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Respectfully Submitted,
/s/William Coffield, Esq.Bar No.: 431126
Counsel for PlaintiffCoffield Law Group, LLP1330 Connecticut Avenue, NWSuite 220Washington, DC 20036(202) 429-4799 (o)(202) 429-3902 (f)[email protected]
Mitchell Fuerst, Esq.Florida Bar No. 264598
Andrew S. Ittleman, Esq.Florida Bar No. 802441Fuerst Ittleman, PL1001 Brickell Bay Drive,Suite 2002Miami, FL 33131305-350-5690 (o)305-371-8989 (f)
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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA, ) Civil Action No. 1:10-cv-01327-RMC
)Plaintiff, ))
v. ))
REGENERATIVE SCIENCES LLC, )CHRISTOPHER J. CENTENO, M.D. )JOHN R. SCHULTZ, M.D. and )MICHELLE R. CHEEVER, )Individuals, )
)
Defendants. )
MEMORANDUM OF LAW IN OPPOSITION
TO PLAINTIFFS MOTION FOR SUMMARY JUDGMENT
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i
TABLE OF CONTENTS
TABLE OF CONTENTS ................................................................................................................. i
TABLE OF AUTHORITIES ......................................................................................................... iii
INTRODUCTION .......................................................................................................................... 1
STATUTORY AND REGULATORY FRAMEWORK ................................................................ 1
I. FEDERALISM AND THE PRACTICE OF MEDICINE ............................................ 1
II. THE COMMERCE CLAUSE ...................................................................................... 4
III. THE FDA ...................................................................................................................... 6
IV. THE HCT/P RULE: 21 C.F.R PART 1271 .................................................................. 6
V. THE BELMONT REPORT ........................................................................................ 11
STATEMENT OF FACTS ........................................................................................................... 14
I. THE DEFENDANTS.................................................................................................. 14
II. THE REGENEXX PROCEDURE .......................................................................... 15
III. PROCEDURAL HISTORY........................................................................................ 16
ARGUMENT ................................................................................................................................ 20
I. SUMMARY JUDGMENT STANDARD .................................................................. 20
A. Fed.R.Civ.P. 56 ............................................................................................................20
B. Summary Judgment is Disfavored When Discovery Has Yet to Commence ..............21
C. To the extent that the Governments Motion for Summary Judgment fails toaddress the Defendants Affirmative Defenses, the Motion should be denied. ...........21
II. ADULTERATION ..................................................................................................... 23
A. Defendants Affirmative Defenses XI and XII ............................................................23
B. The Defendants Do Not Manufacture a Cultured Cell Product ...................................24
C. To the extent that the Defendants medical procedure might be subject to FDAjurisdiction, a genuine issue of material fact exists regarding whether it meetsthe criteria for regulation solely under 21 C.F.R. Part 1271. .......................................26
1. Burden of proof. .......................................................................................................... 26
2. Minimal Manipulation ................................................................................................ 27
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D. The Regenexx Procedure does not substantially affect interstate commerce. ..........32
E. The Defendants do not adulterate anything. ................................................................35
III. MISBRANDING ........................................................................................................ 37
IV. PRACTICE OF MEDICINE....................................................................................... 38
V. A PERMANENT INJUNCTION SHOULD NOT BE ISSUED IN THIS CASE...... 43
CONCLUSION ............................................................................................................................. 46
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TABLE OF AUTHORITIES
Federal Cases
A.L.A. Schechter Poultry Corp. v. United States
295 U.S. 495 (1935) .................................................................................................................. 34
*ABA v. FTC430 F.3d 457 (D.C. Cir. 2005) ........................................................................................ 3, 24, 39
Abdullahi v. Pfizer
562 F.3d 163, 182 n.13 (2d Cir. 2009) ...................................................................................... 12
*Anderson v. Liberty Lobby477 U.S. 242 (1986) .................................................................................................................. 20
Asgrow Seed Co. v. Winterboer
513 U.S. 179 (1995) .................................................................................................................. 40
Baker v. United States
932 F.2d 813 (9th
Cir. 1991) ................................................................................................ 32, 33
Barnes v. District of Columbia,242 F.R.D. 113 (D.D.C. 2007) .................................................................................................. 21
Betancur v. Florida Dep't of Health
296 Fed. Appx. 761, 763 (11th Cir. 2008) ................................................................................... 2
Bowen v. Georgetown Univ. Hosp.488 US 204 (1988) ...................................................................................................................... 6
Breen v. Peters
474 F.Supp. 2d 1 (D.D.C. 2007) ......................................................................................... 20, 21
Bynum v. District of Columbia
215 F.R.D. 1 (D.D.C. 2003) ...................................................................................................... 21
Camp v. Pitts411 U.S. 138 (1973) .................................................................................................................. 31
Center for Auto Safety v. FHA
956 F.2d 309 (D.C. Cir. 1992) (Thomas, J.) ............................................................................. 31
Chaney v. Heckler
718 F.2d 1174 (D.C. Cir. 1984) ................................................................................................. 2
Consumer Federation of America and Public Citizen v. HHS
83 F.3d 1497 (D.C. Cir. 1996) ............................................................................................ 30, 31
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Corson & Gruman Co. v. NLRB
899 F.2d 47 (D.C. Cir. 1990) .................................................................................................... 23
FDIC v. Meyer
510 U.S. 471 (1994) .................................................................................................................. 40
Federal Election Commission v. Rose806 F.2d 1081 (D.C. Cir. 1986) ................................................................................................ 41
*Gonzales v. Raich
545 U.S. 1 (2005) ........................................................................................................ 3, 5, 34, 35
*Gonzalez v. Oregon
546 U.S. 243, (2006) ................................................................................................. 2, 24, 39, 44
Heckler v. Chaney
470 U.S. 821 (1985) .................................................................................................................... 2
Herbert v. National Academy of Sciences974 F.2d 192 (D.C. Cir. 1992) .................................................................................................. 23
Hillsborough County v. Automated Medical Laboratories, Inc.
471 U.S. 707 (1985) .................................................................................................................... 2
Holcomb v. Powell
433 F.3d 889 (D.C. Cir. 2006) ................................................................................................. 20
James Everards Breweries v. Day
265 U.S. 545 (1924) ................................................................................................................... 3
Jones v. Rath Packing Co.430 U.S. 519 (1977). ................................................................................................................... 2
Jones v. United States,529 U.S. 848 (2000) .......................................................................................................... 3, 5, 33
Lambert v. Yellowley
272 U.S. 581 (1926) .................................................................................................................... 3
Linder v. United States
268 U.S. 5 (1925) ................................................................................................................ 25, 44
Mar-Jac Poultry Inc. v. Katz,2011 U.S. Dist. LEXIS 33582 (D.D.C. 2011) (Collyer, J.) ...................................................... 20
Medtronic Inc. v. Lohr
518 U.S. 470 (1996) ................................................................................................................ 1, 2
Metropolitan Life Ins. Co. v. Massachusetts
471 U.S. 724 (1985) .................................................................................................................... 2
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Motor Vehicles Manufs Assoc. v. State Farm, 463 U.S. 29 (1983) ............................................. 41
National League of Cities v. Usery426 U.S. 833 (1976) .................................................................................................................... 3
*Natural Resources Defense Council v. EPA
25 F.3d 1063 (D.C. Cir. 1994) .................................................................................................. 22
New York v. United States505 U.S. 144 (1992) .................................................................................................................... 4
Nixon v. Freeman
670 F.2d 346 (D.C. Cir. 1982) .................................................................................................. 21
Pennsylvania Elec. Co. v. FERC
11 F.3d 207 (D.C. Cir. 1993) .................................................................................................... 23
Railway Labor Exec. Assn v. Natl Mediation Bd.
29 F.3d 655 (D.C. Cir. 1994) (en banc) .................................................................................... 39
Ray v. Atlantic Richfield Co.
