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Stem Cell Clinics Face Mounting Attack From Federal Enforcers

Aug. 20, 2021, 4:33 PM

Stem cell clinics selling unproven therapies can expect to face more legal entanglements as federal regulators and law enforcement crack down on what they fear are costly and risky procedures.

The Federal Trade Commission and the Georgia Office of the Attorney General announced this week they’re suing the founders of regenerative medicine companies for allegedly making misleading health claims to target seniors for pain and other orthopedic therapies that cost up to $5,000 per injection.

Separately, the Food and Drug Administration issued a warning letter to a Utah clinic over stem cell treatments derived from umbilical cords. The letter, which calls on the facility to come into compliance with FDA regulations, marks the first warning since the agency ended a three-and-a-half year grace period to allow these clinics to come into compliance with its 2017 regenerative medicine policy.

The actions are part of an ongoing battle between the hundreds of for-profit stem cell clinics that have proliferated across the country and regulators who are trying to protect consumers’ pocketbooks and patients from undue harm. And attorneys say more are likely on the way.

The latest lawsuit suggests “a possible uptick in both FTC and state enforcement actions against entities that are marketing unapproved stem cell therapies,” Barbara Binzak Blumenfeld, an FDA attorney with Buchanan Ingersoll & Rooney, said.

Many people may think that the FDA has sole federal authority over the regulation of stem cell products, Binzak Blumenfield added. But while the FDA has a specific regulatory scheme for such products, the FTC Act prohibits unfair or deceptive acts or practices, as well as false advertising for drugs either in or affecting commerce.

“Businesses selling risky, unproven stem cell products continue to pop up in all parts of the country, and this industry has grown too large for the FDA to rein in on its own,” Liz Richardson, project director of health-care products for The Pew Charitable Trusts, said. “It’s encouraging to see the FTC and state law enforcement leaders working together to hold these businesses accountable and protect consumers’ health.”

Pew found that more than 360 people between 2004 and 2020 experienced adverse events that were linked to these treatments.

High Priority

Clinics that sell these stem cell treatments say they are surgical procedures that don’t require FDA regulation. The FDA counters that products that re-purpose fat tissue to repair cells are subject to its regulations on human cells, tissues, and cellular and tissue-based products.

Peter Marks, director of the FDA’s Center for Biologics Evaluation and Research, indicated in June that bringing these products under compliance with the FDA’s regulations is a high priority for the agency.

Meanwhile, the FTC is trying to stop what it says are deceptive marketing practices from centers that claim to cure everything from Parkinson’s disease to heart conditions to pain issues. The agency returned more than $500,000 to patients for such treatments two years ago.

The FTC’s latest action on stem cells isn’t unique, Binzak Blumenfeld said. She noted the agency has issued a series of warning letters and reached a settlement with two medical groups in California.

Attorneys general in several states, including North Dakota and New York, have also moved ahead with lawsuits.

But what’s significant about the Georgia-FTC case is the complaint alleges the defendants were aware that their actions violated the law, Binzak Blumenfeld said.

She said entities and practitioners in the stem cell space “need to be aware that not only do they have to contend with FDA, but they have to be aware of their obligations under both federal and state consumer advertising laws as well.”

While Richardson said it’s encouraging to see federal agencies collaborate, she’d like to see more done.

“Along with the FDA, the FTC and state attorneys general should put more resources into the fight against dangerous and unapproved stem cell treatments,” she said.

To contact the reporter on this story: Jeannie Baumann in Washington at jbaumann@bloombergindustry.com

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Alexis Kramer at akramer@bloomberglaw.com

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