Subscribe to Newsletter
Business & Regulation Standards & Regulation, Business Practice

Stem Cell Therapy’s Unwelcome Surprise

Laertis Ikonomou

In early September 2022, a court ruling in California delivered a minor shock to the cell and gene therapy scene.

A landmark and potentially controversial decision made by the Honorable Judge Jesus G. Bernal of the Central District of California ruled that stem cell treatments offered by the Beverly Hills company Cell Surgical Network should not be subject to FDA oversight. The FDA had taken out a lawsuit against the company, hoping to control their questionable use of stem cells to treat a number of conditions. However, Judge Bernal ruled in favor of the defendants, arguing that their treatments lie outside of FDA jurisdiction because they are not drugs. 

Though California is something of a hub in the sketchy world of unproven stem cell therapies and the clinics that sell them, few – perhaps nobody – in the cell and gene scene’s reputable mainstream would have expected a federal judge to come down on the side of such a company, and especially not with such a questionable line of reasoning. For an informed perspective on this ruling and its potential consequences I spoke to Laertis Ikonomou, an associate professor at the University at Buffalo’s Oral Biology Department and Cell, Gene, and Tissue Engineering Center, and Chair of the International Society for Cell & Gene Therapy’s Committee on the Ethics of Cell and Gene Therapy.

In general, we have seen a lot of regulatory action on behalf of and on the part of the FDA and the Federal Trade Commission (FTC), whose letters carry particular weight.

Did you find the ruling especially surprising?

Yes. In the last couple of years, we had seen a pattern of positive developments. Back in 2018, in a very similar case, the Department of Justice sought an injunction on behalf of the FDA against a Florida-based business, the US Stem Cell Clinic. The ruling in that case proved quite the opposite to what we have just seen in California. In the US Stem Cell Clinic case, a district judge ruled that stromal vascular fraction (SVF) should be regulated as a drug – even if it is autologous and patient derived. From the perspective of the International Society for Cell & Gene Therapy (ISCT), that was a positive development.

In general, we have seen a lot of regulatory action on behalf of and on the part of the FDA and the Federal Trade Commission (FTC), whose letters carry particular weight. The FTC has initiated regulatory actions against companies that advertise unproven and unauthorized products as COVID-19 treatments, and at the state level we have seen authorities commence legal proceedings against companies selling unproven, unsafe, and fraudulent products as medicines. This work is not easy because the marketplace in question now numbers more than 2,700 businesses across the US. But, in general, the developments were looking positive.

And that’s why the Bernal ruling came as a shock to us. The decision contradicts not only current scientific evidence, but also past rulings on the treatments in question.

Has the ISCT has had its eye on dubious stem cell treatments for a long time?

We absolutely have! We have been monitoring this industry almost since its inception. In 2013, we created our Presidential Task Force on the Use of Unproven and/or Unethical Cell and Gene Therapies, which we recently renamed as the ISCT Committee on the Ethics of Cell and Gene Therapy (ECGT). The change in name reflects an expanded scope; we now deal with not only direct-to-consumer businesses offering unproven interventions, but also all the ethical aspects of cell and gene therapy development. The committee includes many experts across various domains, including regulatory science, bioethics, public policy, and basic and clinical research. We’re trying to cover as many facets of this industry as possible.

Is the Cell Surgical Network an outlier?

I don’t think so. In the very name “Cell Surgical Network,” we can see the most worrisome commonality of such operations: they form networks. There can be dozens, even hundreds of clinics in these networks. It can be a very lucrative trade, and because of that we should remember that these companies often have the means to engage in protracted legal battles with the FDA. In this sense, the Cell Surgical Network is a prototypical example of an American, direct-to-consumer purveyor of unproven “stem cell” therapies.

Is this a particularly Californian phenomenon?

That’s a great question, and today we do have the data to answer it. Around 10 to 15 years ago, when these companies emerged, we were tracking them in the dark. But fast forward to 2022, and we have a lot of high-quality quantitative data. For example, ECGT member Leigh Turner has conducted surveys of this market, and you can read his most recent findings in a paper called “The American stem cell sell in 2021: US businesses selling unlicensed and unproven stem cell interventions,” published in Cell Stem Cell. He found a high concentration of clinics in specific states, including California, Florida, Texas, and Arizona. Importantly, we can say that these businesses are not distributed uniformly across the US. So, it does make sense that legal battles like the one in question also tend to take place in these wealthy “hub states.”

Could this new verdict set a precedent?