435 U.S. 151 (1978) .................................................................................................................... 2
RB&W Manufacturing v. Buford2004 U.S. Dist. LEXIS 22512 (N.D. Ill. 2004) ......................................................................... 22
Rice v. Santa Fe Elevator Corp.331 U.S. 218 (1947) .................................................................................................................... 2
Ruff v. Partners Liquidating Trust
2001 U.S. Dist. LEXIS 11683 (N.D. Ill. 2001) ......................................................................... 22
Rush Prudential HMO, Inc. v. Moran
536 U.S. 355 (2002) .................................................................................................................. 40
*Scarborough v. Harvey
493 F.Supp. 2d 1 (D.D.C. 2007) ............................................................................................... 21
United States v. Article of Food Consisting of 345-50 Pound Bags
622 F.2d 768 (5th Cir. 1980) ...................................................................................................... 27
United States v. Bass,
404 U.S. 336 (1971) .................................................................................................................... 3United States v. Baxter Healthcare
712 F.Supp. 1352 (D.N.J. 1989) ............................................................................................... 44
United States v. Dianovin Pharmaceuticals
475 F.2d 100 (1st Cir. 1973) ................................................................................................ 32, 33
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United States v. Dotterweich320 U.S. 277 (1943). ............................................................................................................. 6, 34
*United States v. Evers
643 F.2d 1043 (5th
Cir. 1981) .............................................................................................. 37, 38
*United States v. Lopez514 U.S. 549 (1995) ................................................................................................................ 4, 5
United States v. Morrison529 U.S. 598 (2000) ................................................................................................................ 4, 5
United States v. Oakland Cannabis Buyers Cooperative532 U.S. 483 (2001) .................................................................................................................... 3
United States v. Vidal-Cruz
67 F.Supp.2d 35, (D.P.R. 1999) ................................................................................................ 34
United States v. W.T. Grant Co.345 U.S. 629, 633 (1953) .................................................................................................... 43, 44
United States v. Walsh331 U.S. 432 (1947) .............................................................................................................. 6, 34
Watson v. State of Maryland,218 U.S. 173 (1910) .................................................................................................................... 2
Whitman v. Am. Trucking Assns
531 U.S. 457 (2001) .................................................................................................................... 3
Constitutional Provisions
U.S. Const., Art.1, 8 ..................................................................................................................... 4
Federal Statutes
18 U.S.C. 922(q)(1)(A) ................................................................................................................ 5
21 U.S.C. 321(g)(1)(B) .............................................................................................................. 25
21 U.S.C. 331(k) ........................................................................................................................ 32
21 U.S.C. 333(e) .......................................................................................................................... 4
*21 U.S.C. 353a ............................................................................................................. 24, 36, 37
21 U.S.C. 812(c) .......................................................................................................................... 3
42 U.S.C. 262(a) .......................................................................................................................... 6
State Statutes
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*C.R.S. 12-36-106(1) ................................................................................................................. 25
Federal Regulations
21 C.F.R. 1271.10(a)........................................................................................................ 9, 26, 28
21 C.F.R. 601.41 ........................................................................................................................ 11
Federal Rules
Fed. R. Civ. P. 56 .......................................................................................................................... 21
Fed.R.Civ.P. 56(a) ........................................................................................................................ 27
Miscellaneous
*Belmont Report, at p.3 fn ............................................................................................................ 14
44 Fed. Reg. 23192 (April 18, 1979) ............................................................................................ 12
60 Fed.Reg. 36,808 (July 18, 1995) ................................................................................................ 7
61 Fed.Reg. 26523 .......................................................................................................................... 9
61 Fed.Reg. 9,185 (Mar. 7, 1996) ................................................................................................... 8
63 Fed.Reg. 26,744 (May 14, 1998) ............................................................................................... 7
63 Fed.Reg. 26,745 (May 14, 1998) ............................................................................................. 27
66 Fed.Reg. 5,457 ......................................................................................................................... 28
9 Oxford English Dictionary 546 (2d ed. 1989) ........................................................................... 26
American Medical Association,What Constitutes the Practice of Medicine?, L(5)J. Am. Med. Assoc. 368, 368-369 (Feb. 1,1908) .................................................................................................................................... 25, 40
Application of Current Statutory Authorities to Human Somatic CellTherapy Products and Gene Therapy Products,58 Fed.Reg. 53,248 (December 13, 1993) .............................................................................. 7, 8
Bedi, A., B.T. Feeley, and R.J. Williams,3rd,Management of articular cartilage defects of the knee.
J Bone Joint Surg Am, 2010. 92(4) ............................................................................................. 7
*Brief for the Petitioners, Gonzales v. Oregon, 546 U.S. 243 (2006),available at 2005 U.S. S.Ct. Briefs LEXIS 354 ............................................................ 25, 26, 40
Cunha, B.A., C.M. Sibley, and A.M. Ristuccia,Doxycycline. Ther Drug Monit, 1982. 4(2): p. 115-35.............................................................. 32
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Dr. Alvan Feinstein & Dr. Jeffrey Lichtenstein,Medical Ethics and the Architecture of Clinical Research (1979) ........................................... 13
Dr. David Sabiston,The Boundaries Between Biomedical Research Involving Human Subjects
and the Accepted or Routine Practice of Medicine
with Particular Emphasis on Innovation in the Practice of Surgery (1979) ............................ 13
*Dr. Robert Levine,The Boundaries Between Biomedical or Behavioral Research and the Accepted and Routine
Practice of Medicine (July 14, 1975) ........................................................................................ 13
Exec. Order No. 12612 (Oct. 26, 1987) ........................................................................................ 41
Exec. Order No. 12866 (Sept. 30, 1993)....................................................................................... 41
Exec. Order No. 12988 (Feb. 5, 1996) .......................................................................................... 41
Exec. Order No. 13083 (May 14, 1998) ....................................................................................... 41
Exec. Order No. 13132 (Aug. 4, 1999) ......................................................................................... 41
Exec. Order No. 13450 (Nov. 13, 2007) ....................................................................................... 41
Exec. Order No. 13563 (Jan. 21, 2011) ........................................................................................ 41
Guidance on Applications for Products Comprised of LivingAutologous Cells ManipulatedEx Vivo andIntended for Structural Repair or Reconstruction. 61 Fed.Reg. 26,523 (May 31, 1996) .......... 7
John Robertson, Esq.,Legal Implications of the Boundaries BetweenBiomedical Research Involving Human Subjects and the Accepted or Routine Practice of
Medicine (Dec. 31, 1975) .......................................................................................................... 13
National Research Act, Pub.L.93-348, 88 Stat. 342. .................................................................... 11
Proposed Approach to Regulation of Cellular and Tissue Based Products,62 Fed.Reg. 9,721 (Feb. 28, 1997) .............................................................................................. 9
*Summary for Basis of Approval,Carticel, BLA Ref. No. 96-0372, (August, 1997) ....................................................................... 7
*The Belmont Report:
Ethical Principles and Guidelines for the Protection of Human Subjects of Research, (1979) 12
The Random House Dictionary of the English Language 1194 (2d ed. 1987) ............................. 26
Webster's Third New International Dictionary 1402 (1966) ........................................................ 26
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INTRODUCTION
The Defendants in this case treat the musculoskeletal injuries of their patients at the
Centeno Schultz Clinic in Broomfield, Colorado using, inter alia, a procedure called the
Regenexx Procedure. In its Motion for Summary Judgment, which it filed before the start of
discovery, the Government argues that the Regenexx Procedure constitutes the manufacturing,
holding for sale, and distribution of an unapproved injectable biological drug product which it
refers to as a cultured cell product. As will be detailed in this Opposition, numerous genuine
issues of material fact exist which must lead to the denial of the Governments motion.
STATUTORY AND REGULATORY FRAMEWORK
The Defendants and the Government are of very different opinions as to what the
Regenexx Procedure is. The Defendants assert that the Procedure constitutes the practice of
medicine as defined by the law of the State of Colorado and that the FDA lacks jurisdiction to
regulate it. The Government asserts that the Procedure constitutes a biologic drug lacking FDA
approval in violation of federal law. These differences are embedded in virtually every aspect of
this lawsuit and must be understood in their appropriate Constitutional context.
I. FEDERALISM AND THE PRACTICE OF MEDICINEThe United States Supreme Court has interpreted Federalism to require an assumption
that the historic police powers of the States were not to be superseded by the Federal Act unless
that was the clear and manifest purpose of Congress. Medtronic Inc. v. Lohr, 518 U.S. 470, 485
(1996). As stated by the Court, [t]hroughout our history the several States have exercised their
police powers to protect the health and safety of their citizens. Because these are primarily, and
historicallymatter[s] of local concern, the States traditionally have had great latitude under
their police powers to legislate as to the protection of the lives, limbs, health, comfort, and quiet
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of all persons. Id., at 474; quoting Hillsborough County v. Automated Medical Laboratories,
Inc., 471 U.S. 707, 719 (1985); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 756
(1985).
It is well settled that the practice of medicine is left for the States to regulate; see e.g.
