Regulation of Stem Cell Clinics: The… | American Med Spa Association

Regulation of Stem Cell Clinics: The Sands Are Shifting

Posted By Madilyn Moeller, Monday, November 25, 2024

Liposuction before stem cell therapy procedure

By Jeffrey Segal, MD, JD

The world of regenerative medicine is rapidly evolving, with stem cell therapy and exosome treatments emerging as promising solutions for a variety of chronic conditions. Recent court rulings may indicate how the FDA will regulate stem cell procedures in your medical spa. ByrdAdatto previously confirmed that this is a medical procedure—but is the material injected during stem cell treatments considered a drug? ByrdAdatto’s Jeffrey Segal, MD, JD, covers the latest legislation in favor of the FDA.

Stem cells are promising. They may impact so many conditions down the road. Some clinics have a head start. They’ve been making claims that the future is here. Now.

One major unknown was what authority the FDA has, if any, for regulating treated and spun-down fat for re-implantation. In California, a lower-level federal court ruled in favor of the defendant physicians. On September 27th, the Ninth Circuit appellate court reversed, in favor of the FDA.

The court opinion is instructive. I’ll quote directly from the ruling.

"This case requires us to decide whether the Food and Drug Administration can regulate certain stem cell mixtures advertised as treatments for a host of medical conditions. Defendants are doctors who create such a mixture by removing fat tissue from a patient and breaking it down to concentrate the portion containing stem cells. The result is a mixture of stem cells, other types of cells, and cell debris called stromal vascular fraction (“SVF”), which they then administer to the patient. For example, Defendants inject SVF directly into a patient’s knee to treat osteoarthritis. In recent years, clinics offering similar stem cell mixtures have proliferated despite concerns over whether such treatments are safe and effective.

After inspecting Defendants’ two clinics, the FDA brought this lawsuit, claiming various violations of the Federal Food, Drug, and Cosmetic Act. Defendants argue that their SVF is not a “drug” within the meaning of the Act and that, even if it is, some of their uses of SVF fall under an exception from FDA regulation for certain surgical procedures. We reject both arguments. Accordingly, we reverse the district court’s entry of judgment in favor of Defendants.

Defendants are two California-licensed physicians and the entities they co-founded: the California Stem Cell Treatment Center and the Cell Surgical Network. The California Stem Cell Treatment Center operates two clinics in Beverly Hills and Rancho Mirage. At those clinics, as part of what they call “patient-funded investigational research,” Defendants offer stem cell treatments to “[p]atients who are looking for non-surgical alternatives to their degenerative disorders.” Defendants advertise that they have “technology to produce a solution rich with your own stem cells” that they say can alleviate dozens of medical conditions, including Alzheimer’s, arthritis, asthma, cancer, macular degeneration, multiple sclerosis, heart problems, pulmonary problems, Crohn’s, Parkinson’s, and erectile dysfunction. The treatments are not covered by insurance, so patients pay out of pocket. A single treatment typically costs $8,900, and a twelve-treatment option costs $41,500. Defendants have treated thousands of patients.

Through the Cell Surgical Network, Defendants also operate a network for “physicians who want[] to bring regenerative medicine into their own practices.” Affiliates agree to follow Defendants’ treatment protocol and pricing guidelines; share “research data”; and purchase Defendants’ equipment for isolating cells, called the “Time Machine,” for about $30,000.

The substance that Defendants produce is called “stromal vascular fraction,” or “SVF.” SVF is “a liquified mixture of cells and cell debris” derived from fat tissue. Fat tissue, which looks a bit like honeycomb when magnified, is a connective tissue primarily made up of fat cells. Fat tissue also comprises many other types of cells, including mesenchymal stem cells. Most of the cells are embedded in an “extracellular matrix,” a structure made partly of collagen fibers that holds the cells in place. Fat tissue also contains interspersed blood vessels.

Defendants derive SVF from fat tissue using a multi-step process. First, after administering local anesthesia to a patient, Defendants use liposuction to remove fat tissue. The retrieved tissue is then centrifuged (spun at high speed) to separate and remove blood and anesthesia. The next step is called “enzymatic digestion.” An enzyme blend is added to the tissue, and during a thirty-minute incubation period, the enzymes break down the extracellular matrix (the tissue’s structural components). During this period, cells detach from the matrix and become free-floating. Through another round of centrifugation, the fat cells, which made up the bulk of the tissue, are removed and discarded. What is left is repeatedly flushed with a solution to wash away as much of the enzyme blend as possible and centrifuged to concentrate the remaining cells. The resulting “slurry” is pushed through a filter to remove the broken-down structural components. The end result, SVF, is a concentrated mixture of many types of cells, including stem cells, and cell debris. Defendants administer it in a variety of ways, including by injection, intravenous drip, and inhalation.

That entire process is sometimes done on one day: The patient undergoes liposuction, waits for the tissue to be processed, and receives SVF all during one visit. But in the “expanded” version, the collected tissue is not processed onsite. Instead, the tissue is sent to a cell bank for processing and the cells are replicated (“expanded”) for later use in the same patient.”

Procedurally, what happened?

