Time’s really up! FDA authority to crack down on regenerative medicines upheld as grace period ends

On July 9, 2021, the U.S. Food and Drug Administration’s Center for Biologics Evaluation and Research (CBER) added a Q&A page on its website about the May 31 end of the grace period intended to provide developers of human cell, tissue, or cellular- or tissue-based products (HCT/Ps) with time to assess whether they needed to file an investigational new drug application (IND) or marketing application with FDA. This comes after the Eleventh Circuit’s June 2021 ruling that unanimously upheld a Florida district court’s June 2019 ruling in favor of the FDA in US Stem Cell Clinic, affirming that neither the “same surgical procedure” or “361 HCT/P” exception to FDA regulation applies because the biological material implanted into the patient is not the same as that removed and the Clinic intended the stems cells to perform functions beyond the basic functions performed prior to the procedure. Both the new web page and Eleventh Circuit decision spotlight how companies in the regenerative medicine space can no longer ignore warnings and face the risk of swift and aggressive action by the FDA.

Following the court’s decision in US Stem Cell Clinic, CBER Director Peter Marks, M.D., stated in an FDA Voices blog post that the agency will continue cracking down on unapproved products marketed as regenerative medicine therapies, citing how the US Stem Cell decision is “a victory for public health and an endorsement of the FDA’s work to stop stem cell clinics that place patients at risk by marketing products that violate the law.” Dr. Marks also referred to a second injunction case, United States v. Cell Surgical Network et al., which is currently being litigated in the U.S. District Court for the Central District of California, and a third enforcement action pursued by the FDA involving the seizure of vials of Vaccinia Virus Vaccine, Live, which was resolved in March 2018.

Background on US Stem Cell Clinic

Since 2015, FDA has been documenting violations of current Good Manufacturing Practice (cGMP) requirements for tissue products by US Stem Cell Clinic. The agency issued a Warning Letter to the clinic in August 2017, which we analyzed here. The clinic claimed that FDA’s cGMP regulations were not applicable because the treatment falls under FDA’s “same surgical procedure” and “361 HCT/P” exceptions to regulation under the Federal Food, Drug, and Cosmetic Act (FDCA) and the Public Health Service Act (PHSA). In June 2019, a Florida district court ruled in favor of FDA, and enjoined the clinic from offering its stem cell therapy to patients.

As we summarized (here), the district court found that the population of stromal and vascular cells in US Stem Cell Clinic’s therapy, known as stromal-vascular fraction (SVF), requires FDA approval of a New Drug Application (NDA) or a Biologics License Application (BLA) before it can be commercially marketed. The court also found that the therapy was adulterated and misbranded because of the clinic’s manufacturing procedures and that its promotion violated statutory requirements.

“Same surgical procedure” exception

On appeal with the Eleventh Circuit, US Stem Cell Clinic again argued it is exempt from regulation under the FDCA because the procedure falls into the “same surgical procedure” exception at 21 C.F.R. § 1271.15(b). This provision states that FDA’s regulation does not apply if “you are an establishment that removes HCT/P’s from an individual and implants such HCT/P’s into the same individual during the same surgical procedure.” Arguing before the District Court, FDA had successfully asserted that the SVF implanted into the clinic’s patients does not constitute “such HCT/P” removed from the patient due to the processing steps applied to the SVF in this case, meaning US Stem Cell Clinic was not covered by this exception.

In prefacing its analysis, the Eleventh Circuit notably explained that it was not merely offering judicial deference to FDA, saying it was “giving the agency’s view no special weight.” The court said that although “[t]here was a time when a court faced with a regulation that seemed ‘impenetrable on first read’ might simply ‘wave the ambiguity flag’ and defer to the agency’s interpretation,” this is the case “[n]o longer.” Rather, the court “carefully consider[ed] the text, structure, history, and purpose of [the] regulation,” and resolved the apparent ambiguity in FDA’s favor.

First, the court considered the clinic’s argument that cells or tissues can be HCT/Ps only if they are “intended for implantation” into a patient, and it is the SVF – and not the adipose tissue – that is “intended for implantation.” The court rejected this defense, explaining that because adipose tissue contains the SVF, and because HCT/Ps are “articles containing or consisting of human cells or tissues that are intended for implantation” into a patient, both the adipose tissue and the SVF are HCT/Ps subject to regulation.

Second, US Stem Cell Clinic argued that an HCT/P re-implanted into a patient meets the regulatory definition of “such HCT/P” if it is “like or similar” to the HCT/P removed from the patient. The Eleventh Circuit disagreed. Instead, the court adopted FDA’s interpretation that “such HCT/P” refers to “the antecedent HCT/P removed from the patient in its original form.” The Eleventh Circuit agreed with FDA and the District Court that the SVF procedure does not fall within the “same surgical procedure” exception “because the biological material implanted into the patient is not the same as that removed.” The court cited a history of FDA treating “such HCT/Ps” as meaning HCT/Ps in their original form that have not been subjected to significant processing.