Betancur v. Florida Dep't of Health, 296 Fed. Appx. 761, 763 (11th
Cir. 2008), [s]tates retain
the police power to regulate professions, such as the practice of medicine. citingWatson v. State
of Maryland, 218 U.S. 173, 176 (1910). As stated by the Court in Chaney v. Heckler, 718 F.2d
1174, 1180 (D.C. Cir. 1984),1 Congress exempted the practice of medicine from the Act so as
not to limit a physicians ability to treat his patients.
2
Of course, Congress may still regulate the practice of medicine (or certain aspects of it) if
it chooses to and if such regulation is consistent with its powers under the Commerce Clause. As
stated by the Court in Gonzalez v. Oregon, 546 U.S. 243, 271 (2006), [e]ven though regulation
of health and safety is primarily, and historically, a matter of local concern, there is no question
that the Federal Government can set uniform national standards in these areas. (internal
citations omitted). However, in cases where a States exercise of its police power is challenged
under the Supremacy Clause, we start with the assumption that the historic police powers of the
States were not to be superseded by the Federal Act unless that was the clear and manifest
purpose of Congress.Ray v. Atlantic Richfield Co., 435 U.S. 151, 157 (1978); quoting,Rice v.
Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947); Jones v. Rath Packing Co., 430 U.S. 519,
525 (1977). In other words, we have wisely decided that unless Congress conveys its purpose
1 Overruled on other grounds as stated in Heckler v. Chaney, 470 U.S. 821 (1985).
2 The FDA has itself recognized this principle: Throughout the debate leading to enactment [of the Act], there wererepeated statements that Congress did not intend the Food and Drug Administration to interfere with medicalpractice and references to the understanding that the bill did not purport to regulate the practice of medicine asbetween the physician and the patient.Id., at n.16; quoting 37 Fed.Reg. at 16503.
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clearly, it will not be deemed to have significantly changed the federal-state-balance. Jones v.
United States, 529 U.S. 848, 859 (2000) (Stevens, J., concurring); quoting, United States v. Bass,
404 U.S. 336, 349 (1971).3
When Congress chooses to regulate the practice of medicine, it does so explicitly. For
instance, during Prohibition, Congress enacted Section 2 of the Prohibition Act, which prevented
physicians from prescribing intoxicating malt liquors for medicinal purposes. The Supreme
Court upheld the statute as a lawful exercise of Congresss power under the Eighteenth
Amendment to the Constitution; James Everards Breweries v. Day, 265 U.S. 545 (1924); see
also, Lambert v. Yellowley, 272 U.S. 581 (1926)
Congress has also regulated the practice of medicine through the Controlled Substances
Act (CSA). For instance, under the CSA, Congress classified marijuana as a Schedule I drug
because of its high potential for abuse, lack of any accepted medical use, and absence of any
accepted safety for use in medically supervised treatment. Gonzales v. Raich, 545 U.S. 1, 14
(2005); citing 21 U.S.C. 812(c). Thus, [b]y classifying marijuana as a Schedule I drug, as
opposed to listing it on a lesser schedule, the manufacture, distribution, or possession of
marijuana became a criminal offense...Id; see also, United States v. Oakland Cannabis Buyers
Cooperative, 532 U.S. 483, 490 (2001). The Supreme Court has upheld this law as necessary for
the regulation of interstate commerce, even though the law effectively preempted express state
law determinations contrary to the result which has commended itself to the collective wisdom of
Congress.Raich, 545 U.S. at 41; quoting National League of Cities v. Usery, 426 U.S. 833, 840
(1976).
3Congress, as articulated by Justice Scalia, does not, one might say, hide elephants in mouseholes. Whitman v.
Am. Trucking Assns, 531 U.S. 457, 468 (2001); see also,ABA v. FTC, 430 F.3d 457, 467 (D.C. Cir. 2005).
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Likewise, Congress has regulated physicians use of human growth hormone to treat
patients by criminalizing whoever knowingly distributes, or possesses with intent to distribute,
human growth hormone for any use in humans other than the treatment of a disease or other
recognized medical condition 21 U.S.C. 333(e). Thus, even though human growth hormone
is not a scheduled drug like marijuana, Congress has restricted physicians ability to use it on
their patients and has thereby regulated the practice of medicine in the clearest possible way.
II. THE COMMERCE CLAUSEAlthough Congresss authority is indisputably expansive, it is by no means total. As
articulated by the Supreme Court, [t]he Constitution creates a Federal Government of
enumerated powers. United States v. Lopez, 514 U.S. 549, 552-53 (1995); citing U.S. Const.,
Art.1, 8. Deeply ingrained in our Constitutional history is the principle that the Constitution
created a Federal Government of limited powers while reserving a generalized police power to
the States is deeply ingrained in our constitutional history. United States v. Morrison, 529 U.S.
598, 618, n.8 (2000); quoting New York v. United States, 505 U.S. 144, 156-157 (1992).
The United States Supreme Court has outlined three broad categories of activity that
Congress may regulate under its commerce power. Morrison, 529 U.S. at 608-609; quoting
Lopez, 514 U.S. at 558. These three broad categories are (1) the use of the channels of
interstate commerce, (2) the instrumentalities of interstate commerce, or persons or things in
interstate commerce, even though the threat may come only from intrastate activities, and (3)
those activities having a substantial relation to interstate commerce, i.e. those activities that
substantially affect interstate commerce.Id. (internal citations and quotations omitted).
Modern Supreme Court jurisprudence has set the outer limits of Congresss authority
under the Commerce Clause, especially as it relates to the regulation of intrastate activities. In
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Lopez, the Court considered the constitutionality of the Gun-Free School Zones Act of 1990,
which made it a federal offense for any individual knowingly to possess a firearm at a place that
the individual knows, or has reasonable cause to believe, is a school zone. Lopez, 514 U.S. at
551; quoting 18 U.S.C. 922(q)(1)(A). Before the Supreme Court, the Government argued that
the Act was a proper exercise of Congresss Commerce Clause authority; Id., at 564. Noting that
the Constitution specifically withheld from Congress a plenary police power that would
authorize enactment of every type of legislation, the Court rejected the Governments
arguments; Id., at 566.4 The Court thus ruled that the Act was beyond Congresss Commerce
Clause power.
5
Conversely, in ruling that the Federal Government had jurisdiction to regulate marijuana
lawfully obtained for medical purposes under a new California-state law, the Court in Raich
reasoned that, in enacting the CSA, Congress was particularly concerned with the need to
prevent the diversion of drugs from legitimate to illicit channels. Raich, 545 U.S. at 16. Thus,
even though the marijuana at issue in Raich was lawfully possessed under California law, the
Court ruled that Congress nevertheless had the power to regulate it due to the impact that it could
have on the interstate marijuana market.
6
4 To uphold the Governments contentions here, we would have to pile inference upon inference in a manner thatwould bid fair to convert congressional authority under the Commerce Clause to a general police power of the sortretained by the statesTo do so would require us to conclude that the Constitutions enumeration of powers does notpresuppose something not enumeratedand that there never will be a distinction between what is truly national andwhat is truly local. This we are unwilling to do.Id., at 567; (internal citations omitted).5See also, United States v. Morrison, 529 U.S. 598 (2000);Jones v. United States, 529 U.S. 848 (2000).
6 See, e.g. Id. at 34 (Scalia, J., concurring) (Not only is it impossible to distinguish controlled substances
manufactured and distributed intrastate from controlled substances manufactured and distributed interstate, but ithardly makes sense to speak in such terms. Drugs like marijuana are fungible commodities. As the Court explains,marijuana that is grown at home and possessed for personal use is never more than an instant from the interstatemarket--and this is so whether or not the possession is for medicinal use or lawful use under the laws of a particularState.)
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III. THE FDALike all other Federal governmental agencies, the FDAs power to promulgate
legislative regulations is limited to the authority delegated by Congress. Bowen v. Georgetown
Univ. Hosp., 488 US 204, 208 (1988).
The Government points to two sources of authority for the FDAs regulation of the
Defendants medical practice, the Federal Food, Drug and Cosmetic Act (FDCA) and Public
Health Service Act (PHSA). The FDCA rests upon the constitutional power resident in
Congress to regulate interstate commerce. To the end that the public health and safety might be
advanced, it seeks to keep interstate channels free from deleterious, adulterated and misbranded
articles of the specified types. It is in that interstate setting that the various sections of the Act
must be viewed. United States v. Walsh, 331 U.S. 432, 434 (1947); citing United States v.
