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.”
The companies 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, the companies 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 the companies 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.
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.
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 against the companies, it’s founders Elliott B. Lander, M.D., and Mark Berman M.D. 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.
The 9th Circuit Court of Appeals reversed in the published case of U.S.A. vs California Stem Cell Treatment Center 22-56014 (September 2024).
The parties first dispute whether Defendants’ SVF constitutes a “drug” under the Under the Food, Drug, and Cosmetic Act (“FDCA”). Based on the plain text of the statute, the 9th Circuit agreed with the FDA that Defendants’ SVF is a drug. 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.”
Defendants next argue that even if their SVF is a “drug,” their same-day SVF treatment is completely exempt from FDA regulation under what is called the “same surgical procedure” exception (“SSP exception”).
The 9th Circuit held that that Defendants’ same-day version of the SVF treatment does not qualify for the SSP exception.
In an exceedingly similar case regarding “body-fat derived stem cell therapy,” the Eleventh Circuit agreed with the FDA that, to qualify for the SSP exception, “such HCT/Ps’ must be in their original form (rather than subjected to extensive processing).” United States v. US Stem Cell Clinic, LLC, 998 F.3d 1302, 1305, 1310 (11th Cir. 2021)