Ninth Circuit Appeal May Significantly Affect FDA's Authority To Regulate Stem Cell Clinics

• Published date: 13 December 2022
• Subject Matter: Food, Drugs, Healthcare, Life Sciences, Food and Drugs Law
• Law Firm: Ropes & Gray
• Author: Mr Joshua Oyster, Austin Laroche and Beth P. Weinman,

On October 27, 2022, the United States government appealed a rare defeat in an injunction case brought under the Federal Food, Drug, and Cosmetic Act ("FDCA") to the U.S. Court of Appeals for the 9th Circuit. The appeal followed the denial of an injunction by the U.S. District Court for the Central District of California that would have prevented a stem cell clinic in California from continuing to market and administer adipose-derived stem cell products to patients for a variety of serious diseases and conditions. The district court ruled that the stem cell products produced at the clinic were not subject to regulation as "drugs" under the FDCA and that one of the medical procedures through which the products were administered met the criteria for the same surgical procedure exception ("SSP Exception"), which exempts procedures from Food and Drug Administration ("FDA") regulation. The court's ruling conflicts with recent precedents, including a Florida district court decision that was affirmed by the 11th Circuit, which held that the SSP Exception did not apply to a very similar set of facts and that the stem cell products at issue were in fact drugs.

A 9th Circuit decision to uphold the district court decision would create a circuit split regarding the applicability of the SSP Exception and could impact the legal interpretation of what constitutes a "drug" in the context of human cells, tissues, and cellular and tissue-based products ("HCT/Ps"). Such a split could fundamentally alter FDA's ability to regulate stem cell therapies. The government's appeal in the 9th Circuit will no doubt be closely watched in 2023 by stem cell clinics and other healthcare providers who perform procedures with a patient's own cells and tissues.

This Alert summarizes the applicable regulatory framework for HCT/Ps and recent policy developments, analyzes the different outcomes between the two recent FDCA injunction cases involving stem cell clinics, and discusses the implications for future oversight of such clinics by FDA and other government regulators, depending on the outcome of the 9th Circuit appeal.

I. The HCT/P Regulatory Framework

FDA defines HCT/Ps as "articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient."¹ Significantly different regulatory frameworks can apply to HCT/Ps, depending on the processing method used to create the HCT/P and its intended use, as discussed further below.

HCT/Ps Regulated Solely Under Section 361 of the Public Health Service Act and Part 1271.

Certain HCT/Ps are regulated solely under section 361 of the Public Health Services Act ("PHSA") and corresponding FDA regulations that establish a set of safety standards tailored primarily to prevent the introduction, transmission, or spread of communicable diseases.² Generally, manufacturers of these products must be registered with FDA, list the HCT/Ps they market, comply with current good tissue practices, and comply with requirements related to reporting adverse events and labeling. However, such products are not regulated as "drugs" or "devices" and do not require FDA premarket review, approval, or clearance before they can be marketed. In order for an HCT/P to be regulated solely under section 361 of the PHSA, it cannot be more than "minimally manipulated," and it must be "intended for homologous use only," among other criteria.³ "Homologous use" is the "repair, construction, replacement, or supplementation of a recipient's cells or tissues with an HCT/P that performs the same basic function or functions in the recipient as in the donor."⁴ In other words, the party offering the procedure must intend that the HCT/P will perform the same basic function before and after it is implanted.

HCT/Ps Regulated Under Section 351 of the PHSA.

HCT/Ps that do not qualify for regulation solely under section 361 are regulated solely under section 351 of the PHSA.⁵ These products must obtain FDA approval, clearance, or a biologics license before they can be marketed, and the facilities in which they are manufactured are subject to applicable registration and listing requirements for drugs (including biologics) and devices. Such facilities are also required to comply with current good manufacturing practices ("cGMP") and all the other FDA requirements applicable to drugs, biologics, or devices.

HCT/Ps Exempt from FDA Regulation.

HCT/Ps may be wholly exempt from the requirements in FDA's HCT/P regulations in 21 C.F.R. Part 1271 if they meet an exception listed in 21 C.F.R. 1271.15. One of those exceptions, the SSP Exception, applies when an establishment "removes HCT/P's from an individual and implants such HCT/P's into the same individual during the same surgical procedure." HCT/Ps that meet the SSP Exception are not subject to FDA oversight. In establishing this exemption, the agency has made a judgment that the removal of cells or tissues from an individual and reimplantation in the same person during the same surgery, without any further processing of the tissue, does not raise any greater communicable disease risks than the risks typically associated with surgery.⁶

II. FDA Policies and Administrative Enforcement

FDA has become increasingly concerned in recent years about clinics that market injections of stem cell treatments as cures for a host of diseases and conditions without scientific evidence to support the safety and efficacy of the treatments for the marketed uses. In FDA's view, such procedures are "clearly illegal...