Dotterweich, 320 U.S. 277, 280 (1943). The PHSA delegates to the FDA as follows: The
Surgeon General, with the approval of the Secretary, is authorized to make and enforce such
regulations as in his judgment are necessary to prevent the introduction, transmission, or spread
of communicable diseases from foreign countries into the States or possessions, or from one
State or possession into any other State or possession.42 U.S.C. 262(a). Pursuant to that
authority, the FDA created the chapter of regulations at issue in this case, 21 C.F.R. 1271.1, et
seq.
IV. THE HCT/P RULE: 21 C.F.R PART 1271In the Governments Motion for Summary Judgment, it describes that prior to 1997,
FDA had regulated human cellular and tissue based products on a case-by-case basis,
responding as the agency determined appropriate to the particular characteristics of and concerns
raised by each type of product. Motion for Summary Judgment, at p.6; citing, 63 Fed.Reg.
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26744 (May 14, 1998) (Proposed Registration Rule); Proposed Approach, at 6. Indeed, prior to
1997, FDA had regulated human cellular and tissue based products only pursuant to informal
guidance documents.7
In 1995, Genzyme Tissue Repair (Genzyme) began marketing Carticel based upon
indications from the agency that, being an autologous cell therapy, Carticel would not be
regulated. Summary for Basis of Approval, Carticel, BLA Ref. No. 96-0372, p.1 (August,
1997).
8However, later that same year, CBER
9
On July 18, 1995, FDA announced that it would hold a public hearing on November 16-
17, 1995, regarding Products Comprised of Living Autologous Cells Manipulated ex vivo and
Intended for Implantation for Structural Repair or Reconstruction. 60 Fed.Reg. 36808.
Thereafter, a hearing was held and attended by a variety of public and private officials, including
a collection of Genzyme representatives. As described by the FDA, the Hearing had 8 panels
notified [Genzyme] that CBER considered
Carticel to be a somatic cell therapy product as defined in the October 14, 1993 Federal
Register notice concerning human somatic cell and gene therapy products and advised
[Genzyme] that marketing approval would be required. Id. Consequently, Genzyme submitted
a request for product designation to clarify agency jurisdiction [and] the agency notified
[Genzyme] that it could continue to market Carticel while jurisdiction was under consideration
and policy under development.Id.
7 See, e.g. Points to Consider in Human Somatic Cell Therapy and Gene Therapy, 56 Fed.Reg. 61022 (November
29, 1991); Application of Current Statutory Authorities to Human Somatic Cell Therapy Products and GeneTherapy Products, 58 Fed.Reg. 53248 (December 13, 1993); Guidance on Applications for Products Comprised ofLiving Autologous Cells Manipulated Ex Vivo and Intended for Structural Repair or Reconstruction. 61 Fed.Reg.26523 (May 31, 1996).8Carticel is an autologous cell culture product wherein a surgeon takes a cartilage biopsy from a patient and sends
the biopsy to a central Genzyme laboratory where it is cultured for several months before being shipped back to thetreating physician for surgical re-implantation. Bedi, A., B.T. Feeley, and R.J. Williams, 3rd, Management ofarticular cartilage defects of the knee. J Bone Joint Surg Am, 2010. 92(4): p. 994-1009.9 CBER is FDAs Center for Biologics Evaluation and Research.
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with 24 speakers, and there was general consensus that the establishment, the production process
and the products should be of the highest quality. The speakers and attendees also agreed that
MAS cell products should benefit the patient, but there was little consensus on the appropriate
mechanism that should be used to show this benefit. Docket No.95N-0200.10
On March 7, 1996, the FDA announced that it would hold an FDA Commissioners
roundtable public meeting on the regulatory approach to products comprised of living autologous
cells manipulated ex vivo and intended for structural repair or reconstruction. 61 Fed.Reg.
9185. The roundtable, to be held on March 15, 1996, was to be a continuation of the public
hearing held on November 16-17, 1995, and the participants were to discuss FDAs current
thinking on the regulatory approach of these products with respect to clinical and manufacturing
issues, and to get input on the agencys tentative approach. Id. At that roundtable, the FDA
publicly announced for the first time that FDAs Product Jurisdiction Officer had chosen CBER
to be the lead center for the regulation of MAS cell products; 1995-N-0200 000814. At that
roundtable, the FDA also publicly announced for the first time as follows:
The record of the
hearing was kept open until February 16, 1996.
Burdensome, long term clinical studies should be avoidedwhenever possible and the regulation of the manufacturing processshould be based on sound scientific principles and not [be]excessive. In this spirit, I believe a new approach is warranted. Webelieve at the agency that we can accomplish this best not with thetraditional PLA-ELA requirements, but rather with a newapproach, with a biologics license application.
10 The basic nomenclature of HCT/Ps changed on several occasions during the 1990s. At first, the FDA referred to
these as somatic cell therapy, i.e. the prevention, treatment, cure, diagnosis, or mitigation of disease or injuries inhumans by the administration of autologous, allogeneic, or xenogeneic cells that have been manipulated or alteredex vivo. Application of Current Statutory Authorities to Human Somatic Cell Therapy Products and Gene TherapyProducts, 58 Fed.Reg. 53248. Later, the FDA referred to autologous HCT/Ps as MAS cells or MAS cell products,i.e. living autologous cells manipulated ex vivo and intended for structural repair or reconstruction. Guidance onApplications for Products Comprised of Living Autologous Cells Manipulated Ex Vivo and Intended for StructuralRepair or Reconstruction, Docket No. 95N-0200. Today, these are all referred to simply as HCT/Ps.
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1995-N-0200 000817. Although the FDA stressed at the hearing that the regulation of this field
ought not hinder its development, the FDAs announcement was nevertheless met with a
subdued reactiondue in part to the fact that a number of people [being] in shock at the overall
proposal that FDA has put forward 1995-N-0200 000853.11
Next, FDA issued its Guidance on Applications for Products Comprised of Living
Autologous Cells ManipulatedEx Vivo and Intended for Structural Repair or Reconstruction on
May 31, 1996 (61 Fed.Reg. 26523) and its Proposed Approach to Regulation of Cellular and
Tissue-Based Products (Proposed Approach) on February 28, 1997 (62 Fed.Reg. 9721). In the
Proposed Approach, the FDA set forth a plan wherein, purportedly, tissues would be regulated
with a tiered approach based on risk and the necessity for FDA review based on the following
five overarching public health and regulatory concerns:
A) How can the transmission of communicable diseases be prevented?
B) What processing controls are necessary, e.g. to prevent contamination thatcould result in an unsafe or ineffective product, and to preserve integrity andfunction so that products will work as they are intended?
C) How can clinical safety and effectiveness be assured?
D) What labeling is necessary, and what kind of promotion is permissible forproper use of the product?
E) How can the FDA best monitor and communicate with the cell and tissueindustry?
Proposed Approach, at p.9. The terms of the proposed approach would ultimately become
codified at 21 C.F.R. 1271.10(a) which provides, inter alia, that HCT/Ps be minimally
manipulated in order to be regulated solely under section 361 of the PHS ACT and the
regulations in Part 1271.
11 The administrative record produced by the Government in this case exceeds 10,000 pages and each page has oneof five possible prefixes: DNR, GTP, REG, FDA 91N-0248, and 1995-N-0200.
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On March 17, 1997, the FDA held a public hearing regarding its Proposed Approach; see
PA 000139 PA 000406. During that hearing, the participants discussed the issue of minimal
manipulation, and Mary Pendergast, Esq. on behalf of FDA, announced that it was the FDAs
plan to keep downgrading things and pushing them into the M&M, not the upgraded M&M
with peanuts category, the more than minimally manipulated. PA 000319. In other words,
according to Ms. Pendergast, the FDA would downregulate tissue processing techniques over
time as it learned more about them and could determine that such processing did not alter the
relevant biological characteristics of the tissues being processed.
However, the FDA has never downregulated a stem cell process, in spite of the fact that
studies supporting the safety and efficacy of processes are widely available and have been made
available to FDA on numerous occasions. The reason why no downregulation has ever occurred
is uncertain at this time, but may be revealed by the following conversation between Ms. Lisa
Raines, on behalf of Genzyme, and Mary Pendergast, Esq., on behalf of FDA on the record at
FDA headquarters on March 17, 1997:
[Ms. Raines]: Lisa Raines. I just wanted to comment on the issueof the possibility of the possible downregulation of more thanminimally manipulated products for which premarket approval isrequired and just suggest that that is a potentially very difficultthing to do if you want to preserve the incentives for innovation.
