
The count then concludes with the language first quoted.

There are prior steps to the judge’s reasoning/conclusion, relating to whether you compare the total product removed (adipose tissue which includes fat and other stuff) versus what is reimplanted (SVF), or do you look at the target of what is sought to be removed (the SVF) and compare that to what is reimplanted (the same SVF, according to the defendants).

The judge choose the latter, which required him to dig deeper into whether the cells were altered, i.e. whether they were the same as what was taken out.

He determined that the parties had different views about that. In other words, there was a factual dispute about a critical element of the case, and factual disputes are resolved by trials, not by summary judgment. Hence the denial of the government’s summary judgment motion. This is a big loss, (albeit interim) for the FDA.

Something else that the feds won’t like is that the judge did not show the almost universal deference given to an administrative agency’s interpretation of its own statutes and regulations. The judge thought that the agency’s view of “what is taken out of the body” was overly broad and didn’t make any sense. Basically, the judge accepted the defense view on this, and then held that there is no deference to an agency’s opinion which is not realistic and doesn’t make sense. Ouch!

Something else the judge didn’t like, and something which I found really offensive about the government’s efforts, was its attempt to bar defendants Berman and Lander from testifying either as an expert or any way else. I think the judge was offended by that whole argument and called out the government on it, at one point castigating the government for wasting the his time. Really Big Ouch on that one.

So, what’s next?

Per a court approved December 2019 joint stipulation, the parties have 14 days to submit a proposed schedule for the trial and whatever else has to be scheduled, but perhaps the government might try something else. We’ll see.

What is the effect of this order?
As a lawyer on the side of the private stem cell clinics, this is very good news for these clinics. I happen to think that the SVF taken out is the same SVF put back in, because ultimately all the process does is strip out the fat and the structure from the remaining SVF. If the judge thinks so too, then the government is going to lose the injunction case, at least based on the judge’s analysis in his order today.

This could set up an appeal by the government, and could result in conflicting decisions between the Ninth and Eleventh Circuits (home of appeals from Florida).

This is also good news for the Florida clinic because a federal judge has accepted the argument it had made, but unfortunately, it was not the federal judge on its case. Still that’s why they have appellate courts.

This is also welcome news to the customers who have banked their SVF with the Florida operation, to the extent the material had not been destroyed (and last I checked a few months ago, it hadn’t been).

Finally, it is very, very good news for the physician affiliates of the Cell Surgical Network, as well as other physicians using SVF, (at least outside the Southern District of Florida.) The judge’s opinion is a clear indication that the only legal hurdle left is whether the SVF coming out is the same SVF going back in. If it is, and the judge so finds, then there’s going to be a substantial uptick of SVF procedures being offered in this country (outside of the Southern District of Florida). But then again, I’ve been wrong before, so we will just have to see what happens.

A shout out to federal Judge Jesus G. Bernal for this important decision standing up to the government, and to the very excellent work of defense counsel, the very venerable Venerable law firm.

Rick Jaffe, Esq.

FDA v. California Stem Cell case update

FDA v. California Stem Cell case update

Honestly, I lost interest in this case after the federal judge in the Florida US Stem Cell case granted summary judgement to the FDA and issued a permanent injunction barring the use of the stem cell/SVF product, which is basically the same stuff used by the California group. I assumed that the California federal judge would agree with the Florida judge. I am still making that assumption, but I did learn a few interesting things from my cursory review of the summary judgment papers which have been filed. Also, I heard some misinterpretations of what has recently happened in the case, so I thought it might be helpful to set people straight.

The Schedule

In federal court, the parties propose an initial schedule which is accepted, rejected or modified by the court. It is everyone’s rough guess of how long it will take to get to a trial. But things change. It is extremely common for scheduling orders to be revised, meaning deadlines and trial settings are pushed back, by months, or many months, and there are sometimes several successive revisions to scheduling orders.

In this case, the Government complied with the then current scheduling order and filed its motion for summary judgment in early July. The judge took a quick look at the papers, and he probably reviewed the docket in the Florida stem cell case. On his own, he pushed back the hearing on summary judgement to December. That meant the original trial date had to be put off as well.