“In 2017, the FDA inspected the California Stem Cell Treatment Center clinics. The inspectors concluded that the clinics were manufacturing and administering unapproved drug products. They found violations of the FDA’s manufacturing requirements and a lack of proper documentation of adverse health events related to the clinics’ SVF treatments.

In 2018, the FDA filed this lawsuit and sought injunctive relief, alleging that Defendants were violating the Food, Drug, and Cosmetic Act by improperly manufacturing and labeling SVF. After a seven-day bench trial, the district court entered judgment in favor of Defendants, holding that Defendants’ treatments were not subject to FDA regulation. The district court held that Defendants’ SVF is not a “drug” under federal law, reasoning that “Defendants are engaged in the practice of medicine, not the manufacture of pharmaceuticals.” The court also alternatively held, as to the same-day procedure, that Defendants’ use of SVF falls within an exception to regulation for certain surgical procedures. That holding was based on the court’s factual finding that the cells in the same-day SVF “are not altered, chemically or biologically” and that the procedure “does not create any new material or introduce any foreign article” into the body. The FDA timely appealed.”

Can the FDA regulate stem cell injections as a drug?

The first question the court answered was whether SVF was even a drug.

“Drug[s]” are defined in the Act 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.”

“Defendants administer a particular thing—a liquified concentrate of cells and cell debris. And they do so with the undisputed intent, as reflected in their marketing, to treat a long list of diseases and to affect structures of the body, such as to regenerate cartilage.”

Defendants argued that the capacious language of the FDCA, read literally, would have intolerable breadth. The court rejected this argument noting that a wide net would not change the outcome in this case. SVF “was a drug” for purposes of the FDCA.

Defendants next argued that regulation of the practice of medicine was preserved by the states. The FDA had no authority to regulate the licensed practice of medicine.

“But in United States v. Kaplan, 836 F.3d 1199 (9th Cir. 2016), we rejected essentially the same argument. There, we held that a doctor could be criminally prosecuted under the FDCA for reusing in biopsies a “needle guide” that was intended for single use only. Id. at 1208-11. We explained that “[t]hough the regulation of the practice of medicine is delegated to the states, when a physician misuses medical devices and threatens public health, the physician may run afoul of the [FDCA].” Id. at 1203; see also United States v. 9/1 Kg. Containers, More or Less, of an Article of Drug for Veterinary Use, 854 F.2d 173, 176 (7th Cir. 1988) (“To regulate drugs is to be ‘involved’ in the ‘practice of the healing arts.’”); United States v. Evers, 643 F.2d 1043, 1048 (5th Cir. 1981) (“Of course, while the [FDCA] was not intended to regulate the practice of medicine, it was obviously intended to control the availability of drugs for prescribing by physicians.”).”

The court noted it was not regulating the practice of medicine, per se. It was regulating the drugs and devices which doctors use in the practice of medicine.

“The FDA is not asserting authority over surgery as a general category. Rather, it is asserting authority over doctors’ creation or use of products that fall within Congress’s definition of “drugs.””

In sum, the court ruled that SVF was a “drug” subject to regulation under the Food, Drug, and Cosmetic Act.

The same surgical procedure exception and HCT/Ps

Next, the defendants argued that even if their SVF was a drug, it qualifies for an exemption from FDA regulation. Under the “same surgical procedure” exception. (“SSP exception.”)

Ready for another acronym? How about HCT/P’s?

“The SSP exception applies to: “[A]n establishment that removes HCT/P’s from an individual and implants such HCT/P’s into the same individual during the same surgical procedure.” 21 C.F.R. § 1271.15(b). “HCT/Ps” are defined as “articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient.” Id. § 1271.3(d).”

In addition to drugs and devices, the FDA also regulates human cells, tissues, and cellular and tissue-based products, abbreviated as “HCT/Ps.”

The SSP exception applies to a procedure only if the removed HCT/P and the implanted HCT/P are the same. For Defendants’ SVF procedure, the removed HCT/P is the fat tissue, not the cells targeted for implantation. Because the SVF procedure removes fat tissue but implants SVF, the procedure is not exempt from regulation under the SSP exception.

In other words, for the “same surgical procedure” exception, what comes out must be what goes back in. Or mostly.

“But, Defendants point out (and the FDA does not dispute) that the cells they extract from the fat tissue are also, by definition, HCT/Ps. Consequently, the SVF procedure can be characterized as removing two different kinds of HCT/Ps: the fat tissue and the cells within the fat tissue. When determining whether a procedure removes and implants the same HCT/Ps, Defendants argue that the SSP exception requires us to compare the implanted HCT/P with the HCT/P that was “the target of the removal, rather than the largest system removed.””

“In Defendants’ view, the SSP exception applies no matter how much processing the removed tissue undergoes, so long as the extracted cells are implanted in the same surgical procedure.”

The FDA maintains that the SSP exception requires us to view the removed HCT/P as a whole, before it has undergone any significant processing. Under that interpretation, the HCT/P removed by the SVF procedure is the fat tissue, not the cells.

Well, does untreated fat need to go back in as is, or can SVF be separated from the rest of the fat, and then be injected? This came down to a linguistic puzzle.