If you require a company to collect the clinical data, eitherbefore or after approval, at great expense, to allow competitors intothat market without imposing on them a comparable responsibilityand obligation, just as a policy matter, creates a great incentive tobe the second guy instead of the first guy.
If you dont have first guys, you wont have second guys.So there really is a risk. I mention it in particular in this areabecause products that FDA considers to be more than minimalmanipulated, those manipulations may not be consideredpatentable. Certainly, in the area in which my company is working,
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we do not have any intellectual property other than some tradesecrecy with respect to our processes.
So, if there is no patent protection, if there is no FDAexclusivity as there is under the Food, Drug and Cosmetic Act for a
period of five years for the first indication for a new drug, if youeliminate all of that in this area, you create a significant financialdisincentive for companies to develop these therapies.
[Ms. Pendergast]: A point well taken. That is why we need to hearback from you as to what you want. We are very curious as towhich way do you want it. Do you want to preserve yourconfidential commercial information and use that as a tool, amarketing tool, and a market entry barrier or do you want theAgency to be downclassifying as soon as it can things that (sic),once we get a handle on their impact on the cell, the tissue and the
body.
PA 000324-000325.
Carticel was approved on August 22, 1997 pursuant to 21 C.F.R. 601.40-46, which
permit the use of certain surrogate endpoints or an effect on a clinical endpoint other than
survival or irreversible morbidity as bases for approvals of products intended for serious or life-
threatening (sic) illnesses or conditions. 21 C.F.R. 601.41; Exhibit 1, at p.19.12
V. THE BELMONT REPORT
As of the date
of Carticels approval, Genzyme had scant clinical data supporting its approval; see e.g.
Affidavit of Dr. Michael Freeman, at p.13, 8u. Since Carticels 1997 approval, no other stem
cell therapy has been approved by the FDA.
In 1974, Congress enacted the National Research Act, which established the National
Commission for the Protection of Human Subjects of Biomedical and Behavioral Research; see
National Research Act, Pub.L.93-348, 88 Stat. 342.
12 See, Affidavit of Dr. Michael Freeman, attached hereto as Exhibit 2, at 8u (No medical training is necessary torealize that a common knee cartilage injury is unlikely to be fatal.)
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One of the charges to the Commission was to identify the basicethical principles that should underlie the conduct of biomedicaland behavioral research involving human subjects and to developguidelines which should be followed to assure that such research isconducted in accordance with those principles. In carrying out the
above, the Commission was directed to consider: (i) the boundariesbetween biomedical and behavioral research and the accepted androutine practice of medicine, (ii) the role of assessment of risk-benefit criteria in the determination of the appropriateness ofresearch involving human subjects, (iii) appropriate guidelines forthe selection of human subjects for participation in such researchand (iv) the nature and definition of informed consent in variousresearch settings.
See,http://ohsr.od.nih.gov/guidelines/belmont.html
In 1979, the Commission carried out this charge when it issued The Belmont Report:
Ethical Principles and Guidelines for the Protection of Human Subjects of Research, (1979)
(the Belmont Report).13 As described by the National Institute of Health, the Belmont Report
was the outgrowth of an intensive four-day period of discussions that were held in February
1976 at the Smithsonian Institution's Belmont Conference Center supplemented by the monthly
deliberations of the Commission that were held over a period of nearly four years.14
13 A copy of the complete Belmont Report is attached hereto as Exhibit 3.
As
described by Commission Chairman Kenneth J. Ryan, M.D. in his letters dated September 30,
1978 to, inter alia, President Carter, it was the recommendation of the Commission that the
Belmont Report be adopted in its entirety as a statement of departmental policy on the conduct of
research involving human subjects. Exhibit 3, pp. 5, 7, 9, and 11 of 40. The Belmont Report
was published in the Federal Register at 44 Fed. Reg. 23192 (April 18, 1979), and was designed
to provide federal employees, members of Institutional Review Boards and scientific
14See,http://ohsr.od.nih.gov/guidelines/belmont.html; see alsoAbdullahi v. Pfizer, 562 F.3d 163, 182 n.13 (2d Cir.2009).
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http://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.html -
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investigators with common points of reference for the analysis of ethical issues in human
experimentation.Id.15
The Belmont Report is relevant to the Governments Motion for Summary Judgment for
two interrelated reasons. First, as detailed later in this brief, the Belmont Report may assist the
Court in evaluating as an issue of material fact whether the Regenexx Procedure constitutes the
practice of medicine. As described in Dr. Centenos attached affidavit (Exhibit 5), Dr. Centeno
developed the Regenexx Procedure consistent with the terms of the Belmont Report; Centeno
Affidavit, at pp. 67-71. The Belmont Report may thus assist the Court in evaluating whether the
Regenexx Procedure is the practice of medicine or something else entirely; see e.g., Levine, 1-
6 (If a physician proceeds in his interaction with a patient to bring what he considers to be the
best available technique and technology to bear on the problems of that patient with the intent of
doing the most possible good for that patient, this may be considered the pure practice of
medicine.)
Similarly, the Belmont Report is relevant to the Governments request for a permanent
injunction which is based, inter alia, on the allegation that the Defendants are somehow
experimenting on their patients; see Governments Motion for Summary Judgment, at pp.38-
39. Indeed, the Belmont Report provides the Court with a tutorial regarding what constitutes the
practice of medicine, what constitutes medical research, what constitutes a combination of the
15 Published contemporaneously with the Belmont Report was a two-volume Appendix which exceeds 600 pages
and contains the reports of experts and specialists who assisted the Commission in fulfillingits charge. Id.Although we do not attach the entire appendix to this Brief, we do attach as Exhibit 4 the Appendixs Table ofContents, as well as a copy of the following individual reports: Dr. Robert Levine, The Boundaries BetweenBiomedical or Behavioral Research and the Accepted and Routine Practice of Medicine (July 14, 1975); Dr. AlvanFeinstein & Dr. Jeffrey Lichtenstein, Medical Ethics and the Architecture of Clinical Research (1979); JohnRobertson, Esq.,Legal Implications of the Boundaries Between Biomedical Research Involving Human Subjects andthe Accepted or Routine Practice of Medicine (Dec. 31, 1975); Dr. David Sabiston, The Boundaries BetweenBiomedical Research Involving Human Subjectsand the Accepted or Routine Practice of Medicine with Particular
Emphasis on Innovation in the Practice of Surgery (1979).
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two, and how the physician should govern himself in each of those circumstances; see e.g. see
e.g. Belmont Report, at p.3 fn. (The fact that some forms of practice have elements other than
immediate benefit to the individual receiving an intervention, however, should not confuse the
general distinction between research and practice. Even when a procedure applied in practice
may benefit some other person, it remains an intervention designed to enhance the wellbeing of a
particular individual or groups of individuals; thus, it is practice and need not be reviewed as
research.)
STATEMENT OF FACTS
I. THE DEFENDANTSThe Defendants in this case are Regenerative Sciences LLC (Regenerative), Dr.
Christopher Centeno, Dr. John Schultz, and Ms. Michelle Cheever. Together, the Defendants
treat the musculoskeletal injuries of their patients at the Centeno Schultz Clinic in Broomfield,
Colorado using, inter alia, a procedure called the Regenexx Procedure. Counterclaims, 3.
This history and corporate structure of Regenerative and the Centeno Schultz Clinic is
detailed in the attached affidavits of Gus Michaels, Esq. and Dr. Centeno. As Mr. Michaels
describes, Dr. Centeno first formed Christopher J. Centeno, M.D., P.C. d/b/a The Centeno
Clinic in 1999. The practice was incorporated as Centeno-Schultz, Inc. in 2005 after Dr. John
Schultz joined the practice. The professional corporations name was changed to Centeno
Schultz, P.C. in 2007. Michaels Affidavit, at 3. Today, Drs. Centeno and Schultz jointly own
the Centeno Schultz Clinic and are majority shareholders of Regenerative. Counterclaims 4.
