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Update on the FDA’s California Stem Cell Case: So is SVF (i.e., sort of stem cells) a New Drug? That is the question

Update on the FDA’s California Stem Cell Case: So is SVF (i.e., sort of stem cells) a New Drug? That is the question

Here is where the case stands as of September 13, 2021:

Closing arguments were held on August 20th. The Judge set a short post-closing briefing schedule and both sides did briefs and replies, mostly on the definition of HCT/P’s. The reply briefs were submitted, per the judge’s order, on September 1st, as of which day the case was submitted and is now sub judice (legalese for pending decision by the court).

One interesting note. Of course, the Government submitted to Judge Bernal the 11th Circuit’s decision affirming summary judgment for the FDA in the Florida US Stem Cell case. That decision is on-point authority because it deals with the exact same issue; whether SVF is a new drug under 21 CFR 1271 or not. However, because the decision is in a different Circuit (California is in the Ninth Circuit), it is not binding on a California district court. Meaning the district judges in other federal circuits are not required to follow it. It is, however, entitled to weight and is considered persuasive. But the bottom line again is that it is not binding, the way a prior Ninth Circuit opinion be if there had been such on-point authority.

But the interesting thing was that the Defendants submitted another circuit court opinion in support of its position and that would be The Judge Rotenberg Education Center, Inc. v US FDA. That case did not deal with stem cells, but rather the FDA’s attempt to ban an FDA-cleared medical device for a specific use. The DC Court of Appeals in a 2-1 decision held that the FDA did not have that power under the statute. This is a different but similar issue. This case was more about the off-label use of an approved (cleared) device and whether such use was the practice of medicine which is not regulatable by the FDA. The similarity is that the defendants, in this stem cell case, are arguing that the use of SVF by physicians is the practice of medicine. So, I suppose, there is an analogy to the DC case.

I don’t think Judge Rotenberg case will be outcome determine. If Judge Bernal rules for the FDA, he will simply distinguish the case based on the obvious fact that the stimulation device was FDA cleared (approved). SVF is not FDA approved for any use. The issue in the stem cell case is whether the product is a new drug and hence requires FDA approval, which is a pretty different issue.

On the other hand, if Judge Bernal rules for the defendants, he can certainly pull out some language from this decision to support his result and reasoning and will surely include discussion of the practice of medicine not being regulatable by the FDA. For those of you interested in the practice of medicine vs FDA regulation issue in the context of off-label vs restrictive use, here is the decision. You will like it.


So What’s Judge Bernal going to do?

Hell if I know.

Based on his denial of summary judgment and the sole factual question which he seemed to think needed to be addressed at a trial, it seemed to me pretty clear that he was going to rule for the Defendants. I only listened to most of the Government’s case and none of the defense case. So, I do not have a complete picture. But I am very familiar with the issues and the arguments based on the US Stem Cell cases and my own work in the field. The judge seemed annoyed a lot of the time, mostly towards the Government or so I thought. I don’t see that a lot.

From the above, I would still say that the judge was going to rule for the Defendants. The rub is of course the 11th Circuit’s opinion. It takes a brave district judge to issue a technical decision (and this will be a highly technical decision) against the FDA where there is other circuit authority in support of the FDA’s position. But then, my sense is that Judge Bernal has some libertarian tendencies and doesn’t at all mind sticking it to the man.

So what’s he going to do?

On this, I’d have to say your guess is as good as mine.

Still, I’m going with he’s going to stick to his guns on the main issue. He might try to split the difference, since there are some other issues in the case on which he could rule for the FDA (like the toxins they added to the stem cells for some patients).

There were seven trials days, plus extensive closings, plus many papers flying back and forth post-closing. On the other hand, having ruled on summary judgment, he is very familiar with the issues. And he only really thought there was one big issue to be tried. Still in all, it could take him a couple of months to come out with his decision.

Rick Jaffe, Esq.

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.