On 18 October 2018, the Federal Trade Commission (FTC) announced that it had reached a settlement prohibiting two companies, Regenerative Medical Group and Telehealth Medical Group, as well as their physician owner, from making drug claims about amniotic stem cell therapies unless the claims are supported by competent and reliable scientific evidence. The settlement requires the defendants to notify their patients about the order and ordered the defendants to pay USD525,000 of a partially suspended USD3.31 million judgment.

The defendants made claims that their stem cell treatments could treat numerous diseases including blindness, autism, traumatic brain injuries, Parkinson's disease, multiple sclerosis, cerebral palsy, macular degeneration, osteoarthritis, strokes, and chronic kidney disease. The defendants implied that their stem cell treatments were as good as, or better than, traditional medical treatments. According to the FTC, the representations were false or were not substantiated at the time that the representations were made. The defendants charged consumers up to USD15,000 for an initial treatment with recommended "boosters" going for up to USD8,000.

Among the claims made by the defendants were the following:

Lives are being saved, the blind see, the crippled walk and the patients with heart, lung, kidney and nerve diseases can alter the course of their suffering with a simple therapy [that] lasts for years and impacts their lives NOW!

In fact, there are many different types of stem cells. According to the FTC, there are no human clinical studies showing that amniotic stem cell therapy treats any diseases in humans. According to the FTC Complaint,

the vast majority of amniotic stem cell research has been conducted on animal models. There are no human clinical studies in the scientific literature showing that amniotic stem cell therapy cures, treats or mitigates diseases or health conditions in humans, and the medical community considers amniotic stem cell therapy to be an experimental and unproven treatment. [The defendant] has not conducted any studies demonstrating that amniotic stem cell therapy cures, treats, or mitigates diseases or health conditions in humans.

Further, the FTC explains that "cure" claims, such as those made by the defendants, require the support of human clinical testing. Specifically,

competent and reliable scientific evidence means tests, analyses, research, or studies (1) that have been conducted and evaluated in an objective manner by experts in the relevant disease, condition, or function to which the representation relates; (2) that are generally accepted by such experts to yield accurate and reliable results; and (3) that are randomized, double-blind, and placebo-controlled human clinical testing…

The FTC filed the complaint and proposed order in the US District Court for the Central District of California. The FTC files a complaint when it has "reason to believe" that the law has been or is being violated and a proceeding is in the public interest. In this instance, the laws allegedly being violated were Section 5 of the FTC Act, which prohibits "unfair or deceptive acts or practices in or affecting commerce" and Section 12 of the FTC Act, which prohibits "dissemination of any false advertisement in or affecting commerce for the purpose of inducing, or which is likely to induce, the purchase of food, drugs, devices, services or cosmetics." Stipulated final orders have the force of law when approved and signed by the District Court judge.

Medical treatment claims, such as those made for the stem cells, also have regulatory implications under the Federal Food, Drug, and Cosmetic Act (FDC Act) and the Public Health Service Act (PHS Act). As an initial matter, amniotic stem cells would constitute Food and Drug Administration (FDA) regulated "human cells, tissues, or cellular or tissue-based products" (HTC/Ps). These are "articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient." 21 C.F.R. 1271.3(d).

Stem cells and other HCT/Ps can be regulated solely under 21 C.F.R. Part 1271 (to prevent the spread of communicable disease) if they meet all of the following criteria:

  • They are minimally manipulated;
  • They are intended for homologous use only (as reflected by the labeling, advertising, or other indications of the manufacturer's objective intent);
  • Their manufacture does not involve the combination of the cells or tissues with another article, except for water, crystalloids, or a sterilizing, preserving, or storage agent, provided that the addition of water, crystalloids, or the sterilizing, preserving, or storage agent does not raise new clinical safety concerns with respect to the product; and
  • Either:
    • They do not have a systemic effect and are not dependent upon the metabolic activity of living cells for their primary function; or
    • They have a systemic effect or are dependent upon the metabolic activity of living cells for their primary function, and:
      • Are for autologous use;
      • Are for allogeneic use in a first-degree or second-degree blood relative; or
      • Are for reproductive use.

21 C.F.R. 1271.10(a).

Some establishments are fully or partially exempt from the Part 1271 requirements. Relevant to this discussion is that an establishment is generally not required to comply with Part 1271 if it removes HCT/Ps from an individual and implants such HCT/Ps into the same individual during the same surgical procedure.

If the amniotic stem cells do not meet all four of the criteria above and are not used per the "same surgical procedure" exemption, they would be regulated as a biological product (and be subject to all of the requirements that such status entails), but they still would also be subject to certain of the Part 1271 obligations such as the donor eligibility requirements and good tissue practices. 21 C.F.R. 1271.20.

In this case, the amniotic stem cells would not meet all four of the criteria. The stem cells presumably are identified, separated from other amniotic tissues, and then concentrated before injection. Further, the cells are not used for their original purpose, e.g., they are transplanted to a different organ where they are allegedly used for a different function – restoring the function of that organ. Finally, the amniotic stems cells are withdrawn from one individual – the donor – and delivered to another in a different surgical procedure.

Thus, FDA would likely consider the amniotic stem cells to be "drugs" and more specifically a "biological product." The FDC Act defines a "drug", in relevant part, as "articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease." 21 C.F.R. 321(g)(1). Section 351 of the PHS Act defines a "biological product", in relevant part, as a "virus, therapeutic serum, toxin, antitoxin, vaccine, blood, blood component or derivative, allergenic product, or analogous product, … applicable to the prevention, treatment, or cure of a disease or condition of human beings." 42 U.S.C. 262(i)(1). This definition has been interpreted to include cell therapy products.

As such, the amniotic stem cells would have to comply with the regulatory regime applicable to biological products.in addition to certain Part 1271 requirements. These regulations require FDA's prior approval which, in turn is based on data from thorough clinical trials and manufacturing quality standards. Without such a prior approval, and compliance with certain other requirements, the stem cells would be adulterated, misbranded or otherwise violative under the FDC Act, the PHS Act and implementing FDA regulations due to the lack of compliance with relevant drug and biological product requirements, including lack of an approved Biologics License Application for marketing. See e.g., 21 U.S.C. 331 and 42 U.S.C. 262. The penalties for marketing an unapproved biological product can be severe, including imprisonment, civil and criminal fines and injunctions against further activities as well as seizure of the products involved. Convictions of marketing of unapproved biological products can also lead to other penalties such as debarment or disqualification for clinical trials or even exclusion from the Medicare program.

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