 “361 HCT/P” exception

The clinic also argued on appeal that it is exempt from regulation under the FDCA and PHSA because the procedure falls into the “361 HCT/P” exception, whereby an HCT/P meeting four criteria (set forth in 21 C.F.R. § 1271.10(a)) is deemed a “361 HCT/P,” meaning that it is regulated solely under Section 361 of the Public Health Service Act (PHSA) and its implementing regulations in 21 C.F.R. Part 1271. Being deemed a “361 HCT/P” subjects a therapy to a lighter regulatory burden. However, the Eleventh Circuit ruled that the 361 HCT/P exception does not apply because the HCT/P in this case is not “intended for homologous use only.”

“Homologous use” is “the repair, reconstruction, replacement, or supplementation of a recipient’s cells or tissues with an HCT/P that performs the same basic function or functions in the recipient as in the donor.” 21 C.F.R. § 1271.3(c). US Stem Cell Clinic argued that SVF meets the “homologous use” criterion of a “361 HCT/P” because SVF was intended to perform the same basic regenerative function both before and after the procedure. However, the District Court determined that the Clinic intended that the SVF treat a “litany of illnesses in the recipient,” which is not the “same basic function” that the SVF performed prior to the procedure.

The Eleventh Circuit agreed with the District Court that the clinic intends the stem cells to perform functions after the procedure that are beyond the basic functions the stem cells performed prior to the procedure. The court said that “promotion of an HCT/P for an unproven therapeutic use, such as curing cancer,” would be a nonhomologous use, and thus the 361 HCT/P exception does not apply in this case. In making this determination, the court said it relied upon the labeling, advertising, and other indications of the manufacturer’s objective intent. Because the defendants had marketed their SVF therapy to treat an array of diseases, the court found the clinic could not argue the pre-procedure SVF cells were intended to have performed the same function as the re-implanted SVF cells.

In issuing its opinion, the court permanently enjoined US Stem Cell Clinic from offering its adipose stem cell therapy unless and until several conditions were met, including FDA approval of a new drug application or biologics license application for the SVF solution.

CBER cites US Stem Cell victory to again warn of end to HCT/P compliance “grace period”

In 2017, FDA published a new regenerative medicine policy framework consisting of four guidance documents, which provided for a “grace period” of risk-based enforcement discretion for certain HCT/Ps, which ended on May 31, 2021. This grace period was meant to give certain manufacturers time to assess whether they need to file an IND or marketing application with FDA, or whether they met the four regulatory criteria for continuing to market their products solely under the authority of section 361 of the PHSA, which does not require pre-market review and approval.

Following up on the government’s victory in this legal battle, CBER Director Peter Marks, M.D., published a blog on June 3 warning that FDA will be cracking down on unapproved products marketed as regenerative medicine therapies, citing how the Eleventh Circuit affirmed the lower court’s judgment in US Stem Cell as cause for the renewed admonition. Marks wrote that the “US Stem Cell decision is a victory for public health and an endorsement of the FDA’s work to stop stem cell clinics that place patients at risk by marketing products that violate the law.”

More recently, on July 9, CBER added a Q&A page on its website about the end of the HCT/P enforcement discretion period, drawing a clear line in the sand to convey that FDA is serious about the end of enforcement discretion period. Notably, the Q&A page directs physicians not to administer an HCT/P that does not qualify for 361 HCT/P status, until that HCT/P has a BLA, unless that physician is studying the HCT/P as a clinical investigator in a clinical trial under an IND. It also appears to say that there is no grace period for products that were introduced into interstate commerce before May 31, 2021 and are still on the market.

This was the not the first time that CBER has warned of impending enforcement of its regenerative medicine policy framework; in an FDA “Voices” blog post on April 21, Marks had written that the agency will not again extend the “grace period” for HCT/P companies to come into compliance with its regenerative medicine policy framework. In both that article and the June 3 publication, Marks emphasized that FDA has taken – and will continue to take – action regarding unlawfully marketed HCT/Ps. Most recently Marks wrote that, since December 2018, the FDA has issued 400 letters to manufacturers and health care providers who may be offering violative stem cell or related products. In addition, since 2017, FDA has issued 14 Warning Letters and 24 Untitled Letters involving violative HCT/Ps, Marks wrote.

We recently analyzed (online here) the significance that these warnings carry for companies in the regenerative medicine space, and outlined the potential risks of noncompliance. These risks go well beyond FDA enforcement, and include the possibility of FTC action, False Claims Act liability, product liability claims, and susceptibility to private lawsuits.


If you have any questions on responding to the potential for stepped up enforcement, or if you need to evaluate whether your products and facilities comply with FDA’s regenerative policy framework, please contact any of the authors of this alert or the Hogan Lovells lawyer with whom you regularly work.


Authored by Mike Druckman and Lowell Zeta


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