The judge ordered to parties to meet and confer and come up with a new trial date and other deadlines. The parties couldn’t agree on much. Interestingly, the Defendants asked for a quicker hearing than the judge ordered December hearing, because of the uncertainty and resulting financial problems the case was creating for the defendants’ business. The judge declined, and set the trial date in February 2020.

That was fine for the Government because it is not expecting there to be a trial, based on its view of the law, and its recent summary judgement win in the US Stem Cell case on similar facts.

The fact that the trial date has been pushed back until February 2020 has no legal significance because 1. As stated, trials get put back all the time in federal cases, and 2. The Government (and most likely the judge) doesn’t think there will be a trial.

What I learned from the Government’s Summary Judgment Papers

Caveat: because of the press of other business, I only took a quick look at the papers. My impression was the Government’s papers were very similar to the papers it filed in the US Stem Cell cases. However, the papers did relate two facts which I was not aware of.

First, in 2018 the Government obtained a court order seizing the company’s toxin laced stem cell/SVF vacinia product, based on a finding that the product was misbranded. It is unlikely that this judge will reach a different result, on that product at least. The people who make misbranded products get injunctions issued against them for producing misbranded drugs.

Second, the company is (or had been) expanding some of its patients stem cells. I don’t get it. We know from appellate authority in the Regenerative Sciences case that is illegal. These two facts make a much stronger case for the Government than the facts in the Florida case. Here is the Government’s Motion for Summary Judgment (without the declarations and exhibits)
govtsumj

What I learned from the Defendants’ Summary Judgment Papers

While I thought the Government’s papers in this case were basically the same as what it filed in the Florida case, I think the defense papers in this case are much stronger than in the Florida case. Same firm in both cases, but different lawyers.

Don’t get me wrong, the Florida defense papers were perfectly fine, well written and extremely competent. However, I think the California summary judgment papers presented a more compelling defense, notwithstanding the fact that they had some bad facts to deal with. (Lander’s declaration states that they are not doing these two bad things anymore, or hadn’t as of the date of the FDA’s complaint). The California defense also had the advantage of their clients being actual board-certified surgeons, rather than the morons in Florida who thought it was a good idea to have a nurse practitioner inject people’s eyeballs with stem cells. Still, I thought the California papers were excellent and told a very compelling story. Hats off to the defense team.

Here is the Defendants’ Summary Judgment Response, and the principal declarations:

sumjopposition
landerdec
gurwitzdec

I really liked the expert report attached to the attorney’s affidavit. I do not recall if it was submitted in the Florida case. If it was, it made alot more sense here since the defendants are surgeons and make a better case for a surgery exception, than in Florida case where (I presume) NP’s are not licensed to practice surgery.

Will the Defense’s excellent papers make a difference?

The defense has some very bad facts to overcome (expansion of cells, and using a toxin in a product which has been determined by a judge in the same district to a misbranded drug), and the recent US Stem Cell decision dealing with a product which is closer to being FDA compliant under applicable law.

So, despite, the excellent job on the papers by defense counsel, as an old Louisiana friend of mine used to say: “You can’t make chicken salad out of chicken [explicative deleted].” And that’s about how I see it. We’ll have the answer probably mid-to late January, 2020.

Rick Jaffe, Esq.
rickjaffeesquire@gmail.com

The US Stem Cell Judge Denies the Motions to Intervene by the SVF Owners Subject to….?

The US Stem Cell Judge Denies the Motions to Intervene by the SVF Owners Subject to….?

On July 31st, the US Stem Cell judge issued an “Omnibus Order” denying “without prejudice” all of the SVF’s Motions to Intervene in the case.
Here is her order:
orderdenyingintervention

What is happening is confusing, even to an FDA litigator like me. But, for what it’s worth, here is my explanation of what’s going on and why we’re here, (whereever “here” is).

First, I think that neither party specifically informed the judge that the company was banking SVF product for its patients and possibly people who were not patients, but just used US Stem Cell as an SVF bank). I do not know why that happened/didn’t happen.

