As stem cell industry explodes, can a static FDA keep up?

FDA budget graphThere are legitimate arguments about the degree to which the FDA should regulate stem cell clinics and the point-of-care, for-profit stem cell industry. I’ve held debates about that on my blog with argument on both sides including a very valuable debate between Dr. Chris Centeno and Doug Sipp.

However, increasingly it is looking like the more important, immediately pressing question is not the degree of regulation that is hypothetically desirable, but rather whether the FDA is even capable of regulating this exploding industry appropriately no matter what any of us think about the degree of regulation.

Can the FDA, as it is currently funded and structured, effectively regulate the stem cell industry?

Unfortunately, the answer is “no” at this time.

A big part of the reason is the static FDA budget (see graph above left).

As most readers of this blog know, I am in favor of a relatively high degree of FDA regulation of stem cell treatments so I find the slow, incomplete response of the FDA cause for concern. But I don’t really blame the FDA itself because I believe given its budget and personnel there is only so much it can do. Keep in mind the FDA has a huge amount of other responsibilities beyond cell therapy-related biologics (the area in which stem cells fall).

We saw in a recent very helpful article by University of Minnesota professor, Dr. Leigh Turner that there are at least 20 stem cell clinics operational in the state of Texas alone. This does not even include associated businesses that may fall under FDA regulations. Thus, I’m not convinced that the FDA could even oversee all the stem cell clinics just in the state of Texas alone. Backing that up is the fact that we see overall relatively little regulatory action by the FDA on stem cell clinics. What about the other 49 states?

The FDA budget is a serious problem.

FDA stem cell clinics

The FY2012 FDA budget (the so-called “budget authority” which is the actual amount of money allocated from the federal government for the FDA and does not include fees the FDA receives from corporations) is approximately $2.5 billion, not much higher than it was all the way back in FY2009.  In the coming year reportedly  it could even face a sequestration-based cut of almost a third of a billion dollars.

Breakdown of 2012 FDA budget can be found here. For biologics, the category in which stem cell based products fall for regulation, we see no change in the number of FTEs from 2010-2012 and I suspect the number in 2009 was the same as will be the number requested for 2013. During this same period, while there is no hard data, I would estimate that the number of facilities (stem cell clinics, manufacturers, product developers, etc) in theory requiring FDA oversight has increased several fold.

So we have a static FDA budget, particularly in the last 3 years, and exploding stem cell industry. Together this is a recipe for serious trouble. See graph above with the red line.

The President’s FDA budget request for FY 2013 is again approximately $2.5 billion, which is really disappointing. The request for 2013 is only $60 million higher than the allocation in 2011.

Bottom line: something needs to change or the stem cell industry will by default become largely deregulated.

This will leave the FDA in a perpetual crisis mode only regulating those stem cell entities that are either highest profile or somehow deemed greatest risk.  I believe we may already be at a point where the FDA is operating this way and I don’t think that approach works. We recently saw the FDA come down hard on stem cell cosmetics with warning letters, but it issues relatively few warning letters for stem cell clinics that actually inject millions or billions of stem cells into patients.

8 thoughts on “As stem cell industry explodes, can a static FDA keep up?”

  1. Chris Centeno, M.D.


    As Lee brings up, there are two pathways for new therapy discovery. One that is pharma/university bench based and one which is physician based. We desperately need both, as many of the new medical discoveries of the last century happened because of physicians. One example of that is off-label use, which as Lee brings up. This and compounding aren’t regulated by FDA. In addition, FDA has no regulatory authority over physicians. If FDA did decide to regulate physicians and could make that happen (doubtful given the wording and administrative/congressional record of the FDCA), it would be impossible. Here’s a piece I wrote that explains why:

    Continuing along the lines of the cells= drugs discussion, what happens if I turn your cells as used in a physician’s office into drugs? Since we have many more physicians than drug factories, this creates a very severe problem.

    How big would FDA have to be to supervise or monitor physicians using stem cells to ensure they weren’t the type FDA thinks are new drugs? There are almost 1 M US physicians. There is one FDA which is overburdened and underfunded. There are 50 state medical boards who are charged with overseeing physicians while FDA is strictly prohibited from having authority over physicians. Even if congress decided tomorrow to grant FDA regulatory authority over physicians, it would have to increase the size of the agency by more than 10X just to have a poor program based solely on the absolute number of doctors. For example, FDA performed 200 ex-US drug manufacture inspections in 2008, in 2009 it had only two inspectors in China-where many of the drugs in the US are manufactured. In the US and elsewhere the agency does about 1,000 annual drug manufacture factory inspections. To police physicians, it would need to increase that number 10x just to have a very poor surveillance program (inspecting about 1% of physicians per anum). In addition, the efficiency of these inspections would drop off a cliff. Right now FDA can inspect the safety of millions of patient doses of mass manufactured drugs by inspecting one large drug factory. If they were inspecting physician offices for autologous stem cell use, that efficiency drops to at best tens to hundreds of doses per inspection. So the numbers above would need to increase by at least 1,000X to monitor 1 million US physicians using stem cells at a 1% per year inspection rate. That overall 10,000 X increase in FDA size would take it from about 12,000 employees to somewhere north of ten million, making it by far largest federal agency and larger than the rest of the federal government.

