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There’s just time for a quick update on the FDA’s Injunction Lawsuit against US Stem Cell Clinic

There’s just time for a quick update on the FDA’s Injunction Lawsuit against US Stem Cell Clinic

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Recent fillings and orders which were expected:

  1. Longer papers for summary judgement. The parties jointly moved to allow each to file more pages than is allowed for summary judgment under the local rules. The parties wanted double the amount. The judge gave them less.
  2. Yesterday the parties filed a joint motion to cancel the local rule required mediation. Mediation is a waste of time in a case like this. There’s no money damages sought, and the Government already told US Stem Cell Clinic what it wanted (stop selling stem cells). The offer was declined. Nothing has changed. The judge should grant the motion.

Summary Judgment motions are due on or before March 11, 2019, which is this Monday. Look to both sides moving for summary judgement.

Here are the arguments each side will make:

The Government’s motion:

  1. There are no disputed facts requiring a trial. US Stem Cell Clinic (USSCC) is extracting MSC’s from adipose tissue and processing the material into some kind of (SVF) Stromal Vascular Fraction, which it is using autologously on patients for a wide variety of non homologous uses.
  2. The extraction process and subsequent processing of the HCT/P’s constitute “more than minimal manipulation.” as defined by FDA regulations and guidence documents.
  3. As a result, the products are regulated as 351 (new drugs) not just 361 matieral (same day surgical procedure, homologous use and not more than minimal manipulation).
  4. There is no NDA or IND on file for the new drugs.
  5. The lab producing the product is not cGMP or cGTP compliant per FDA inspection memorialized in a 483 inspection report and a subsequent warning letter.
  6. As a result, USSCC’s prior and continued use of these products is illegal under Federal law, and specifically, introducing into interstate commerce an unapproved new drug. In addition, the drug is misbranded (since there is no approved labeling and instructions for use) and adulterated (because the drug manufacturing facility is not cGMP and cGTP compliant, and other reasons).
  7. The court should give deference to the FDA’s opinion under the Chevron doctrine, and there is direct precedent supporting the FDA’s and rejecting the Defendant’s anticipated argument (practice of medicine) in the Regenerative Sciences case decided by the DC Circuit.

US Stem Cell Clinic’s motion

  1. There are no disputed facts requiring a trial. USSCC is extracting MSC’s from adipose tissue and processing the material into some kind of (SVF) Stromal Vascular Fraction, which it is using autologously on patients, for homologous use.
  2. The SVF is not more than minimally manipulated as the character of the cells are not being altered.
  3. The material is removed and reimplanted during the same surgical procedure making the procedure exempt under 21 CFR 1271.15, under which the FDA has declined jurisdiction to regulate this and other similiar surgical procedures.
  4. USSCC is involved in the practice of medicine which is a matter of state law and not within the FDA’s jurisdiction, like any other surgical procedure that uses the patient’s own blood product for same day reimplantation.
  5. (If they’re clever, they might come-up with something else which hasn’t been talked about much, but we’ll just have to wait and see).

The Decision

Government 1 — US Stem Cells 0,

is my prediction

Will it matter?

Not as much as the Government (and the stem cell institutional players) think and hope.

Why is that?

Once you’re bitten by the stem cell bug, you don’t get out just because of a little set-back like a permanent injunction (even affirmed by the Court of Appeals). You adapt (or metastasize depending on one’s perspective). The public company involved or related to the lawsuit is non essential and expendable. There are other public company shells to be had in the next iteration of the business.

Stem cell therapy is the center of the medical universe right now. It’s intoxicating especially for participants who are not licensed physicians. Just look at all the chiros and naturopaths getting into it. And let’s face it, it’s a growth industry with great financial rewards, like the gold rush or the wild west. Once you’re bitten….

My guess is that Comella and her crew already have their Plan B figured out and ready to go, and it wouldn’t surprise me if Plan B is already up and running in a small way. And since she’s not a licensed health care practitioner, she doesn’t have to worry about a state medical board stopping her.

So I’m betting that regardless of inevitable permanent injunction granted on summary judgement or its affirmance by the Court of Appeals, she’s not leaving the field so fast.

Rick Jaffe, Esq.

rickjaffeesquire@gmail.com

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

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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.

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

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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.

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

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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.