I’m not a legal expert but, to my understanding, this case won’t set a legal precedent because there were numerous previous rulings across the 2010s. In 2012, in a case between FDA and Regenerative Sciences, LLC, a District of Columbia judge ruled that expanded mesenchymal stromal cell (MSC) treatments should be regulated as drugs. But this didn’t set a binding precedent, and thus we have now landed on an opposite ruling.

I would pin this particular ruling more upon a particular judge and his decision, rather than the product of any trend. After taking in the arguments of both sides, it looks like he bought into that of the defendants – the wording of his ruling aligns closely with their case. How that happened I cannot say. Ultimately, that judge must have decided that those arguments were more scientifically valid than those of the FDA, and ultimately we at the ISCT do not think he chose correctly. We’re seeing a setback here rather than a trend, and I do think it is likely that the FDA will take this ruling to an appeals court and overturn it.

That said, we should still be concerned. Even if a ruling is not binding, it can still create room for maneuver. It will send a signal for other unproven “stem cell” companies to keep fighting the FDA in the courts, and it could even boost the Californian market for these dubious therapies. The verdict will also create a general sense of regulatory uncertainty, and that is a shame because legitimate developers thrive on certainty – they want and need to know what the rules are. Another factor to worry about here is a potential migration of unproven cell therapy companies into California. If they see this as a “safe state” for operations, they won’t mind committing to the costs of relocation.

One of the best and worst things about the US is that when something big happens here, there is a strong chance it will have international repercussions. In many fields, the US is one of the most regulated countries in the world. Many other countries closely observe and may even depend on US regulations. If anything that happens in the US seems legitimate in the eyes of a key regulator in another country, the business environment there may slide toward a much more lax approach to SVF regulations and unproven “stem cell” therapies. We may or may not see a ripple effect like that – it’s too early to say.

What would an ideal ruling have looked like?

An ideal ruling would have agreed with prior rulings – that SVF is not a minimally manipulated product. Rather, it is a significantly manipulated product and therefore should be regulated. Also the moment you place MSCs in culture, you’re considerably expanding them to create a significant number of cells for reinjection into patients. Even if it’s an autologous product, that carries a lot of risk because the cells change their characteristics. And that’s why the law and its interpreters need to ensure that these treatments go through the regular channels to demonstrate safety and efficacy. At the ISCT, we don’t agree with any rulings that say otherwise.

Does the US government need to bring down a bigger hammer against these companies?

At present, only shades of victory are on the table, but I do think that a state “hammer” should be a big part of how we control and contain this marketplace. The FDA has got to work on this in the last couple of years, following the end of their regulatory enforcement discretion period (they had set up a deadline of three and a half years for companies to conform to existing regulations).

However, this is a complex field, and it’s sad but true that following the rule of law and fair legal procedure is always slower than rule by decree. Wealthy companies can lock the FDA into legal battles that last four, five, or six years and still have funds to spare. Even when regulatory enforcement goes after as many of the bad actors as it can, as rigorously and vigorously as possible, there are too many of them. Scientific, medical, and professional bodies and associations like the ISCT can lend a hand here; for example, by educating the public or working to assist regulatory agencies and legitimate developers. 

Would whistleblowing help?

Yes – especially in the case of patient-initiated lawsuits. It would also be good to see more whistleblowing from within these companies, where the employee in question is able to lay out any egregious practices that they witnessed or were asked to facilitate. The role of the right expert witnesses in relevant court cases is important too. But ultimately, I think that regulatory action is more important and effective than all of the above when it comes to dissolving the image of these unproven treatments being so innovative, revolutionary, and effective.

You can read the full, official ISCT statement on Judge Jesus Bernal’s ruling here.

Receive content, products, events as well as relevant industry updates from The Medicine Maker and its sponsors.
Stay up to date with our other newsletters and sponsors information, tailored specifically to the fields you are interested in

When you click “Subscribe” we will email you a link, which you must click to verify the email address above and activate your subscription. If you do not receive this email, please contact us at [email protected].
If you wish to unsubscribe, you can update your preferences at any point.

About the Author
Angus Stewart

Associate Editor of The Medicine Maker

Between studying for my English undergrad and Publishing master's degrees I was out in Shanghai, teaching, learning, and getting extremely lost. Now I'm expanding my mind down a rather different rabbit hole: the pharmaceutical industry. Outside of this job I read mountains of fiction and philosophy, and I must say, it's very hard to tell who's sharper: the literati, or the medicine makers.

Register to The Medicine Maker

Register to access our FREE online portfolio, request the magazine in print and manage your preferences.

You will benefit from:
  • Unlimited access to ALL articles
  • News, interviews & opinions from leading industry experts
  • Receive print (and PDF) copies of The Medicine Maker magazine