The laboratory and clinic are related companies and operate as one business. The
laboratory exclusively services the Centeno Schultz Clinic and the Clinics patients and does so
exclusively at the direction of Drs. Centeno and Schultz. Regenerative and the Clinic have
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overlapping management structures. Michaels Affidavit, at 8. As Mr. Michaels describes,
Dr. Schultz is a board member of both entities, and Dr. Centeno is the medical director for both
entities.Id. Further, Regenerative and the Clinic have been separate, but very closely related
Colorado entities since [Regeneratives] formation in 2005. Id. As Mr. Michaels further
describes, the relationship between Regenerative and the Clinic is commonplace for medical
practices in the State of Colorado. Id., at 7. The relationship between the companies is
analogous to the common practice among physicians of forming separate entities for purposes
such as holding valuable medical equipment, operating ambulatory surgery centers, or such other
activities necessary or closely related to the principal medical practice Id. As Dr. Centeno
describes, [t]hrough the years the lab has been located in various places relative to the practice
so that the patients sample has been handed through a door to the doctor, driven down the street,
is currently transported a short drive, and will soon be handed to the doctor in the same medical
space. Centeno Affidavit, at 55.
II. THE REGENEXX PROCEDUREAs Dr. Centeno describes in his affidavit, the Regenexx Procedure is one of several
procedures that Drs. Centeno and Schultz use to treat their patients. Centeno Affidavit, at 3.
At the time that this case began in August of 2010, the Regenexx Procedure constituted
about one-third of the procedures performed by the clinic. Dr. Schultz and I treat our patients
using the Regenexx Procedure only after deciding on a patient-by-patient basis that the
Regenexx Procedure will most effectively treat the patient whom we are treating.Id.
The steps taken to perform the Regenexx Procedure are summarized in the introductory
paragraphs of the Defendants Counterclaims ( 5-19) and more completely outlined in Dr.
Centenos affidavit, at 12-33, and need not be fully repeated here. Suffice it to say for
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purposes of this document that the Procedure involves the extraction of stem cells and natural
growth factors from the patient, the expansion of the stem cells ex vivo in culture using the
patients own natural growth factors and FDA approved products, the reimplantation of the
patients stem cells back into the patient, and a robust set of safety protocols designed to protect
the patient and ensure the medical integrity of the procedure. Id. Additionally, the Procedure has
been examined by the Colorado Board of Medicine and has been determined to be fully
compliant with Colorado-state law; see, Michaels Affidavit at 12; Centeno Affidavit, at 6.
III. PROCEDURAL HISTORYOn or about August 5, 2008, Regenerative received a letter dated July 25, 2008 from
FDAs Office of Compliance and Biologics Quality concerning Regeneratives Regenexx
Procedure. Counterclaims, at 20. In that letter, the FDA alleged that Regenerative was
promoting the use of MSCs under conditions that caused the cells used in the Regenexx
procedure to be drugs under section 201(g) of the Federal Food, Drug and Cosmetic Act (FDCA)
and biological products as defined in section 351(i) of the Public Health Service Act (PHSA).Id.
The FDA further alleged that the MSCs utilized in the RegenexxProcedure were drugs which
were not the subject of an approved biologics license application (BLA) or investigational new
drug application (IND) and may therefore have been unlawful. Further, on July 25, 2008, the
very date on which the FDA purportedly sent its letter to Regenerative, but eleven days before
Regenerative actually received it, the FDA posted its letter on its website (www.fda.gov) and
thereby made the letter available to the public. Regenerative was given no opportunity to respond
to the FDAs letter prior to the letter being published by the FDA on the World Wide Web.Id., at
21.
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On August 12, 2008, counsel for Regenerative sent the FDA a Petition for Stay of Action
pursuant to 21 C.F.R. 10.35 requesting that all information in the petition for stay of action be
withheld from public disclosure. Id., at 22. On August 19, 2008, the FDA responded to
undersigned counsel stating that FDA was in receipt of the petition for stay of action filed on
behalf of Regenerative. FDA assigned the petition a docket number and accepted the petition for
filing but did not indicate whether it would agree to the action requested. Id. On August 25,
2008, counsel for Regenerative sent FDA a separate legal opinion, citing cases, statutes,
regulations and FDA policy which demonstrated that the agencys allegations in its July 25, 2008
letter were both legally and factually flawed. Id., at 23. On October 3, 2008, the FDA formally
denied Regeneratives Petition for Stay of Action, refused to remove the July 25, 2008 letter
from the FDAs public website, and denied Regeneratives request that the Petition for Stay of
Action be withheld from public disclosure.Id.
Almost seven months later, on February 23, 2009, the FDA initiated an inspection of
Regeneratives medical facilities. That inspection concluded on April 15, 2009, when the FDA
issued a Form 483 to Regenerative indicating that, according to the FDA, Regenerative was
manufacturing biological drugs in a facility that did not meet the standards of federally regulated
biological drug manufacturers. Id., at 24. Also on April 15, 2009, the FDA warned
Regenerative that its (Regeneratives) failure to comply with the terms of the Form 483 could
lead to the issuance of a warning letter, seizure, injunction, criminal prosecution, and the
disqualification of Regeneratives licensed physicians as clinical investigators.Id.
While the inspection was ongoing, Regenerative sued the Government in the United
States District Court for the District of Colorado. Id., at 25.16
16 Case No. 1:09-cv-00411-WYD-BNB in the United States District Court for the District of Colorado.
Regeneratives suit alleged, inter
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alia, that FDAs regulatory scheme defining and regulating the autologous use of stem cells was
ultra vires. On April 29, 2009, the Government filed its motion to dismiss on ripeness grounds,
and the District Court entered its order dismissing Regeneratives lawsuit on March 26, 2010. Id.
On March 29, 2010, Regenerative filed its notice of appeal with the United States Court of
Appeals for the Tenth Circuit.17
The FDAs efforts to regulate Regeneratives medical practice continued shortly after the
District Court dismissed Regeneratives lawsuit. Counterclaims, at 26. On June 2, 2010, the
FDA visited the Plaintiff for purposes of conducting an exhaustive inspection of the Plaintiffs
medical facilities. Id. This inspection began when the Defendants issued a Notice of Inspection
to the Plaintiff which, like the April 15, 2009 Form 483 issued by the Defendants to the
Plaintiff identified the Plaintiff as a drug manufacturer. FDAs inspection of Regeneratives
medical clinic lasted for roughly two weeks and cost Regenerative nearly $20,000 in personnel
time.Id.
The inspection concluded with an exit interview between FDA and Regenerative on or
about June 16, 2010. Counterclaims, at 27. During the exit interview, FDA issued a Form 483
to Regenerative which, like the April 15, 2009 Form 483 and June 2, 2010 Notice of Inspection,
identified Regenerative as a drug manufacturer. This Form 483 also listed a number of alleged
compliance deficiencies at Regeneratives medical facilities only applicable to drug
manufacturers.Id.
Likewise, during the June 16, 2010 exit interview, FDA advised Regenerative that the
decision was made by FDA before the inspection even began that Regenerative was a drug
manufacturer and that that decision could not be challenged. Counterclaims, at 28. Moreover,
17 Case No. 10-1125 in the United States Court of Appeals for the Tenth Circuit.
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FDA advised Regenerative that the failure to remedy the observations contained in the Form 483
could lead to the issuance of a warning letter, Cease and Desist Letter, civil penalties, and/or a
judicial injunction to compel compliance under threat of closure and criminal prosecution.Id.
On June 22, 2010, Regenerative filed suit before this court in Case No. 10-cv-01055
challenging FDAs finding that Regenerative was a drug manufacturer.18
On July 15, 2010, the parties appeared before this Court on Regeneratives Motion for
Temporary Restraining Order, and on July 28, 2010, Regenerative filed its Initial Brief before
the Tenth Circuit challenging the decision of the District Court Judge dismissing Regeneratives
lawsuit against the Government on ripeness grounds. While both matters were pending, the
Government approached counsel for Regenerative and proposed the agreement which is outlined
in the Stipulated Order which has been entered in this case; [DE 10]. In short, in exchange for
voluntarily dismissing the ongoing actions before the District Court for the District of Colorado
Additionally, in an
effort to enjoin the FDA during the pendency of the ongoing appeal in the Tenth Circuit, on June
30, 2010 Regenerative filed a motion for an injunction pursuant to Rule 62(c) of the Federal
Rules of Civil Procedure in the District of Colorado. [Case No. 09-411; DE 53]. Finally, on July
6, 2010, Regenerative filed a Motion for Temporary Restraining Order before this Court in Case
No. 10-cv-01055 [DE 9], and the Government filed its Motion to Transfer Venue or in the
Alternative to Dismiss on July 13, 2010 [DE 11] challenging, inter alia, that Regeneratives
claims were not ripe.
