Background

FDA’s regulations set forth criteria for determining when particular products are regulated merely as transplanted human cells or tissues subject only to the authority of Section 361 of the Public Health Service Act (PHSA) to prevent the transmission of communicable diseases. Such products, referred to as “361 HCT/Ps” or 361 products, may be sold without prior FDA review. The regulation also sets forth several exceptions where a human cell, tissue and cellular- or tissue-based (HCT/P) product is exempt from FDA regulation altogether, such as when a physician removes an HCT/P from an individual and implants such HCT/P back into the same individual during the same surgical procedure (SSP) (known as the “same surgical procedure” exception).

When an HCT/P neither meets the 361 HCT/P criteria nor qualifies for an exception, the product requires either FDA licensure as a biological product under Section 351 of the PHSA, or approval or clearance under the Federal Food, Drug, and Cosmetic Act (FDCA) as a new drug or a medical device.

In United States v. California Stem Cell Treatment Center, a stem cell clinic challenged FDA’s determination that its products were subject to premarket review, and after a seven day bench trial the district court agreed with the stem cell clinic, as we summarized in January 2023 online here. The district court held that neither autologous stromal vascular fraction cells (SVF Cells) nor mesenchymal stem cells (MSC Cells) are “new drugs”; instead the court found they were removed and implanted back into the same patient during the “same surgical procedure” (SSP), exempting them from FDA oversight altogether.

If affirmed, the district court decision threatened to undermine FDA’s efforts to enforce its standards against unapproved regenerative medicines since FDA lifted a grace period against such enforcement in 2022.  Hogan Lovells US LLP served as counsel to amicus curiae International Society for Stem Cell Research and International Society for Cell and Gene Therapy in support of FDA’s position.

Ninth Circuit ruling

On September 27, 2024, the U.S. Court of Appeals for the Ninth Circuit issued its ruling in United States v. California Stem Cell Treatment Center, reversing the district court and finding that:

1. SVF constitutes a “drug” under the FDCA based on the plain text of the statute. The Ninth Circuit cites to United States v. Regenerative Sciences, LLC, in which the D.C. Circuit held that the “plain language” of the FDCA compelled the conclusion that a stem cell mixture is a “drug” under the FDCA.

2. The “same surgical procedure” (SSP) exception did not apply to the defendant’s same-day SVF treatment because the removed HCT/P and the implanted HCT/P were not the “same.” The majority of the court agreed with FDA that the SVF procedure in question could be characterized as removing two different kinds of HCT/Ps – the fat tissue and the cells within the fat tissue – and that this was the “only one reasonable construction of [the] regulation.” In a concurring opinion, Judge Friedland agreed that the SSP exception did not apply, but only after finding that the SSP exception is “genuinely ambiguous; and thus the court should give Auer deference to FDA’s “reasonable interpretation” of the SSP exception, Judge Friedland wrote.

Implications

We have previously analyzed online here the significance of FDA’s HCT/P warning letters in the regenerative medicine space, and outlined potential risks of noncompliance, which can be numerous. Risks include possible Federal Trade Commission (FTC) action, False Claims Act liability, product liability claims, and susceptibility to private lawsuits. And now, the Ninth Circuit’s finding in this latest litigation strengthens the agency’s position in regulating regenerative medicines. 

If you have any questions about FDA’s HCT/P policy or  enforcement, or if you need to evaluate whether your products and facilities comply with FDA’s regenerative policy framework, please contact the authors or the Hogan Lovells lawyer with whom you regularly work.

Authored by Meredith Manning, Bryan Walsh, and Michael N. Druckman