What a Surprise Court Verdict Means for Californian Cell Therapy

Laertis Iconomou

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

A significant 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 Beverly Hills-based Cell Surgical Network should not be subject to FDA oversight. The FDA has filed 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 are outside the FDA’s purview because they are not drugs.

Although California is something of a hub in the sketchy world of unproven stem cell therapies and the clinics that sell them, few—perhaps no one—in the reputable mainstream cell and gene scene would expect a federal judge to side with such companies, especially not with such questionable ones. way of thinking. For an informed perspective on this ruling and its potential ramifications, I spoke Laertis Iconomouassociate professor in the University at Buffalo’s Department of Oral Biology and Center for Cell, Gene, and Tissue Engineering, and chair of the Committee on Cell and Gene Therapy Ethics of the International Society for Cell and Gene Therapy.


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

Yes. In the last few years, we have seen a pattern of positive developments. Back in 2018, in a very similar case, the Justice Department sought an injunction on behalf of the FDA against a Florida-based company, American Stem Cell Clinic. The ruling in that case turned out to be quite the opposite of what we just saw in California. In the USA 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 obtained from a patient. From the perspective of the International Society for Cell and Gene Therapy (ISCT), this was a positive development.

In general, we’ve seen a lot of regulatory action on behalf of both the FDA and the Federal Trade Commission (FTC), whose letters carry particular weight. The FTC has launched regulatory actions against companies promoting unproven and unapproved products as cures for COVID-19, and at the state level we’ve seen authorities take legal action against companies selling unproven, unsafe and fake products as cures. This job is not easy because the market in question now has more than 2,700 businesses across the US. But, overall, the development looked positive.

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And that’s why Bernal’s verdict shocked us. The decision contradicts not only current scientific evidence, but also previous rulings on the treatments in question.

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

I do not think like that. In the very name “cellular surgical mesh” we can see the most disturbing 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 this it should be remembered that these companies often have the means to engage in protracted legal battles with the FDA. In this sense, the Cellular Surgical Network is a prototypical example of an American, direct supplier of unproven “stem cell” therapies.

That’s a great question, and today we have the data to answer it. About 10 to 15 years ago, when these companies emerged, we followed them in the dark. But fast forward to 2022 and we have lots of high-quality quantitative data. For example, ECGT member Leigh Turner has conducted research into this market, and you can read his latest findings in a paper titled “US Stem Cell Sales 2021: US Companies Selling Unlicensed and Unverified Stem Cell Interventions”, published in Cell Stem Cell. It found a high concentration of clinics in certain states, including California, Florida, Texas and Arizona. Importantly, we can say that these businesses are not evenly distributed across the US. So it makes sense that legal battles like the one in question are also taking place in these wealthy “hub states.”

I’m not a legal expert, but my understanding is that this case will not set a legal precedent as there have been numerous previous rulings in the 2010s. In 2012, in a case between the 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 did not set a binding precedent, so we now reach the opposite verdict.

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I would attribute this particular decision more to a particular judge and his decision, rather than the product of any trend. After considering the arguments of both sides, he appears to have accepted the defendants’ arguments – the wording of his judgment is closely related to their case. How it happened I cannot say. In the end, that judge must have decided that those arguments were more scientifically valid than the FDA’s, and in the end we at ISCT don’t think he made the right choice. We’re seeing a setback here, not a trend, and I think it’s likely that the FDA will take this ruling to an appeals court and overturn it.

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

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

The ideal verdict would agree with previous verdicts – that SVF is not a minimally manipulated product. Rather, it is a product that is significantly manipulated and therefore needs to be regulated. Also the moment you put MSCs in culture, you expand them significantly to generate a significant number of cells to reinject into patients. Even if it is an autologous product, it carries a high risk because the cells change their characteristics. And so the law and its interpreters must ensure that these treatments go through regular channels to demonstrate safety and efficacy. At ISCT, we do not agree with any judgment that says otherwise.

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There are only shades of victory on the table right now, but I think the government’s “hammer” should be a big part of how we control and hold this market. The FDA has had to work on this for the past few years, after their regulatory discretion period ended (they set a three-and-a-half-year deadline for companies to comply with existing regulations).

However, this is a complex area, and it is sad but true that adherence to the rule of law and due process of law is always slower than rules 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 enforcement goes after as many bad actors as possible, as rigorously and vigorously as possible, there are too many. This is where scientific, medical and professional bodies and associations such as ISCT can help; for example, by educating the public or working to help regulatory agencies and legitimate developers.

Yes – especially in the case of lawsuits brought by patients. It would also be good to see more whistleblowers within these companies, where concerned employees can come forward with any egregious practices they’ve witnessed or been asked to help. The role of real experts in relevant court cases is also important. But ultimately, I think regulatory action is more important and more effective than all of the above when it comes to dispelling the image that these unproven treatments are so innovative, revolutionary, and effective.

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

Between my English studies and my Masters in Publishing I was in Shanghai, teaching, learning and very lost. Now I’m expanding my mind to a rather different rabbit hole: the pharmaceutical industry. Outside of this job, I read mountains of fiction and philosophy, and I have to say, it’s very hard to say who’s sharper: the literati or the doctors.

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