FTC Steps in Where FDA Won’t: Regulation of Stem Cell Clinics by FTC
​[Thursday, October 25, 2018]

Last week FTC imposed an unprecedented $3.3 million fine on a stem cell business in California for making false claims about treating several diseases with its stem cell product. The business, called Regenerative Medical Group (RMG), and the physician running it, Dr. Bryn Henderson, were found to violate FTC’s rules for “deceptive” advertisement, “misrepresentations or deceptive omissions of material fact”, and “dissemination of false advertisement”. The fine emanated from a complaint filed by FTC in the Federal District Court of the Central District of California, which was settled with the defendants out of Court. RMG and Dr. Henderson jointly agreed to pay a fine of $3.3 million and since Dr. Henderson is the sole owner of the practice, he was personally held responsible to pay the fine. The violators would need to pay at least $525,000 out of the total fine and rest may be waived due to their low financial assets. This is a rare and exceptional case for FTC based on publicly available information and the description of the offences. Although FTC pursued this case, most of the violations can be easily traced to FDA’s jurisdiction, however, FDA did not participate in this case. The violators in this case have not even had a compliance inspection or a Warning Letter from FDA. In its complaint, FTC described the offence as the sale of amniotic stem cells using deceptive advertisement for the treatment of a variety of diseases such as Parkinson’s disease, autism, multiple sclerosis, cerebral palsy, traumatic brain injury, heart disease, macular degeneration, chronic kidney disease, osteoarthritis, and stroke. Amniotic stem cell therapy is based on stem cells derived from the amniotic fluid of women who have had full-term pregnancies and elected to undergo caesarean sections. Amniotic stem cells have been researched in animal models but there have been no human clinical studies showing that amniotic stem cell therapy cures, treats, or mitigates diseases or health conditions in humans. FTC complained that not only has Dr. Henderson himself not conducted any clinical studies demonstrating the benefits he claimed for amniotic stem cell therapy, but that he was also aware that this therapy is widely considered to be an experimental and unproven treatment, contrary to the claims made by him to his customers. Dr. Henderson had prominently advertised his therapy on internet, social media, and personally talked to most patients visiting his clinic to get the treatment. These same violations can be found at hundreds of clinics and many more physicians selling various cellular concoctions for treating a variety of diseases, although most of them sell autologous treatment and not allogenic as RMG. So far, except for declaring these products to be illegal and issuing Warning Letters to a few such businesses, FDA has taken a hands-off approach to enforcing the regulations for cellular therapies. But the FTC action is far severe. Dr. Henderson is prohibited not only from selling his amniotic stem cell therapy but is also required to provide FTC with a list of all his customers for this product so FTC can contact them for redress, contact all his past customers informing about this decision, and for a period of 10 years inform all his future partners, investors, and business affiliates about this judgement. Although the settlement language contains disclaimers to protect the defendant from future litigations from his customers, it is likely that the RMG and Dr. Henderson would face legal action from his past patients. This should be a case study for all the other stem cell clinics in the country that could be in legal trouble should FTC decide to expand this case to other stem cell clinics. FDA has not yet shown any indication of similar actions for stem cell clinics, but it may join hands with FTC to enforce the laws via false advertisement route rather than the violation of FD&C Act. Stem cell clinics consider yourselves duly warned.