Defendants next argue that the FDA’s focus on the largest system removed would render part of the HCT/P definition superfluous. The definition refers to “cells or tissues,” and Defendants argue that cells can generally only be removed from the body within tissue or other larger systems. It is true that isolated cells would rarely fall under the SSP exception as interpreted by the FDA. But rarely does not mean never. As the FDA points out, at least one type of cell can be removed in isolation, and the regulation addresses an area of evolving science.

Why minimal manipulation matters

The FDA’s expert testified that she was aware of one type of cell that can be removed in isolation: an ovocyte, or egg cell. Meaning, the language of the HCT/P was not superfluous. Some cells are isolated, and are not always part of tissues.

“HCT/Ps are subject to full regulation unless they qualify for an exception. Id. § 1271.20. To qualify for limited exemption from regulation, an HCT/P must meet the criteria set out in § 1271.10(a); in relevant part, the HCT/P cannot be more than “minimally manipulated.”…

“In this context, the FDA also stated that it “would not assert any regulatory control over cells or tissues that are removed from a patient and transplanted back into that patient during a single surgical procedure,” because “[t]he communicable disease risks, as well as safety and effectiveness risks, would generally be no different from those typically associated with surgery.””

“The SSP exception is at the bottom tier: procedures covered by the SSP exception are completely exempt from regulation. This means that covered procedures should involve relatively low risk—risk no greater than that typically associated with conventional surgery. And, because processing HCT/Ps introduces risk, covered procedures should not involve significant processing.”

“The FDA’s interpretation is more consistent with the SSP exception’s plain meaning. And it is the only interpretation that makes sense in light of the HCT/P regulations’ tiered, risk-based framework, and its purpose and history. The seeming textual ambiguity is resolved in the FDA’s favor. When determining whether a surgical procedure “removes HCT/P’s and implants such HCT/P’s,” the removed HCT/P must be viewed as a whole, before any significant processing. For Defendants’ SVF procedure, the removed HCT/P is the fat tissue, not the cells targeted for implantation. Because the SVF procedure removes fat tissue but implants SVF, the procedure is not exempt from regulation under the SSP exception.”

If you are just taking out fat tissue from the abdomen, for example, and placing it in the frontal sinus to obliterate the space, then that likely does qualify for SSP exception.

If you are subjecting fat to enzymatic degradation and spinning it down, and implanting for something other than structural filler, then the FDA likely can regulate your creation. As a drug. Or as a non-exempt HCT/P. Or both.

The greater the manipulation and the more claims you make, the more the FDA has the better legal argument.

Outlook for stem cell legislation

Well, what’s next?

The case goes back down to the district court to analyze the facts based on the Ninth Circuit’s interpretation of the law.

Importantly, another federal appellate court, the Eleventh Circuit, also ruled in favor of the FDA in 2021. There, the lower-level court ruled in favor of the FDA. The stem cell clinic appealed.

“US Stem Cell Clinic, LLC, its parent company, and its chief scientific officer (collectively, the Clinic) offer a procedure in which they remove fat tissue from a patient, isolate the portion containing stem cells, and inject that portion back into the patient. This procedure purportedly treats all manner of chronic conditions, from pain to Parkinson’s disease.

The United States Food and Drug Administration is skeptical of the Clinic’s claims. It sued the Clinic, alleging the stem cell procedure violates the Federal Food, Drug, and Cosmetic Act (codified at 21 U.S.C. §§ 301 et seq.). The district court granted summary judgment for the FDA and enjoined the Clinic from offering its procedure until it can demonstrate to the FDA that its stem cell therapy is safe and effective. The Clinic appeals, arguing it is exempt from regulation because the procedure falls into either the “same surgical procedure” exception or the “361 HCT/P” exception to regulation under the FDCA. See 21 C.F.R. § 1271.15(b); id. § 1271.10. We disagree: The procedure does not fall within the first exception because the biological material implanted into the patient is not the same as that removed and the procedure does not fall within the second exception because the Clinic intends the stem cells to perform functions after the procedure beyond the basic functions the stem cells performed prior to the procedure. We therefore affirm the judgment of the district court.”

What this means for your medical spa

If you are making claims related to stem cells, and you practice in either the Ninth Circuit or Eleventh Circuit, the use of such cells is likely covered by the FDA. Which means it should comport with requirements established for other drugs and HCT/Ps.

If you don’t practice in either the Ninth Circuit or Eleventh Circuit, then the FDA’s authority over such practice is unsettled. But the FDA is 2-0. I don’t expect this to be the last word. It’s possible that the Ninth Circuit case will be appealed to the Supreme Court and the court will hear it. Who knows?

It’s also possible Congress will clarify what is and is not acceptable.

And state Boards of Medicine will continue to crack down on exaggerated, unproven claims.

What do you think?

Jeffrey J. Segal, MD, JD, was a neurosurgeon in private practice before beginning the second phase of his career as a serial entrepreneur in the health care field. He then founded or co-founded four separate health care startups. He lives and breathes health care and understands it viscerally. Dr. Segal founded Medical Justice, which touched on so many medico-legal issues, and also runs eMerit, which helps doctors control their online reputation through patient feedback.