After it obtained summary judgement, the government prepared an order requiring all SVF product in the Defendants’ possession to be destroyed. So far as I can tell, neither party informed the judge about the banked product for customers.

The defendants did not inform its SVF banking customers of the problem, until after the judge signed the injunction order, whereupon the defendants told its customers that their body material was about to be destroyed per the court’s order, and encouraged them to write to the judge via the clerk’s office.

The clerk received over two hundred letters and at least two motions to intervene, one of which was filed by a South Florida law firm purporting to represent many of the SVF banking customers.

After the judge started seeing these letters from the SVF banking customers, she did what she probably thought was the only thing she could do, given the procedural posture of the case, (namely, that there was a final judgement); she issued a stay of the part of the injunction order relating to the banking customers’ SVF, pending the filing of an appeal by the defendants of her permanent injunction order and judgment.

If the defendants appeal, then the judge’s stay continues until the court of appeals (the Eleventh Circuit) makes some applicable ruling on the case. If the defendants do not appeal, her stay of the destruction order automatically dissolves, and the destruction will take place under the FDA’s supervision, per the final permanent injunction.

Here is what my gut tells me is going to happen (meaning this is not a researched deep analysis).

If the defendants file a timely appeal (and I hope and suspect they will), that should essentially end the district court’s involvement in the case, as technically, I don’t think she will have jurisdiction on the case once a timely appeal is filed. She may issue another clarifying opinion telling the intervenors to try to intervene in the appeal, but that is about all I expect to happen in the district court, unless and until the court of appeal reverses and remands all or a part of the case back to the district court.

And I will go out on a limb and make a prediction about will happen in the court of appeals.

The part of the injunction order enjoining the defendants from performing SVF transplant procedures will be affirmed.

However, if correctly litigated, the part of the judge’s order mandating the destruction of the banked SVF product will or should be reversed on the grounds that the district court never acquired jurisdiction over the material/failure to join an indispensable party/the relief granted exceeded the claims in the lawsuit, or some combination thereof, as will be argued by the intervenors. That part of the case will be remanded for further proceedings. At that point, I would hope to see a settlement between the FDA and the SVF banking customers.

Well, maybe there is some wishful thinking going on here, but I think that is the way it could play out, if it goes that far.

Rick Jaffe, Esq.
rickjaffeesquire@gmail.com

Should you be worried if you banked your SVF/Stem Cells?

Should you be worried if you banked your SVF/Stem Cells?

The injunction entered by the Florida federal district court judge in the US Stem Cell case ordered the company to destroy all of the SVF product which it was storing for their patients and SVF banking customers. I did not think that was right, in large part because the owners of the stored product were not parties to that lawsuit. See my previous post: http://rickjaffeesq.com/2019/07/22/breaking-new-on-the-us-stem-cell-case-svf-destruction-order-stayed-and-svf-owners-intervene-in-the-suit/

here is the final injunction order:
permanentinjunctionorder

The basis of the judge’s destruction order was that the material is an unapproved new drug basically because the separation of the SVF from the fat from which it was derived constitutes more than minimal manipulation and is not even a stem cell. The FDA also claimed that US Stem Cell was using the product in their patients for non-homologous use, but that may or may not carry over into SVF banking because there is no use homologous or otherwise in banking, and won’t be until the client wants the cell back for reimplantation, arguably anyway. The other problem the court had with the product, (also adopting the FDA’s position), is that the material was not produced in accordance with Current Good Manufacturing Practices, which made the drug product adulterated under FDA law.

As I reported recently, the judge stayed the part of the injunction ordering the destruction of the banked SVF product pending appeal, even though she thought the product was FDA illegal and the owners did not have any rights to their body parts.

In case you have any doubt about how unimpressed the judge was with the rights of patients/consumers to control their own body parts (or something derived therefrom), here are the judge’s words and you can decide for yourself.

