U.S. v. U.S. Stem Cell: Where Does Regenerative Medicine Go From Here?

On June 3, the U.S. District Court for the Southern District of Florida delivered the U.S. Food and Drug Administration (FDA) a victory by granting it an injunction against U.S. Stem Cell Clinic, LLC and U.S. Stem Cell, Inc. (Company) for marketing unapproved, adulterated, and misbranded stem cells.  The decision culminates FDA’s years-long effort to ensure that the Company complied with the laws applicable to human cells, tissues, and cellular and tissue-based products (HCT/Ps), and is illustrative of broader actions that FDA has recently taken to explain and enforce its HCT/P regulatory framework.

At issue in this case was whether U.S. Stem Cell’s stromal vascular fraction (SVF) treatments were subject to FDA oversight, or whether the Company’s practices were exempt from oversight under the “same surgical procedure” exemption outlined in FDA regulations.  During its procedures, the Company obtained fat from a patient during a liposuction procedure, prepared certain stem cells that are contained in the fat (the SVF), and then reinjected the SVF back into the same patient on the same day as the liposuction. The Company claimed that SVF could treat numerous serious diseases, including diabetes and heart disease.

FDA had asserted for years, based on repeat non-compliant facility inspections and a warning letter, that U.S. Stem Cell’s actions resulted in the manufacture of an unapproved drug under the Federal Food, Drug, and Cosmetic Act (FFDCA), the Public Health Service Act (PHSA), and FDA regulations.  The Company, however, had continuously maintained that it was performing a medical procedure that was exempt from FDA oversight under the “same surgical procedure” exemption. 

The Court sided with FDA’s arguments, bringing valuable clarity to the meaning of the regulations and how they are applied:

• To be exempt from FDA oversight under the “same surgical procedure” regulation, the cells removed from and re-implanted into the same person (referred to as “such HCT/Ps” in the regulation) must be in their original form as removed. The cells may only be subjected to minor rinsing, cleansing, sizing, or shaping.
• “Such HCT/Ps” referred to the original fat tissue, not the processed SVF. U.S. Stem Cell removed fat tissue, but only re-implanted a portion of that tissue (the SVF) into the patient.  FDA’s interpretation was entitled to deference.
• FDA’s HCT/P guidance documents are not legislative rules and therefore did not require notice-and-comment rulemaking. As the court noted, FDA had the legal authority to bring the enforcement action against U.S. Stem Cell even in the absence of the guidance documents. 
• Because the processed SVF does not have the fat tissue’s original function of providing cushioning and support, the SVF was not being reinjected into the patient for a “homologous use.” Fat tissue and SVF only shared some, not all, functional characteristics.
• Here, the SVF is a drug regulated under the PHSA, FFDCA, and the HCT/P regulations. As a result, the SVF was adulterated because the defendants did not follow current good manufacturing practices (cGMPs) during production of the SVF.  The SVF is also misbranded because the product was not labeled with the indications, use, dosage, route of administration, or side effects.

So where does the regenerative medicine industry go from here?  It is unlikely that the U.S. Stem Cell decision will bring about the demise of the regenerative medicine industry.  However, its impact is likely to be felt by different segments of this industry in different ways:

• Companies that are sponsoring stem cell clinical trials and that are working towards an FDA approval are the least likely to be impacted. These companies have already determined that their product requires FDA pre-approval and they are conducting pre-clinical and clinical testing to support an approval.  This decision will reaffirm their actions.
• Physicians providing in-office procedures involving stem cells should proceed with caution. Healthcare providers should determine if the procedures they offer truly meet the “same surgical procedure” exemption, or if they are in fact manufacturing an unapproved product.
• Companies and individuals that are unsure of whether a product is subject to FDA regulation should seek advice on the matter. These parties should be cognizant of FDA’s current limited period of risk-based enforcement discretion that ends in late 2020.

Although this decision applies only to the defendants in the case, FDA’s victory demonstrates that it has the authority to continue to take legal actions against those parties that do not comply with the HCT/P framework.  Whether this decision will actually impact those that are not in legal compliance—or will serve as the springboard for more aggressive FDA enforcement efforts—remains to be seen.