Ninth Circuit Upholds FDA’s Authority to Regulate Stem Cell Clinic Treatments

On September 27, 2024, in U.S. v. California Stem Cell Treatment Center, Inc., a Ninth Circuit panel unanimously held that a stem cell clinic’s Stromal Vascular Fraction (SVF) procedure constitutes a “drug” under the Food, Drug and Cosmetic Act (FDCA) and does not meet the “same surgical procedure” (SSP) exception to FDA’s regulation of human cells, tissues, and cellular and tissue-based products (HCT/Ps) contained in 21 C.F.R. Part 1271. The District Court in this case, which came to the opposite conclusion and is now reversed, was a notable outlier in a string of cases in other circuits upholding FDA’s authority to regulate stem cell clinics on similar grounds as the Ninth Circuit did here. See U.S. v. Regenerative Sciences, LLC, 741 F.3d 1314 (D.C. Cir. 2014); U.S. v. U.S. Stem Cell Clinic, LLC, 998 F.3d 1302 (11th Cir. 2021). The case was remanded to the District Court for further proceedings, which could include consideration of whether Defendants’ SVF procedure is eligible for lighter-touch regulation under section 361 of the Public Health Service Act (PHSA) or, instead, Defendants must obtain approval of a Biological License Application (BLA) for the SVF prior to its marketing and use. Defendants may also seek en banc review of the decision from the full Ninth Circuit.

Facts

Defendants in this case are two licensed physicians and the stem cell clinics they founded. At the clinics, Defendants offer treatments that consist of extracting fat tissue from patients and, through a multi-step process, turning that tissue into a liquefied mixture of stem cells, other cells and cell debris known as Stromal Vascular Fraction (SVF). The resulting SVF is then administered to the same patient by injection, intravenous drip, or inhalation. There are two varieties of the procedure: one where the fat tissue extraction and reimplantation of SVF is completed on the same day and another where the tissue is sent to a cell bank for processing and cell expansion for later use by the patient.  (Note we do not discuss the cell expansion variety of this treatment further in this blog as the court quickly dispensed of it as obviously not subject to the SSP exception.)  These procedures are offered to treat a variety of conditions, including Alzheimer’s, arthritis, asthma, cancer, etc., no doubt with varying degrees of scientific support for their safety and efficacy in treating these conditions.

Regulatory Background

FDA regulates and generally requires premarket approval of all new drugs, which are defined as “articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease,” or “intended to affect the structure or any function of the body.” 21 U.S.C. § 321(g)(1). FDA also regulates HCT/Ps, defined as “articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient,” including bone, ligament, skin, cornea, stem cells derived from blood, and reproductive tissue. See 21 C.F.R. § 1271.3(d).

FDA has a tiered, risk-based approach to regulating HCT/Ps, with three levels of oversight depending on the category of HCT/P. The lowest risk category, which is not subject to any oversight by FDA, includes HCT/Ps removed from an individual that are implanted into the same individual during the “same surgical procedure.” 21 C.F.R. § 1271.15(b). HCT/Ps that meet the four criteria under 21 CFR 1271.10(a), such as being “minimally manipulated,” and that do not meet the SSP exception fall in the middle of the hierarchy and are regulated solely under section 361 of the PHSA, aimed at preventing the spread of infectious disease. The highest risk category of HCT/P are those that do not meet the criteria under 21 CFR 1271.10(a) or the SSP exception. HTC/Ps in this last category are regulated as drugs or medical devices under the FDCA, or biological products under section 351 of the PHSA, which typically require premarket approval and compliance with the full panoply of FDA regulation.

Court Opinion

One of Defendant’s primary arguments was that its SVF treatments constituted the practice of medicine, not the manufacture and administration of a “drug” and were, therefore, not subject to FDA regulation. The Court rejected this argument, finding instead that the SVF mixture itself was a drug (favorably citing the prior Regenerative Sciences case).

The Court also found that the SVF treatment did not meet the SSP exception and was, therefore, not wholly exempt from FDA regulation on that basis. The SSP exception requires that the HCT/P implanted into the patient be the same “such HCT/P” that was originally removed from the patient. The Court interpreted this provision to mean that the HCT/P removed from the patient had to be viewed as a whole (not its constituent parts), before any significant processing. Although the cells in the SVF mixture were present in the fat tissue originally removed from the patient, the Court found that the relevant HCT/P for purposes of the SSP exception was the fat tissue itself and, therefore, the significantly processed SVF was not the same “such HCT/P”.

Although the holding was unanimous, one judge concurred with respect to the SSP exception analysis. The concurrence found the language of the SSP exception genuinely ambiguous, but would have reached the same conclusion as the majority because FDA was owed Auer deference on its interpretation of the regulation (citing Auer v. Robbins, 519 U.S. 452 (1997); see also Kisor v. Wilkie, 588 U.S. 588, 566 (2019)).

Conclusion

The Court did not consider the question whether the SVF treatment required an NDA/BLA or, instead, met the criteria under 21 C.F.R. 1271.10 to be regulated solely under section 361 of the PHSA. This could be the subject of further proceedings at the District Court level on remand. Additionally, Defendants may also seek en banc review of the decision from the full Ninth Circuit. In the meantime, FDA now has three different circuit courts that have upheld its authority to regulate stem cell clinics performing the sort of procedures at issue in these cases.