Significant Win Confirms FDA Regulatory Authority: U.S. Supreme Court Declines to Hear Appeal of the California Stem Cell Treatment Center

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Patrick Foong, PhD
ISCT Ethics of Cell and Gene Therapy (ECGT) Committee
Western Sydney University
Australia

Reviewed by the ISCT ECGT Committee.

The US Supreme Court (SCOTUS) has decided not to hear an appeal from a 9th Circuit ruling that found in favor of FDA against a stem cell clinic and practitioner defendants challenging the FDA's authority to define stem cells used in certain manners as “drugs” under the Food, Drug and Cosmetic Act – a definition that FDA has long relied on and applied to regulate and protect the public against unsafe and unproven interventions. In United States v. California Stem Cell Treatment Center, Inc., the Supreme Court denied the Clinic’s petition for a writ of certiorari, a discretionary order from a higher court to a lower court to send up a case's record for review. This significant decision by the highest U.S. Federal court effectively upholds the FDA’s strict regulatory oversight of these stem cell therapies through authority to define and apply [in its discretion] which interventions qualify as “drugs,” and enforce the standards to prove safety, efficacy, proper manufacturing. This decision has significant implications for stem cell clinics, which are expanding across the nation.

In this case brought by the U.S. Department of Justice in 2018, the defendants were clinics and their physician owners / operators. At two of its clinics, the company offered stem cell treatments to patients exploring non-surgical options for their degenerative conditions, often at high out-of-pocket expense, as experimental interventions are rarely if ever covered by conventional health insurance. The promotion claimed that they possess the technology to create a solution using patients’ “stem cells”, which could cure numerous diseases and conditions – claims that FDA and much of the scientific community believe to have little to no valid evidence to support. At issue were the Defendants’ stromal vascular fraction (SVF) surgical procedure and the expanded mesenchymal stem cells (MSC), which were amongst multiple other procedures promoted by the clinics despite dubious evidentiary support and multiple warnings by FDA that similar SVF and MSC procedures were considered biological drugs.

In the district court trial, Judge Jesus Bernal ruled (United States v. Cal. Stem Cell Treatment Ctr., 2022 U.S. Dist. 156714 (C.D. Cal. Aug. 30, 2022) that the defendant's stromal vascular fraction (SVF) surgical procedure and the expanded MSC procedure were not drugs under the definition of the Federal Food, Drug, and Cosmetic Act (“FDCA”, 21 U.S.C. § 301 et seq.), arguably according little if any deference to FDA’s interpretations and court precedent from other jurisdictions. According to Judge Bernal, defendants' SVF procedure qualified for the same surgical procedure (SSP) exception, basically finding that the procedures were closer to the Practice of Medicine, which is generally outside the purview of the FDA and these procedures were therefore not subject to the FDCA nor Public Health Service Act (42 U.S.C. § 201 et seq.). Judge Bernal’s ruling had raised myriad concerns as it was inconsistent with prior precedents, including a recent 11th Circuit case that found in favor of the FDA on almost the exact same fact pattern. (see United States v. US Stem Cell Clinic, LLC,, 998 F.3d 1302 (11th Cir. 2021).

In response to Judge Bernal’s ruling, the Food and Drug Administration (FDA) filed an appeal to the Court of Appeals for the 9th Circuit. Together with the International Society for Stem Cell Research (ISSCR), the International Society for Cell & Gene Therapy (ISCT) jointly filed an amicus curiae (friend of the court) brief in support of the FDA on both the law and the facts at issue.

In 2024, the Court of Appeals for the 9th Circuit reversed the district court opinion, finding that the techniques were not Practice of Medicine nor exempt from FDA authority or requirements under the FDCA nor the PHSA as Defendants had argued, but that the FDA’s interpretation that the procedures at issue qualifies as “drug,” and was subject to pre-marketing requirements amongst many other regulatory requirements aimed at protecting the public from unsafe and unproven interventions and promoting patients’ right to make autonomous decisions based on fact. The 9th Circuit held that the defendant’s SVF procedures constituted a “drug” under the FDCA based on the plain text of the statute. It rejected the defendants’ contention that even if the SVF is treated as a drug, the same-day SVF treatment is exempt from FDA regulation under the SSP exception. They acknowledged that the HCT/P regulations lack clarity regarding the meaning of the SSP exception. Thus, they would have to examine the context and structure of the rule, and, importantly, deferred to the FDA. The SSP exception applies to a procedure if the removed HCT/P and the implanted HCT/P are the same. In this case, the removed HCT/P is fat tissue and not the cells targeted for implantation. As the process removes fat tissue but implants SVF, it should be considered as more than minimally manipulated and thus it is not exempt. While the third judge agreed with the majority of the panel’s conclusion that the same-day SVF treatment did not fall under the SSP exception, she stated that the exception was ambiguous and, accordingly, the court would apply the test set forth in Auer v. Robbins, 519 U.S. 452 (1997) to defer to the FDA’s interpretation.

Although this opinion was a concurrence rather than the majority opinion, it is nevertheless highly notable following the Supreme Court’s decision in Loper Bright, which struck a significant blow to deference that courts’ accord expert agencies – commonly known as Chevron deference – that this concurring opinion still deferred to FDA’s interpretation using an older case of precedential value, Auer.

This 9th Court of Appeals ruling along with the 11th Circuit’s ruling in US Stem Cell Clinic, and the Supreme Court’s denial of cert., are not only significant victories for the FDA, but also but provide a level of comfort that despite recent precedent undermining deference to administrative agencies, FDA’s authority and interpretations are still accorded respect by the Courts. Nevertheless, as this denial of cert. was not accompanied by an opinion explaining the Supreme Court’s rationale, and several federal cases challenging FDA’s authority are likely to reach the Supreme Court within the next couple of terms, this is a very important area for ISCT members, other professional societies, patients, and public safety advocates to watch.