Rulings Issued in Two Unrelated Lawsuits Challenging FDA’s Authority Under Section 361 of the PHS Act

By Jennifer B. Davis –

(1) Regenerative Sciences, Inc. v. FDA.  On March 26, 2010, Chief Judge Wiley Y. Daniel of the United States District Court for the District of Colorado dismissed on “ripeness” grounds a February 22, 2009 action brought by Colorado-based Regenerative Sciences, Inc. (“RSI”).  The lawsuit  – filed after RSI’s receipt and response to an FDA Untitled Letter, and in the midst of a subsequent FDA inspection of its laboratory – sought declaratory and injective relief from FDA jurisdiction and regulation under the Federal Food, Drug, and Cosmetic Act (“FDC Act”), Public Health Service Act (“PHS Act”), and the 21 C.F.R. Part 1271 Human Cells, Tissues, and Cellular and Tissue-Based Products regulations (“HCT/P regulations”) of RSI’s autologous, mesenchymal stem cell (“MSC”) Regenexx™ Procedure for treatment of musculoskeletal and spinal injuries.  To our knowledge, the case represents the first attempt to challenge in federal court the FDA’s claimed legal authority for portions of the HCT/P regulations.  The decision is also notable for its precedent-confirming pronouncement that FDA Warning Letters are not “final agency action.”

In the Regenexx™ Procedure, MSCs isolated from a patient’s bone marrow undergo a 1-2 week expansion in the laboratory using natural growth factors from the same patient’s blood.  The expanded MSCs are then returned to the patient at a site of injury with the goal of regenerating bone and cartilage to repair the degenerated area. 

FDA’s July 25, 2008 letter to RSI advised that based on the review of RSI’s website, the agency determined RSI was promoting “use of [MSCs] under conditions that cause these cells to be ‘drugs’ under section 201(g) of the [FDC Act] (21 U.S.C. §321(g)), and biological products, as defined in section 351(i) of the [PHS Act] (42 U.S.C. §262).”  FDA further asserted that the Regenexx MSCs were HCT/Ps as defined by section 1271.3(d) of the HCT/P regulations, but, that they did not satisfy all of the section 1271.10 criteria establishing when a cellular HCT/P is not subject to the requirements for an approved biologics license application (“BLA”) or investigational new drug application (“IND”).  FDA’s letter advised the company that “implantation of the mesenchymal stem cells for which a valid license or IND is not in effect appears to violate the [FDC] Act and the PHS Act and may result in FDA seeking relief as provided by law.”

RSI argued in response that its MSCs were not “drugs” or “biological products,” and that they should not be regulated by the agency.  Six months later, FDA initiated an inspection of RSI’s facilities under its authority in the FDC and PHS Acts.  RSI then filed its lawsuit claiming that: (1) the Regenexx Procedure constitutes the practice of medicine and is beyond the scope of FDA’s regulatory authority and jurisdiction under the FDC And PHS Acts; (2) FDA’s decision that the manipulation of MSCs renders the cells a “drug” and a “biological product” requiring an IND or BLA was arbitrary and capricious; and (3) FDA’s regulatory definition of “HCT/P,” which fails to distinguish between allogenic or autologous transfers to a “human recipient,” was ultra vires FDA’s authority because Congress did not intend to give FDA authority over the autologous, “practice of medicine” use of HCT/Ps.

Judge Daniel found that RSI’s claim challenging the validity of FDA’s HCT/P regulatory definition was a “purely legal” question “fit” for judicial review, but nevertheless concluded that the claim was not ripe because RSI “ha[d] not shown any specific concrete action taken by the FDA that has harmed it or any specific losses it has suffered as a result of FDA action.”  Adhering to prior precedent, Judge Daniel explained that “the July 25, 2008, FDA warning letter is not a ‘final agency action’ as defined under the APA,” but “a ‘tentative or interlocutory action.’”

Addressing RSI’s other claims – that the Regenexx Procedure constitutes the Practice of Medicine, over which FDA has no authority under the FDC Act or PHS Act, and that FDA’s decision that the MSCs were “drugs” or “biological products” requiring an investigational new drug application (“IND”) or biologics license application (“BLA”) was arbitrary and capricious – Judge Daniel concluded that they, too, were not ripe because such claims would “require a factual inquiry into whether FDA can regulate autologous use of [HCT/Ps] and their functions” and  “do not involve a final FDA action interpreting and applying Part 1271 ‘to a specific set of circumstances as required for the action to be ripe and fit for review.’”   Further explaining his decision, Judge Daniel wrote:

