Regenerative Sciences Lawsuit Update and FDA’s Attempt to Broaden the Definition of “Interstate Commerce”

By William T. Koustas –

We have previously reported (here, here, here, and here) on the court struggle in the United States District Court for the District of Columbia (“the Court”) between FDA and Regenerative Sciences, Inc. (“Regenerative”).  Regenerative challenges FDA’s claim that the company’s stem cell procedure is subject to FDA jurisdiction and regulation under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and/or the Public Health Service Act (“PHSA”) as an unapproved drug and/or biologic.  Regenerative has developed a procedure in which stem cells are isolated from a patient’s bone marrow, undergo an expansion in a laboratory and are then returned to the patient’s site of injury to treat musculoskeletal and spinal injuries (“Regenexx Procedure”).  Perhaps most interesting is the Government’s new argument that the Regenexx Procedure is subject to regulation by FDA because it involves interstate commerce.   

After Regenerative’s February 2009 lawsuit against FDA was dismissed, the Government sued Regenerative in June 2010 after FDA issued a Form 483 concerning an inspection of Regenerative’s Colorado facility.  Our previous blog entries on this case have additional discussion on its procedural background.  In our last post on this case in January, we discussed the Government’s motions for summary judgment and to dismiss Regenerative’s counterclaims.  Several documents have been filed in this case since that time, including Regenerative’s brief opposing the Government’s motion to dismiss in April 2011, the Government’s reply brief in support of its motion for summary judgment in August 2011, and Regenerative’s surreply in opposition to the Government’s motion for summary judgment in August 2011.  The Government responded to a show cause order in September 2011, and Regenerative recently filed its own response to that order in October 2011.

In its motion to dismiss, the Government claims that it is not attempting to regulate the practice of medicine, but rather, FDA is regulating the manufacturing of a drug product.  The Government further argues that Regenerative’s claim that the statements regarding minimal manipulation in the preamble of FDA’s HCT/P should have been subject to notice-and-comment rulemaking is without merit since the statements were only in the rule’s preamble and not part of the rule itself.  A fuller discussion of FDA’s HCT/P rule as it pertains to this case can be found in our last blog post.  Regenerative’s filing opposing the Government’s motion to dismiss argues that FDA is indeed attempting to regulate the practice of medicine.  Regenerative asserts that the Government cannot define what is and what is not the practice of medicine when it does not have the jurisdiction to regulate the practice of medicine to begin with and points out that Colorado’s definition of the practice of medicine is much broader than the Government’s definition.  Regenerative also argues that the U.S. Supreme Court has thwarted a prior Government attempt to define the practice of medicine in Gonzales v. Oregon, 546 U.S. 243 (2005).  Regenerative argues that the preamble statements regarding minimal manipulation in FDA’s HCT/P rule are part of the substantive rule and should have been implemented through notice-and-comment rulemaking. 

In its reply brief in support of its motion for summary judgment, the Government reasserts its argument that the cultured stem cells used in the Regenexx Procedure are drugs as defined in the FDCA and therefore subject to FDA approval.  The Government further argues that, although Colorado’s definition of the practice of medicine is fairly broad, it does not address the ability of a physician to produce a drug product which is regulated by FDA.  The Government further reiterates its view that Regenerative’s legal challenges to the HCT/P rule, including whether the statement regarding minimal manipulation should have been subject to notice-and-comment rulemaking, are time barred as we described in our previous blog post. 

The Government also argues that, as a drug, Regenerative’s stem cells are within FDA’s jurisdiction as they affect interstate commerce despite the fact that the Regenexx Procedure is done entirely in Colorado.  First, the Government asserts that the stem cells fall within the scope of interstate commerce since Regenerative obtains “components” to manipulate the stem cells from outside of the state.  Second, and most amazingly, the Government argues that interstate commerce is substantially affected because individuals traveling to Colorado to have the Regenexx Procedure would “depress the market for out-of-state drugs that are approved by FDA.”  This interpretation of interstate commerce appears to be new ground for the FDA.  In fact, it appears to be a novel interpretation of the FDCA, as is evidenced by the Government’s failure to cite any judicial precedent for their argument.  If this interpretation were to be accepted by the Court, we have difficulty envisioning that FDA would admit that any food, drug, device, biologic, or cosmetic product is not subject to FDA’s jurisdiction. 

In its surreply brief opposing the Government’s motion for summary judgment, Regenerative continues to argue that its physicians are engaged in the practice of medicine as defined by Colorado law and therefore outside of the jurisdiction of FDA.  Regenerative’s brief further suggests that FDA does not have jurisdiction to regulate the Regenexx Procedure even if it were considered a drug because it does not substantially affect interstate commerce as the procedure is entirely done in Colorado and does not have a national market.  While the Government seeks to counter this argument by broadly interpreting interstate commerce to include depressing the interstate drug market, Regenerative argues that such a broad interpretation of interstate commerce would allow FDA to regulate a medical procedure based on its ability to depress the interstate drug market.  This, Regenerative asserts, would clearly lead to the FDA regulation of any and all medical procedures and the practice of medicine as a whole.

More recently, the Court issued an order to show cause for the Government to demonstrate why it should not read the definition of device in the FDCA as informing and restricting the definition of drug.  The Court notes that the FDCA defines device as “an article used in the diagnosis, cure, mitigation, treatment or prevention of disease, 21 U.S.C. § 321(h)(2), but which, presumably unlike a drug, ‘does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of its primary intended purposes’ 21 U.S.C. § 321(h).”  Based on this definition, the Court asked the Government why it should “not interpret the meaning of the word ‘drug’ to include not only an article for use in diagnosis, etc., and intended to affect the structure and function of a patient, but also an article that ‘achieve[s] its primary intended purposes through chemical action’ and which is ‘dependent upon being metabolized for the achievement of its primary intended purposes.’” 

The Government’s memorandum in response to the order to show cause essentially argues that there is nothing in the FDCA, or its legislative history, that suggests the definition of drug be narrowed as contemplated in the show cause order.  The Government asserts that by the FDCA “….implicitly recognizing that drugs often work through chemical or metabolic action and specifying that devices may not work through [such action] is not the same as mandating that all drugs must be shown to work through chemical or metabolic action.”  The Government also claims that the definition of the term drug as described in the show cause order would be contrary to decades of legal precedent.  Regardless, the Government asserts that the Regenexx Procedure works through chemical action, thus making it a drug under the Court’s proposed narrower definition of drug. 

In its response memorandum, Regenerative argues that, contrary to the Government, its review of the legislative history of the definition of device demonstrates that Congress did in fact intend that it “inform and restrict” the definition of drug.  It asserts that the fact that Congress wrote a new definition of device to exempt medical devices from the definition of drug effectively restricts the definition of drug.  As such, Regenerative argues, Congress intended to “inform and restrict” the definition of drug through the definition of device.  Regenerative also pushed back on the Government’s assertion that the Regenexx Procedure works through chemical action thereby causing it to be a drug, noting that there are many medical treatments that consist of living cells that are not considered drugs (e.g., blood transplants, organ transplants, etc.). 

The Government is expected to file a brief to Regenerative’s response to the show cause order by October 24, 2011.