18 It should not be inferred that the Defendants responses to these FDA inspections were limited to the filing of
lawsuits in Denver and Washington, D.C. As stated by Dr. Centeno in his affidavit, [w]e are proactive andresponsive to improve quality. Prior to the FDA first showing up to inspect the lab in 2008, we hired a nationalrecognized lab audit company, Reglera, to inspect the lab and make recommendations to improve patient safety.Over the ensuing several years we hired Reglera twice more. See appendix C for final Reglera audits. After everyFDA inspection, while we disagreed that we should treat our tissue lab as a drug production facility, we met toaddress any concerns brought up by the investigators that could improve our patients safety. See appendix D forrecords of our actions after the 2009 and 2010 inspections. Centeno Affidavit, at 32n.
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and the Court of Appeals for the Tenth Circuit and withdrawing its Motion for a Temporary
Restraining Order before this Court in Case No. 10-cv-01055, the Government agreed to sue the
Defendants in this Court and thereby allow the entire dispute between the parties to be litigated
in a single forum. [DE 10]. Additionally, the Defendants have agreed to discontinue their use of
the Regenexx Procedure during the pendency of this litigation; Id.; see also, Motion for
Summary Judgment, at p.17.
ARGUMENT
I. SUMMARY JUDGMENT STANDARDA. Fed.R.Civ.P. 56Rule 56(a) of the Federal Rules of Civil Procedure provides that [t]he court shall grant
summary judgment if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law. Facts are material if disputes over
them might affect the outcome of a suit under governing lawHolcomb v. Powell, 433 F.3d
889, 895 (D.C. Cir. 2006); quoting Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). Issues
are genuine if the evidence is such that a reasonable jury could return a verdict for the
nonmoving party. Breen v. Peters, 474 F.Supp. 2d 1, 7 (D.D.C. 2007); citing Liberty Lobby,
477 U.S. at 248;Holcomb, 433 F.3d at 895.
More specifically, at the summary judgment state the judges function is not himself to
weigh the evidence and determine the truth of the matter but to determine whether there is a
genuine issue for trial. Liberty Lobby, 477 U.S. at 249. Further, in ruling on a motion for
summary judgment, the court must draw all justifiable inferences in the nonmoving party's favor
and accept the nonmoving party's evidence as true. Mar-Jac Poultry Inc. v. Katz, 2011 U.S.
Dist. LEXIS 33582, 17 (D.D.C. 2011) (Collyer, J.); citing Liberty Lobby, 477 U.S. at 255.
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B. Summary Judgment is Disfavored When Discovery Has Yet to CommenceRule 56(c)(1)(A) provides that when moving for summary judgment, the party asserting
that a fact cannot be genuinely disputed must support the assertion by citing to particular parts
of materials in the record, including depositions, documents, electronically stored information,
affidavits or declarations order, stipulationsadmissions, interrogatory answers, or other
materials In other words, as stated by the Court in Scarborough v. Harvey, 493 F.Supp. 2d 1,
17 (D.D.C. 2007), [s]ummary judgment is premised on the notion that parties will have had
adequate time for discovery to establish whether a genuine issue of material fact exists. Id.,
quoting Breen v. Peters, 474 F.Supp. 2d, 1, 7 (D.D.C. 2007).
Accordingly, it is the general rule that decision by summary judgment is disfavored
when additional development of facts might illuminate the issues of law requiring decision.
Barnes v. District of Columbia, 242 F.R.D. 113, 116 (D.D.C. 2007); quoting Nixon v. Freeman,
670 F.2d 346, 362 (D.C. Cir. 1982); see also Bynum v. District of Columbia, 215 F.R.D. 1, 4
(D.D.C. 2003). In this case, the Government has failed to establish, much less argue, why the
Court should depart from the general rule that summary judgment should be denied prior to the
completion of discovery and the opportunity of the parties to develop the material facts discussed
below which are relevant to this case.
C. To the extent that the Governments Motion for Summary Judgment fails toaddress the Defendants Affirmative Defenses, the Motion should be denied.
As a threshold matter, it must be noted that the Governments Motion for Summary
Judgment only addresses the Defendants affirmative defenses dealing with the practice of
medicine. Indeed, at p.34, n.27, the Government writes that [a]lthough we respond briefly to
Defendants practice of medicine argument here because it appears to be their principal defense
to this suit, we will not respond to Defendants affirmative defenses unless and until they are
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briefed by Defendants. This position, however, is fundamentally flawed and calls for the denial
of the Governments Motion.
While the burden of proof of an affirmative defense must be carried by the party asserting
it, [t]he burden or proof has nothing to do with a movants obligation to address contested
issues in a motion for summary judgment. RB&W Manufacturing v. Buford, 2004 U.S. Dist.
LEXIS 22512, 9-10 (N.D. Ill. 2004). In other words, regardless of who bears the ultimate
burden on proving the defenses, if a party contends that it is entitled to judgment as a matter of
law, it must show the court why that is so in its motion for summary judgment. Id.; citing Ruff v.
Partners Liquidating Trust, 2001 U.S. Dist. LEXIS 11683 (N.D. Ill. 2001).
In this case, the Government has addressed only the Defendants practice of medicine
affirmative defenses, and chosen to place the burden of briefing the Defendants other
affirmative defenses on the Defendants. Certain of the Defendants affirmative defenses
including Affirmative Defenses XI and XII are based on questions of fact which will be
developed in discovery and prosecuted by the Defendants at trial or in their own motion for
summary judgment. In failing to even mention these affirmative defenses in its own motion for
summary judgment, the Government has left to be determined genuine issues of material fact
discussed below, thus preventing the Court from ruling on the Governments Motion as a matter
of law.
Similarly, by failing to address these affirmative defenses in its own Motion and choosing
instead to address them in its reply brief, the Government has violated this Circuits well settled
rule that petitioners lay all their arguments on the table in their opening briefs so that their
opponents are not taken by surprise.Natural Resources Defense Council v. EPA, 25 F.3d 1063,
1072, n.4 (D.C. Cir. 1994); citing Pennsylvania Elec. Co. v. FERC 11 F.3d 207, 209 (D.C. Cir.
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1993);Herbert v. National Academy of Sciences, 974 F.2d 192, 195 (D.C. Cir. 1992); Corson &
Gruman Co. v. NLRB, 899 F.2d 47, 50 n.4 (D.C. Cir. 1990) (We require petitionersto raise all
of their arguments in the opening brief to prevent sandbagging ofrespondents and to provide
opposing counsel the chance to respond.) Accordingly, the Governments Motion should be
denied.
II. ADULTERATIONIn its Motion for Summary Judgment, the Government argues that the Defendants
cultured cell product is adulterated, and that the facts relevant to the adulteration issue have
either been admitted by the Defendants or are beyond dispute. However, in reality, the
Defendants have consistently denied that they manufacture a cultured cell product, and
numerous other genuine issues of material fact also exist necessitating the denial of the
Governments Motion.
A. Defendants Affirmative Defenses XI and XIIFirst, as a threshold matter, the Government has ignored the Defendants affirmative
defenses in its Motion choosing to instead address them in its reply. As stated above, the
Governments choice has violated this Circuits well settled jurisprudence on this issue. More
importantly, the Governments choice has left a critical factual issue on the table necessitating
the denial of the Governments Motion.
Defendants Affirmative Defense XII states that [b]ecause the FDA has previously
approved or licensed the manufacturing of autologous, culture expanded HCT/Ps, the
adulterating and misbranding provisions of the FDCA are not applicable to the Defendants use of
autologous, culture expanded HCT/Ps in treating the injuries of their patients on a patient-by-
patient basis. Because of this prior approval, Defendants Affirmative Defense XI provides that
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this treatment of patients on a patient-by-patient basis is within the practice of medicine, does not
constitute the manufacturing or distribution of a product and is not subject to the adulterating and
misbranding provisions of the FDCA; see, 21 U.S.C. 353a.
As previously discussed, the FDA approved Genzymes Carticel in 1997. Carticel
involves the extraction of HCT/Ps from a patient by the patients physician, expanding the
HCT/Ps at a Genzyme laboratory, returning the expanded HCT/Ps to the physician, and the use
of the expanded HCT/Ps in the treatment of the patients injured knee. As articulated in their
affirmative defenses, the Defendants are therefore entitled to compound Genzymes Carticel
pursuant to 21 U.S.C. 353a, and are statutorily exempted from the FDCAs adulteration and
misbranding provisions; see 21 U.S.C. 353a(a). Thus, even at a threshold level, the
Governments failure to address these affirmative defenses in its motion creates aper se genuine
issue of material fact necessitating the denial of the Governments Motion.
