Regenerative Sciences – FDA Struggle Continues

January 19, 2011

By William T. Koustas

We previously reported on the struggle between FDA and Regenerative Sciences, Inc. (“Regenerative”) in which Regenerative challenged FDA’s claim that the company’s stem cell procedure is subject to FDA jurisdiction and regulation under the Federal Food, Drug, and Cosmetic Act (“FDCA”) and/or the Public Health Service Act (“PHSA”) as the manufacture and sale of an unapproved drug and/or biologic.  (See our previous posts here, here, and here.)  Regenerative has developed a procedure in which stem cells are isolated from a patient’s bone marrow, undergo an expansion in a laboratory and are then returned to the patient’s site of injury to treat musculoskeletal and spinal injuries (“Regenexx Procedure”). 

Regenerative filed a lawsuit against FDA in February 2009 in response to an FDA letter and inspection of its laboratory seeking declaratory and injunctive relief from FDA’s regulation of the Regenexx Procedure, arguing that the stem cells used in that procedure are not drugs or biologics and the Regenexx Procedure is the practice of medicine which is outside of FDA’s jurisdiction.  Regenerative’s February 2009 lawsuit was dismissed on ripeness grounds, but Regenerative filed another complaint in June 2010 after FDA conducted an inspection on Regenerative’s facility in February and March 2009, which culminated in FDA issuing a Form 483.  In response, FDA filed a complaint in August 2010 seeking to permanently enjoin Regenerative from using stem cells to treat patients without approval.  The Court eventually issued an order denying Regenerative’s motion for a temporary restraining order in its June 2010 complaint as moot because Regenerative agreed to voluntarily discontinue the use of the Regenexx Procedure while the August 2010 case is pending.  The Court also entered a stay while the related August 2010 case is litigated.

Now, the U.S. Justice Department, on behalf of FDA (“the Government”), has filed a motion for summary judgment and a motion to dismiss Regenerative’s counterclaims. 

The Government’s January 7, 2011, motion for summary judgment claims that there is no issue of material fact in the case as Regenerative is manufacturing a “drug” (the cultured stem cells) that is being held for sale “after one or more of its components have been shipped in interstate commerce,” and that such a drug is adulterated since Regenerative is not complying with current Good Manufacturing Practices.  The Government further argues that, as a drug, Regenerative’s stem cells are misbranded as they do not bear the symbol “Rx only” and do not have adequate directions for use.  In response to Regenerative’s argument that the Regenexx Procedure is the practice of medicine outside of FDA’s jurisdiction, the Government asserts that while FDA may not “interfere with a physician prescribing lawfully marketed products for uses other than those for which they are approved, licensed, or cleared by FDA, the agency’s role in determining the availability of therapeutic products inevitably affects the options available to practitioners seeking to use or prescribe those products.”  Thus, the Government appears to claim that FDA may not directly interfere with a physician’s prescribing habits, but it may limit what drugs are available to physicians to prescribe in the U.S. market.  Accordingly, the Government argues that FDA is not impinging on Regenerative’s ability to practice medicine as it is only requiring a drug product to be approved for sale in the U.S.

In addition to the motion for summary judgment, the Government also filed a motion to dismiss Regenerative’s counterclaims.  Regenerative claims that FDA’s attempt to regulate stem cells as used in the Regenexx Procedure constitutes the regulation of the practice of medicine and that FDA’s human cell, tissue or cellular or tissue-based product (“HCT/P”) rule’s definition of “minimal manipulation” is arbitrary and capricious and should have been issued through notice-and-comment rulemaking.  As with its motion for summary judgment, the Government asserts that Regenerative’s counterclaims alleging that the Regenexx Procedure is the practice of medicine should be dismissed under similar reasoning as described above while also noting that the FDCA applies to drugs manufactured by physicians.  The motion to dismiss also takes issue with Regenerative’s counterclaims regarding FDA’s HCT/P rule.  Regenerative argues that preamble statements regarding “minimal manipulation” in the HCT/P rule “imposed a per se rule which provides that any expansion of stem cells constitutes more than minimal manipulation” without explaining how such expansion alters biological characteristics of the cells.  The Government argues that such statements in the preamble are not part of the rule requiring notice-and-comment rulemaking as that statement was just a policy statement clarifying the rule.   

The Government further claims that Regenerative’s challenge to the HCT/P rule, which was issued in 2001, is time barred as the chalenge was not filed within six years of the rule being issued as required by 28 U.S.C. § 2401.  The Government asserts that Administrative Procedure Act claims are governed by a “catch-all” statute of limitations of six years after the right of action accrues as described in 28 U.S.C. § 2401(a) unless a different statute requires a different timeframe.  The Government argues that a cause of action accrues when the regulation is applied to the claimant (if the challenge to the rule is based on substantive grounds) or when the regulation is issued (if the challenge to the rule is based on procedural grounds).  Since it is clear that the rule has been applied to Regenerative within the last six years, the Government argues that Regenerative’s counterclaims relating to the HCT/P rule are procedural in nature, and are therefore time barred.