Federal Trade Commission Acts for First Time Against Stem Cell Clinics

The Federal Trade Commission (FTC) recently announced a settlement with a physician in California to resolve charges that the two clinics he controlled engaged in deceptive advertising to promote  unproven stem cell-based therapies.

This case represents the first enforcement action by the FTC—which protects consumers from false and misleading advertisements—to stop the promotion of stem cell treatments that have not been approved by the Food and Drug Administration (FDA). The settlement sends a message that the FTC will exercise its authority to pursue businesses and individuals that market therapies whose efficacy and safety have not been proved.

In advertisements, the clinics claimed that their “amniotic stem cell therapy” could benefit patients with Parkinson’s disease, multiple sclerosis, cerebral palsy, macular degeneration, osteoarthritis, stroke, and chronic kidney disease. The interventions cost $9,000 to $15,000 and were not likely to be covered by insurance.

Under the settlement, the doctor and his clinics must pay $3.31 million, the total amount taken in from stem cell patients. The FTC said the judgment would be partially suspended after they pay $525,000 to the commission, “which may be used to provide refunds to consumers harmed by the defendants’ allegedly deceptive conduct.” They also are prohibited from making health claims unless they are supported by scientific evidence, and they must notify patients about the order.

The FDA has approved relatively few stem cell treatments for use in patients, and those that have been sanctioned target a limited range of conditions, such as blood cancers. Still, a recent study estimated that as of May 2017, 716 clinics in the United States were offering unapproved stem cell treatments. That was up from about 570 just one year earlier. Many of these clinics offer treatments for orthopedic issues, though others claim they can treat conditions such as Alzheimer’s disease, muscular dystrophy, and spinal cord injuries.

As the number of clinics has grown, reports of adverse health events also have emerged, though experts believe such incidents are probably underreported. In 2017, researchers documented the cases of three patients who went blind after receiving stem cell injections, apparently as a treatment for macular degeneration, a common eye disorder among people over age 50.

The roles of the FTC and the FDA

The FDA and the FTC play distinct roles in regulating the promotion of health care products. A 1971 memorandum of understanding spells out the general division of responsibilities: The FDA monitors the advertising and promotion of prescription drug products, while the FTC focuses on the marketing of nonprescription drugs, devices, and cosmetics.

But it has been less clear which agency should take the lead in monitoring advertising for unapproved therapies such as those offered in the stem cell clinics. The California case suggests that the FTC may in certain cases be willing to take the lead in regulating claims about these treatments.

FDA Commissioner Scott Gottlieb has identified the industry as a target for greater enforcement as well. The agency demonstrated that commitment in May,  when it successfully sought permanent injunctions against stem cell clinics in Florida and California that were marketing unproven treatments that could put patients at immediate risk.

One of those clinics used the smallpox vaccine to create a stem cell product that was administered to cancer patients either intravenously or through direct injection into a tumor. Cancer patients often have weakened immune systems and should not receive the smallpox vaccine, because it puts them at risk of serious inflammation, including swelling of the heart and surrounding tissues. 

Why the FTC case matters

Along with FDA’s recent efforts, the FTC settlement is a positive sign that federal regulators recognize the serious risks of unproven stem cell treatments and will take a proactive role in overseeing the market. Given the number of clinics in operation, the agencies would be hard-pressed to fully address the problem by investigating each clinic. Still, pursuing select cases through legal actions could discourage other providers from offering such treatments—or lead them to temper their claims.

Liz Richardson directs The Pew Charitable Trusts’ health care products project.