  2. Canadian stem cell trials impeded by federal regulations, doctors say
    Such non-human primate studies would be “extraordinarily” costly, highly time-consuming and ethically challenging, said Dr. Fehlings, medical director of the Krembil Neuroscience Centre at Toronto Western Hospital. And he said little would be gained by conducting them.

    “It probably would have delayed the field by another 10 years,” said the neurosurgeon. “When you think about a condition as serious and life-threatening and damaging as spinal cord injury … is that a reasonable bar, or is that setting the bar at a level that is not appropriate?”

    Canada appears to have set itself apart from regulators in Europe and the United States, who have recently approved human stem-cell trials without primate studies first, said Dr. Fehlings.

    Dr. Curt said he left Canada for Switzerland’s Balgrist University Hospital after four years at the University of British Columbia partly because of the government’s request that such trials be duplicated in primates.

    “I want to do meaningful research and I want to eventually go from pre-clinical studies to patients. If the regulators are so rigid or whatever, this has an impact,” he said in an interview from Zurich. “It is a challenge and an additional kind of burden to the stem-cell researchers in Canada … There is such a roadblock.”

  3. Paul,

    One other issue I think work discussing. There is a subtlety to your issues with the “compliant” side of the industry that I believe could be better addressed.

    One of the arguments you and others (even I on occasion) make for supporting greater regulation of non-compliant clinics is the need for rigorous clinical data before a product is sold to consumers. There are, however (as we have oft discussed), perfectly compliant ways to get certain kinds of drugs or treatments to patients with very little evidence of their efficacy and only an assumption of their safety for that patient.

    The two examples I cite are “off-label use” and cell-based products which fall under the 361 category.

    In the latter instance, 361 products can be brought to market in perfect compliance with the regulation with no overt approval required and with as little evidence as the company believe necessary to support physician adoption.

    The point is that if you want to take the companies/clinics to task for bringing products/treatments to market with little evidence of efficacy, your argument may not be one focused on “compliance” but rather the appropriateness of the regulation which allows such products to be marketed with a dearth of evidence behind them.

    Conversely, if you support that regulatory framework that allows this then you have to concede that robust clinical evidence is not always a perquisite to going to market.


    1. Thanks for the comment, Lee. However, I’m not so sure the 361 products issue is that simple. Who decides what is a 361 and what is a 351? Companies such as Celltex argue their product is a 361, while others believe that perhaps it is a 351. Again there is a grey zone. For products that the company and the FDA both agree are 361s, I think you are right, but I wonder (and maybe you know this better than I) how often does that happen? Even in that scenario, the FDA I assume must still make a determination as to whether the product is a 361 requiring work for the FDA.

      In terms of “off-label” use, I didn’t think that was simple either. For example, for a cell therapy product approved for use as say an ankle treatment, I thought a company cannot simply decide with no FDA oversight to encourage physicians to use it, the same product, for off-label in say liver treatment, correct?

      1. The way the FDA has set up the system, it is truly up to the company to determine whether their product falls under the 351 or 361 pathway. If they decide it is a 351 they FDA will regulate it as such. If they decide it is a 361, the only comfort one can take in ‘knowing’ whether a company has self-identified correctly is the lack of enforcement to the contrary by the FDA. As we know, little comfort can be taken in a lack of enforcement because it may be attributed only to FDA’s backlog rather than their concurrence. There are numerous such products on the market now – some with questionable 361 status claimed by the company behind them and others most would agree legitimately fall under 361. All of them have been brought to market with a very small pilot and a small ‘pivotal’. Most then follow up with post-market studies to further support physician adoption and reimbursement submissions.

        Re off-label use, you’re right that a company cannot promote off-label use (drug companies are always being fined for this) but from a regulatory standpoint a doctor can take drug x approved for y and with no evidence at all prescribe it for z. This is perfectly compliant. My point is only that this is an example of products/treatment being given to patients (and in some instances even reimbursed) in a manner which is perfectly compliant but which is based on little to no data of clinical efficacy.

  4. Paul,

    Great post. I think you’re dead right. In my presentation last week commenting on trends in the cell therapy industry I noted that whatever you think of the appropriateness of the current regulatory framework the fact that the growth of clinics providing non-compliant stem cell treatments in the US is clearly and significantly outpacing FDA’s ability to monitor let alone respond will have material impact on those working in compliance with the regulation. It will impact academic clinical studies as well as the industry side of the sector. I argue its impact will be felt the least on regulation which is now entrenched for the short-term. Its big impacts will be in areas like patient recruitment, public policy, investment, etc.

    As a matter of semantics I still wish you would draw a clearer distinction between “non-compliant” and “compliant” stem clinics and the stem cell industry. As we oft discussed, there both compliant and non-compliant version of “stem cell clinics” just as there are both compliant and non-compliant versions of the “point-of-care, for-profit stem cell industry”.

    Keep up the good work.


    1. Some great points, Lee as always! I agree that distinguishing between compliant and non-compliant players is important, but at the same time the FDA needs to provide oversight to both, right? So it still needs personnel and money to regulate the whole area. Also some clinics and other entities surely fall into the grey zone in between clearly compliant and clearly non-compliant. In fact, these grey zone corporations may be the most labor intensive for the FDA because they are by definition harder to peg.

      1. Agreed that the semantics point I made was not made to detract at all from your thesis re the need for greater FDA effectiveness (likely requiring more resources).

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