September 24, 2020

The Niche

Knoepfler lab stem cell blog

In landmark step, judge does not defer to FDA in stem cell clinic chain case, orders full trial

Judge Jesus Bernal presiding in fat stem cells case.
California Federal District Court Judge Jesus Bernal ruled on Monday that fat stem cells might be exempt from being regulated as drugs by the FDA, but a full trial is needed to make that final determination in the case of the FDA vs. Cell Surgical Network, et al.

In what could be a serious legal warning sign for the stem cell field, California federal district court Judge Jesus Bernal denied the government’s motion for summary judgment against Cell Surgical Network, et al. related to their marketing of an unproven fat stem cell product via their chain of clinics. The FDA is seeking a permanent injunction. You can read the new ruling here.

The reasons why Bernal said he rejected the summary judgment request are concerning and don’t fit with my view of the medical science here as a stem cell biologist.

Unfortunately, this all leaves the door potentially still open for hundreds of clinics to sell the unproven fat stem cell product at the heart of this case called “stromal vascular fraction” or (SVF).

We’ll have to wait for a full trial to see how it all turns out, but it’s now clear that Bernal is charting a very different path than the federal district court Judge Ursula Ungaro in Florida, who last year granted summary judgment against SVF firm U.S. Stem Cell, Inc. That Florida ruling resulted in a permanent injunction against U.S. Stem marketing or using SVF, a decision which is now being appealed. The Florida judge largely deferred to the FDA in that trial.

In contrast, Bernal not only denied the FDA/DOJ motion for summary judgment, but also in doing so he surprisingly rejected a key FDA point that SVF could not be exempt from classification as a drug. The government had successfully argued that issue in the Florida case.

Bernal is clearly not going to just defer to the agency, which is good news for the defendants.

Here’s a key part of Bernal’s ruling (emphasis mine and note that SSP means Same Surgical Procedure, a potential basis for a product being exempt from regulation as a drug):

“Finally, this reading of the SSP Exception is entirely consistent with the Government’s assertion that the implanted HCT/P’s be “in the form removed from the patient.” (See Summary Judgment Reply at 4.) It is also consistent with the Guidance Document’s statement that “[a]n HCT/P remains ‘such HCT/P’ when it is in its original form.” Guidance Document at 7. If SVF cells are removed from a patient and those same cells are implanted back into the same patient without alteration of the cells themselves, they are “in the form removed” and “in [their] original form”—even when they were removed along with other biological material that was not ultimately implanted back.

While the SSP Exception could apply to a procedure that removes SVF cells by removing adipose tissue from a patient and implants only extracted SVF cells back into the same patient, it only applies if those SVF cells remain unaltered. The parties dispute whether the SVF Procedure alters the SVF cells. (Summary Judgment Opposition at 15–17.) Because both parties have submitted competing evidence on this point, there is a triable issue of fact and summary judgment is not appropriate.”

Much of this case boils down to whether the SVF cells even exist in the same form in the body as they are in the SVF made in vitro. I don’t believe that they do, but the judge seems at least open to that idea. Actually, enzymatic treatment, removal, and concentration of the heterogeneous population of cells in fat tissue substantially changes those cells. In addition, all the various cells in SVF don’t exist together in fat tissue in the body. They are spread apart. As a scientist, I’m not sure why the judge didn’t see it this way, but then again I’m not an attorney or legal expert. Did the FDA not make a convincing enough case including via its experts?

I asked FDA legal policy expert Professor Patti Zettler for her initial take on this ruling. She noted a key Supreme Court decision sometimes called “Kisor” happened between the Florida verdict and this California order, which may have impacted how this unfolded:

“Wow, I’m pretty surprised by this (and from a public health perspective a bit worried), particularly because I think FDA’s arguments have both legal and public health merits. But as readers of The Niche will know, the regulatory scheme in this space is very complex. The difference in outcomes for the Florida and California cases seems at this point to turn quite a bit on whether the judges gave any deference to FDA’s position on when the same surgical procedure exception in its regulations applies—with Judge Ungaro in Florida deferring to the agency’s position, and Judge Bernal in California not. (One interesting wrinkle for those *really* interested in the law of administrative agencies is that the Florida opinion came before, and the California opinion came after, a June 2019 Supreme Court decision in case called Kisor v. Wilkie. Kisor has been viewed as narrowing the circumstances in which courts will defer to an agency’s interpretations of its own regulations. A colleague at Ohio State wrote a blog post about Kisor here.) All of that said, the case is not over yet—this was an opinion on the government’s pre-trial motion for summary judgment—and so this is one to keep watching.”

Bernal mentioned Kisor in his ruling.

On another point, I also don’t agree with the judge’s analogy of the process of making SVF from fat being just like a surgeon isolating an artery for grafting and in so doing trimming some of the artery off and removing some blood from inside of it. After the surgeon prepares it, the artery is still the artery, while SVF doesn’t even exist inside human beings. The judge also seemed to equate surgical cutting with “enzymatic cutting” conducted to make SVF, a flawed comparison in my view.

Overall, Bernal’s order is at least a temporary setback for both the FDA’s case and in my view for those of us concerned about unproven stem cell clinics. We’ll have to see how the trial goes and the FDA could still win, but the odds of the defendants winning this case instead just went up substantially, relatively speaking at least.  If that happens, then the Florida firm U.S. Stem Cell has a much better chance on its appeal as well I think.

Then the FDA’s broader ability to regulate biologics may be substantially weaker.

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