B. The Defendants Do Not Manufacture a Cultured Cell ProductAs previously described, the Defendants and the Government are of very different
opinions as to what, exactly, the Regenexx Procedure is. The Defendants assert that the
Procedure constitutes the practice of medicine as defined by the law of the State of Colorado and
that the FDA lacks jurisdiction to regulate it. In contrast, based on its argument that the
procedure does not constitute the practice of medicine because it does not involve the use of an
FDA approved drug on a patient, the Government asserts that the Procedure constitutes the
manufacturing of a biologic drug lacking FDA approval in violation of the law.
As described in our opposition to the Governments Motion to Dismiss, because the FDA
lacks the jurisdiction toregulate the practice of medicine, it also lacks the jurisdiction todefine
it; see, Gonzales v. Oregon, 546 U.S. 243 (2006); ABA v. FTC, 430 F.3d 457 (D.C. Cir. 2005).
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Instead, because it is well settled that the practice of medicine has been left to the individual
States to regulate, the definition of the practice of medicine has also been left to the individual
States to create; see e.g. Linder v. United States, 268 U.S. 5, 18 (1925); see also, Gonzales v.
Oregon (defining physician-assisted suicide as within the practice of medicine).
In this case, Defendants Centeno and Schultz are licensed to practice medicine by the
State of Colorado and to treat their patients in a one-on-one bases from their medical facilities
located in Broomfield, Colorado. The State of Colorados definition of the practice of medicine
is unquestionably broad enough to include the Regenexx Procedure, and the Defendants
practice under the direct supervision of the Colorado Board of Medicine; see, Michaels Affidavit
at 12; Centeno Affidavit, at 6.Therefore, the Regenexx Procedure constitutes the practice
of medicine as regulated and defined by law in the State of Colorado; see C.R.S. 12-36-106(1).The Government also argues that the Regenexx Procedure constitutes the
manufacturing of a drug because they promote it to treat a variety of conditions. Motion for
Summary Judgment, at p.19. However, this argument must also fail. Whereas the FDCA defines
drug as articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of
disease in man, 21 U.S.C. 321(g)(1)(B), Colorados definition of the practice of medicine
contains similar language: Suggesting, recommending, prescribing, or administering any form
of treatment, operation, or healing for the intended palliation, relief, or cure of any physical or
mental disease, ailment, injury, condition, or defect of any person C.R.S. 12-36-106(1)(b);
see also, American Medical Association, What Constitutes the Practice of Medicine?, L(5) J.
Am. Med. Assoc. 368, 368-369 (Feb. 1, 1908); Brief for the Petitioners, Gonzales v. Oregon, 546
U.S. 243 (2006), available at 2005 U.S. S.Ct. Briefs LEXIS 354, 40-42 (using ordinary
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meaning19
C. To the extent that the Defendants medical procedure might be subject to FDA jurisdiction, a genuine issue of material fact exists regarding whether it meets
the criteria for regulation solely under 21 C.F.R. Part 1271.
to define the practice of medicine). Thus, simply because a procedure is designed to
cure a person and is advertised as such by the treating physician, it does not mean that that
procedure becomes a federally regulated drug. The Governments Motion for Summary
Judgment should be denied.
1. Burden of proof.
Even though we are before the Court on the Governments Motion for Summary
Judgment of its own claims prior to the commencement of discovery, the Government argues
that the burden is on the Defendants to prove that their cultured cell product meets all of the
criteria in 21 C.F.R. 1271.10(a). Motion for Summary Judgment, at p.20. Regardless of
whether the Governments position is legally correct, it highlights a fundamental inconsistency
within the Governments position in this case.
In the FDAs Proposed Approach, regulation solely under 21 C.F.R. Part 1271 was never
presented as an exception to a rule. Rather, the public was presented with a regulatory regime
wherein tissues would be regulated with a tiered approach based on risk and the necessity for
FDA review which would provide a rational, comprehensive and comprehensible framework
under which tissue processors could develop and market their products. Proposed Approach, at
19 The ordinary meaning of the term medical is pertaining or related to the healing art orto 'medicine,' 9Oxford English Dictionary 546 (2d ed. 1989), and the term medicine refers to that department of knowledge andpractice which is concerned with the cure, alleviation, and prevention of disease in human beings, and with therestoration and preservation of health, id. at 549; see Webster's Third New International Dictionary 1402 (1966)(the science and art dealing with the maintenance of health and the prevention, alleviation, or cure of disease); TheRandom House Dictionary of the English Language 1194 (2d ed. 1987) (the art or science of restoring or preservinghealth or due physical condition). Brief for the Petitioners, Gonzales v. Oregon, 546 U.S. 243 (2006), available at2005 U.S. S.Ct. Briefs LEXIS 354, 40-42.
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p.7; see also 63 Fed.Reg. 26745 (a risk-based tiered approach intended to regulate human
cellular and tissue-based products only to the extent necessary to protect public health.)
Instead of 351 of the PHSA being set forth as the default regulatory scheme for
HCT/Ps, the FDA simply told the public that HCT/Ps would be regulated based on the risk they
presented. Nevertheless, the FDA has enforced these regulations with 351 of the PHSA as a
default rule, and as such, no autologous stem cell therapies have been approved since 1997, in
spite of the fact that the relevant technology has significantly progressed since that time.
The parties are before the Court on the Governments Motion for Summary Judgment.
The burden is on the Government to prove that there is no genuine dispute as to any material fact
and the Government is entitled to judgment as a matter of law; Fed.R.Civ.P. 56(a). None of the
cases cited by the Government in support of its burden-shifting proposition dealt with summary
judgment proceedings or otherwise change the plain language of Rule 56. Accordingly, while the
burden mightultimately be on the Defendants at trial to prove that the Regenexx Procedure
qualifies for exemption solely under 21 C.F.R. Part 1271, such burden is not on the Defendants
at this time. In opposing the Governments motion, the Defendants need only show that there
exists a genuine issue of material fact for trial, and the Defendants readily do so below; see e.g.
United States v. Article of Food Consisting of 345-50 Pound Bags, 622 F.2d 768 (5th
Cir. 1980).
2. Minimal Manipulation
In its Motion, at pp. 20-22, the Government argues that it is beyond dispute that
Defendants cultured cell product is more than minimally manipulated, and that therefore it
remains subject to the FDCAs adulteration and misbranding provisions. Motion for Summary
Judgment, at p.22. However, this statement is not accurate; the Defendants vehemently deny that
they manufacture or more-than-minimally manipulate anything, support their denial with
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affidavits attached to this motion, and dispute the credibility of the Governments factual
presentation. As such, a genuine issue of material fact regarding this issue plainly exists and the
Governments Motion for Summary Judgment must be denied.
21 C.F.R. 1271.10(a) sets forth the FDAs standard for evaluating how stem cells and
other HCT/Ps will be regulated. The first prong of that standard asks whether the HCT/Ps are
minimally manipulated, and 1271.3(f)(2) states that cells and nonstructural tissue are
minimally manipulated when their processing does not alter their relevant biological
characteristics. The term minimal manipulation is vague, and its definition does nothing to
clarify its meaning; see e.g. Affidavit of Dr. Centeno, at 53. In an effort to qualify that
definition, the FDA has stated that culture expansion constitutes the more-than-minimal-
manipulation of stem cells, but has never shared the science upon which it relied to make that
determination; see 66 Fed.Reg. 5457. The FDA has articulated in this case that this
determination was merely an example of what it believes to be more-than-minimal-
manipulation, and as such, does not constitute a legislative rule; Motion to Dismiss, at p.27.
Likewise, prior to the start of this case, the FDA never took the position that many steps
constitutes more-than-minimal-manipulation. Actually, in the administrative record, the FDA
took the opposite position; see PA 000267 (explaining that the intent of the regulations is to
look at cells based on function, not so much as how much processing is done to them.)
The Governments argument that the Regenexx Procedure constitutes the more-than-
minimal manipulation of stem cells is laden with questions of fact. The Government relies
entirely upon the declaration of Steven R. Bauer, Ph.D. for the proposition that the stem cells
used in the Regenexx Procedure are more-than-minimally-manipulated, but as Dr. Bauer
himself acknowledges, he never once examined or otherwise laid eyes on the cells in making his
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determination; see Motion for Summary Judgment, Exhibit B, 2. Indeed, during the FDAs two
inspections of the Defendants medical facilities, no FDA representative ever tested a s