“As an initial matter, the Court is not persuaded that any party has a property interest in the SVF Product warranting a stay of the Order of Permanent Injunction. First, the law is unsettled as to a party’s rights in its biological tissue. See, e.g., Greenberg v. Miami Children’s Hosp. Research Inst., Inc., 264 F. Supp. 2d 1064, 1075 (S.D. Fla. 2003) (explaining that “[t]he property right in blood and tissue samples also evaporates once the sample is voluntarily given to a third party.”). And, in this case, any such rights would be governed by the contractual relationship between Defendants and each individual patient, which rights are not addressed properly in this lawsuit. Second, as explained in the Court’s Order on the Parties’ Motions for Summary Judgment, the SVF Product is not the same as the patients’ stem cells; rather, the SVF Product is a separate product created by Defendants through a proprietary and complex multi-step processing procedure. See D.E. 73. Lastly, in-line with well-settled and recently affirmed Supreme Court precedent, in the Court’s Order on the Parties’ Motions for Summary Judgment, the Court deferred to the FDA’s scientific expertise and its interpretation of the FDCA that the SVF Product is an adulterated and misbranded drug. See D.E. 73; Kisor v. Wilkie, 139 S. Ct. 2400 (2019) (affirming Auer v. Robbins, 519 U.S. 452 (1997)). Accordingly, the Court is not persuaded that any party has a property interest in the SVF Product because it is an adulterated and misbranded drug. See United States v. Ellis Research Labs., Inc., 300 F.2d 550, 554 (7th Cir. 1962) (“We find no merit in defendants’ argument that the injunction sought and granted is an unconstitutional and unwarranted exercise of the regulatory powers exercised by the United States under the Act in question . . . they can have no vested interest in a business activity found to be illegal.”) (emphasis added).”

Here is the judge’s complete stay order:
staydestructionorder

I think there are sound and compelling arguments to be made in response to the judge’s opinion, and sooner or later, in this or another case, I am confident they will be made.

So, the question arises what, if any effect the judge’s decision will have on patients who have banked their SVF (or some other stem cell derived product) with other stem cell banks. There are technical, theoretical and practical answers to this.

The technical legal answer is that a district court decision is not binding in other districts. The reasoning of the decision might be persuasive, but the decision itself is not binding. In fact, I think even a judge in the same district court can disagree. That is especially the case here since the owners of the material were not parties to the lawsuit, and I think that makes the judge’s decision on this particular point much less persuasive.

My prediction is that eventually the patients/SVF owners of material held by US Stem Cells will become parties to the appeal. If so, once the Eleventh Circuit decision comes out (in about a year) that decision will be precedential and binding unless another court of appeals takes a different position. So much for the technical/legal.

As to the theoretical, I suppose the FDA could take that decision and start looking at all the stem cell banking operations to determine which of them are manufacturing adulterated drugs (and that would probably be most or all of them I would guess) even though these materials are not imminently going to be injected into patients. However, I do not see that happening.

The reality is the FDA has a lot on its plate in the stem cell field. There are many hundreds of these private stem cell clinics out there operating in violation of FDA law. The 2017 FDA guidance document stated reason for not taking action against all these clinics is that it wanted to give the industry a three-year window to come into compliance, (and that was damn nice of them if you ask me). But in actuality, the FDA does not have the manpower to investigate and prosecute them all. So as Siddhartha says, “If you have nothing to eat, you should fast.”

Apart from the autologous MSC dervied stem cell clinics, there are dozens and probably hundreds of clinics providing allogeneic based products. All of these places are treating patients with what the FDA would consider illegal drugs. The MSC based autologous stem cell banks are just “manufacturing” and storing the material for possible future use. (And honestly, I just do not get why older people store their stem cells. I’ll address that in another post). But back to the point, I have to believe that the low risk profile of these stem cell banks puts them way down on the potential enforcement list.

I think the FDA’s next target is much more likely to be clinics that provide birth related derived products (i.e. umbilical cord stem cells, cord and placental tissue, and more exotic products) used in alleogeneic therapy. But more about that later.

Rick Jaffe, Esq.
rickjaffeesquire@gmail.com