Key takeaways from unique North Dakota action on stem cell clinic

Hat tip to North Dakota!

You probably know by now that there are stem cell clinics in just about every state in the U.S. and some states and metro areas are hot spots. Heck, some of you reading this probably run such clinics. But did you know that of all the states, arguably North Dakota has handled a stem cell clinic situation better than any other so far? And this has big implications for stem cell clinics across the U.S. You can see my top 10 takeaways from this further down, but first some brief background.

Late last year it came to light that there were alleged issues at a clinic offering stem cells in North Dakota called West 2 Medical Solutions. The clinic had been offering the stem cells less than two weeks before the alleged concerns from patients arose it seems.

Now just a few months later the state of North Dakota, including specifically its consumer protection division, has reached an agreement with West 2 Medical Solutions in which the company will pay more than $20,000 including just under $20,000 going to former customers who wanted refunds, according to the Grand Forks Herald. The firm will also stop offering the stem cells in question, which appear to be marketed as amniotic stem cells. Note that the parties in the North Dakota case still deny the allegations even after coming to a settlement with the state.

Here’s the state’s take on how this wrapped up:

“For us, it’s mission accomplished,” said Parrell Grossman, director of the Consumer Protection Division. “We needed to stop these injections due to our concerns about the misrepresentations and any potential adverse consequences, and otherwise make sure the clinic can engage in other forms of medical treatment that is in compliance with federal and state law.”

The way that North Dakota handled this was striking and below are 10 take-homes from this situation for other stem cell clinics more broadly as well as those following developments related to them.

1. Amniotic stem cells are not somehow immune from regulation. This type of offering is widely marketed now today in America and it is not necessarily FDA compliant. Even if some clinics feel there is wiggle room there, if a state agency disagrees, the clinic may still find itself in an unfortunate situation. From the newspaper article, “The stem cell injections in question were amniotic tissue, called allograft, injections, Grossman said.” My understanding is that isolated living cell, allogeneic amniotic transplants are almost always going to be drug products according to the FDA requiring premarket approval. If what you are selling is not living amniotic cells then you shouldn’t be marketing it as “stem cells”. Also, for you fat stem cell clinic folks, remember the FDA’s final guidance said SVF is a drug too.
2. You personally as the owner of a stem cell clinic may end up having negative consequences from what you are offering depending on how things go with your patients. From the Herald, “West 2 Medical Solutions owners Dean Jones, of Colorado, and Terry Guthmiller, of Bismarck, must refund $19,733 to patients, as well as pay $4,000 in civil penalties, attorney’s fees and other costs to the attorney general’s office.”
3. Even non-owners such as nurses may have risks from working at a stem cell clinic. Let’s say you don’t own a clinic, but you just work at one as a nurse or other health-care provider, we see here that even so you may also be liable in some way if patients are unhappy overall. From the Herald, “Landsiedel and Watkins, who are licensed nurse practitioners in the state of North Dakota, must each pay $500 to the attorney general’s office. Grossman said they negotiated separately with them because they no longer work at the clinic.”
4. Even just a few unhappy patients can have big impact.
5. Don’t screw around with investigators. If a state or federal agency starts investigating your stem cell clinic, you should probably cooperate. In the North Dakota case the clinic apparently was very cooperative it seems so that in my view that was wise. Reportedly things could have gotten more serious if the clinic personnel weren’t so cooperative. From the Herald, “Because the clinic leadership and its employees “fully cooperated” with the investigation, Grossman said the attorney general decided against pursuing a formal filing of a consumer fraud action.”
6. Fraud investigations against stem cell clinics in the U.S. are possible. See quote in above item.
7. As a clinic, you don’t just have to think about the FDA, you should think about state regulators too. Keep in mind that the Federation of State Medical Boards will be releasing its report on stem cell clinics in a few weeks and that document is likely to spark stepped-up state actions on clinics. From the Herald, “”The attorney general’s office, themselves, have taken the position that the products we were using were not compliant with the FDA, and so, accordingly, we just agreed to refrain from using those products,” Jones said in an interview Tuesday.”
8. No stem cells are risk-free and so you must clearly consent patients on risks. Using even some types of stem cells that at times are portrayed by certain firms as not having substantial risks, can lead to problems either from the cells, the procedure or both (or even some other random factor). From the Herald, “At least one patient indicated to the attorney general’s office that there was pain in both knees after receiving the injections.” I don’t know if the North Dakota clinic mentioned more pain was a possible side-effect or not.
9. Regulators can act fast. While some state or federal agencies tend to be seen as slow to act, this North Dakota case proves fast action is possible. It took just a few months from the time of complaints to final state action here.
10. The liability could be in the millions for some clinics. Some clinics have stated publicly that they’ve injected stem cells into thousands of customers. In the North Dakota case, the clinic had to refund the payments back to just a few patients, but it still added up fast. For other clinics with hundreds or thousands of past customers (each having paid thousands or tens of thousands of dollars per treatment), state or federal action could end up with firms having to pay millions of dollars back to patients and/or in regulatory fines.

I hope other states will be as effective as North Dakota in handling their stem cell issues.