The Governments Watchful Eye on Fraud Stemming from Stem Cell Therapy – JD Supra

Stem cell therapy, also known as regenerative medicine, has been around for decades, but in recent years, the use of and interest in stem cell therapy has increased exponentially. The dramatic utilization of stem cell therapy, and the increasing government spend related to these novel techniques, have now caught the eye of federal regulators and prosecutors. In this client alert, we profile some brief context of stem cell therapy, the governments regulations governing these techniques, and some of the best practices for those interested in this emerging space.

Stem cells are cells from which all other cells with specialized functions are generated (i.e., the bodys raw materials). Stem cells may duplicate themselves to create more stem cells or they may generate cells with a specific function like blood or brain cells.

Stem cell therapy is used to repair or replace damaged tissue or cells within the body. Many in the medical community are hopeful that stem cell therapy can be used to treat a wide array of conditions and diseases from multiple sclerosis to vision loss to traumatic spinal cord injuries to Lou Gehrigs disease just to name a few.

The Food and Drug Administration (FDA) oversees and regulates stem cell therapy treatments. While the FDA has acknowledged that stem cell therapy has the potential to treat diseases or conditions for which few treatments exist, there are still only a few treatments that have actually been approved by the FDA. Many treatments are still only in early investigatory stages.

The FDA has recognized the massive potential that stem cell therapy has in allowing patients treatments for various conditions. Consequently, in 2017, the FDA issued guidance indicating its intent to exercise enforcement discretion as a means to support and expedite the development of regenerative medicine products. This enforcement discretion period was to allow innovators time to determine whether to submit an Investigational New Drug (IND) or marketing application and, if such an application is needed, to prepare and submit the application as appropriate. The FDA, however, has made clear its enforcement discretion policy only applies to products that do not raise potential significant safety concerns. What the FDA considers significant is debatable, creating uncertainty and ambiguity for those who might be relying on the FDAs enforcement discretion period.

Initially, the FDA stated that its enforcement discretion period would last through November 2020. But in July 2020, the FDA extended its enforcement discretion period through May 2021 a fast-arriving date. It remains unclear whether the FDA intends to extend the time period of its enforcement discretion any further, but either way, stem cell therapy providers would be well-served by planning for and expecting enforcement efforts to ramp up in the near future.

In 2019, the FDA went to great lengths to warn consumers of the potential fraud that may arise from what it called stem cell therapy hype, and encouraged consumers to make sure any stem cell therapy treatments were either approved or being studied as an IND. The FDAs concerns have led to multiple enforcement actions, including one just last month. On February 1, 2021, for example, the government announced the indictment of Ashton Derges, a healthcare provider in Missouri, who marketed stem cell shots as a successful treatment for various conditions, including COVID-19. According to the indictment, Derges was paid nearly $200,000 by patients for the stem cell shots, none of which actually contained stem cells at all. While this alleged fraud was not particularly sophisticated, it nonetheless marked a significant development: the governments first criminal prosecution of those touting stem cell therapies.

But blatant fraud is not the only type of stem cell therapy case the government has expressed interest in investigating. A primary concern of the government is the marketing and use of unproven stem cell treatments as miracle cures. A good case study of the risks associated with aggressive marketing of stem cell therapy is a case out of Florida involving US Stem Cell Clinic Inc. The clinic was marketing stem cell therapy to treat conditions and diseases such as Parkinsons disease, stroke, and brain injuries none of which were approved by the FDA. And, much of the marketing that US Stem Cell Clinic used promised almost miraculous results. As a result, last year, the FDA successfully permanently enjoined the US Stem Cell Clinic from selling or providing those stem cell therapy treatments. Notably, this case was pursued by the FDA despite the FDA explicitly stating its intent to be lenient with emerging stem cell therapy treatments.

Stem cell therapy is a groundbreaking medical tool with great possibilities to treat a plethora of diseases and conditions. As the industry continues to expand, so will the governments interest. Our firm continues to see an uptick in cases involving stem cell therapy treatments. And we have successfully assisted clients in avoiding unnecessary scrutiny by the FDA and other government regulators.

If you are in the stem cell therapy industry or are considering offering stem cell therapy treatments, we recommend that you:

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The Governments Watchful Eye on Fraud Stemming from Stem Cell Therapy - JD Supra