[RSI] asks this Court to find, as a matter of law, that Congress intended to foreclose the possibility that FDA would regulate any autologous use of HCT/Ps – regardless of the type of HCT/Ps, the intended use of the HCT/Ps, the degree to and circumstances under which the HCT/Ps are manipulated prior to implantation, and regardless of how these factors may contribute to the transmission of diseases. . . .  [S]uch a task would be unduly complex and speculative.  The Court would have to assess the likelihood of the transmission of a wide range of diseases, under diverse methods for processing numerous types of HCT/Ps with various autologous uses, to determine at this stage whether FDA’s regulation defining HCT/Ps . . . is “ultra vires” in all possible circumstances.  Only a final FDA action interpreting and applying Part 1271 (including its exceptions) to a specific set of circumstances would reduce this amorphous inquiry to a controversy of ‘more manageable proportions.’

In promulgating the Part 1271 HCT/P regulations, FDA has consistently claimed that its authority comes from section 361 of the PHS Act (42 U.S.C. §264), which allows the agency to make and enforce regulations necessary to prevent the introduction, transmission, or spread of communicable diseases.  As RSI contended in its lawsuit, however, and as other stakeholders have argued in comments on various HCT/P rulemakings and guidance documents, it is not clear that all of FDA’s promulgated HCT/P requirements are actually (or reasonably) related to the prevention, introduction, transmission or spread of communicable disease, or whether – especially in cases of autologous use –  FDA’s HCT/P requirements impermissibly infringe on the congressionally recognized “practice of medicine.”

(2) Independent Turtle Farmers of Louisiana, Inc. v. FDA.  In a coincidental twist of timing, three days after Judge Daniel dismissed the RSI lawsuit, on March 29, 2010, Judge Dee D. Drell of the United States District Court for the Western District of Louisiana, Alexandria Division, ruled in favor of the agency in another case challenging FDA’s authority under section 361 of the PHS Act – to continue its enforcement of a thirty-five-year-old ban on pet turtles.

In 1975, FDA issued a regulation banning the sale of turtles and turtle eggs (21 C.F.R. §1240.62) based on studies showing that fourteen percent of all Salmonella-induced illnesses were “turtle-related.”  (FDA’s determination of its jurisdiction to issue the ban was challenged and upheld in State of La. v. Mathews, 427 F. Supp. 174, 176 (E.D. La. 1977).)  In promulgating the regulation, FDA said it would consider lifting or changing the restrictions based on “future evidence . . . demonstrat[ing] that Salmonella-  . . . free turtles can be produced and that sufficient safeguards exist to prevent a public health hazard through recontamination of turtles after shipment.”  40 Fed. Reg. at 2544.  In 2006, citing improvements in turtle rearing technology, and other scientific Salmonella-reducing advancements such as liquid antibacterial soap, the Independent Turtle Farmers of Louisiana, Inc. (“ITFL”) petitioned FDA to lift the ban. 

FDA denied the ITFL’s request, concluding that its petition “[did] not demonstrate that Salmonella-free turtles can be consistently produced and that, if Salmonella-free turtles are produced, they will not be recontaminated with Salmonella after shipment.”  The agency also rejected the ITFL’s argument that the ban was unfair in light of FDA’s less stringent guidelines for control of Salmonella in food sources.  The ITFL sued the agency in May 2007 claiming, in part, that the turtle ban exceeded FDA’s authority under section 361 of the PHS Act.

Upholding FDA’s decision to retain the turtle ban, Judge Drell concluded that “FDA’s interpretation of [§361] is entitled to wide deference” and that section 361’s enumeration of the actions that could be taken by the agency (i.e., “inspection, fumigation, disinfection, sanitation, pest extermination, destruction of animals or articles found to be so infected or contaminated”) “does not act as a limitation upon the types of regulations that may be enacted under Section 361.”  Moreover, observed Judge Drell, “the Court is obligated to defer to an agency’s interpretation of its own regulations” and “[j]udging from the evidence presently before the Court, and under the FDA’s interpretation of the Turtle ban, the FDA’s decision to deny the ITFL’s petition was not arbitrary or capricious.” 

Despite their coincidental timing, and although both decisions involved challenges to the scope of FDA’s authority under section 361 of the PHS Act, the merits of these two cases have little to do with one another.  We would not expect the outcome of the ITFL case, which implicates the core concern of § 361 to prevent disease transmission, to have any relevant impact on the merits of the RSI case, which questions the extent of FDA's § 361 authority when a regulation’s relationship to preventing disease transmission is more tenuous, and whether the regulation of autologous stem cells infringes the practice of medicine.