PASADENA, Calif. (CN) — The U.S. Food and Drug Administration told a Ninth Circuit panel on Wednesday it has the authority to regulate a California provider of stem cell treatments that has been likened to "liquid magic."

The FDA is appealing the decision by a federal judge who concluded that the California Stem Cell Treatment Center's procedure, which involves extracting body fat from a patient, isolating stomal vascular fraction, or SVF, cells from the tissue and injecting these back into the patient, doesn't amount to creating a drug and falls under the so-called same surgical procedure exemption to FDA oversight.

The agency sued the Southern California clinic together with a Florida-based one in 2018, claiming they were disregarding patients' safety by peddling "unproven products that exploit the hope of patients and their loved ones."

But while the FDA won an injunction against the Florida clinic that was upheld by the 11th Circuit, the California case went to trial before U.S. District Judge Jesus Bernal in Riverside, who sided with the defendants. The Ninth Circuit decision on the FDA's appeal therefore could create a circuit split that might get the U.S. Supreme Court's attention.

Adam Jed, a U.S. Justice Department attorney representing the FDA, urged the appellate panel in Pasadena to follow the 11th Circuit's lead and find that the surgical procedure exemption doesn't apply to the stem cell treatment at issue. He contrasted the clinic's processing of the extracted fat with skin grafting, which he said is the classic application of the same surgical procedure exemption, where no one would dispute its the same piece of skin before and after.

"If you remove skin, you might wash blood off of it, you might trim the skin, but then you would return what anyone would say was skin," Jed said. "If instead you removed the skin and dissolved it in a vat of acid, and you skimmed off some portion of that slurry, and then you centrifuged off that slurry, and then you returned that, it would be very unnatural" to say the resulting combination of cells and debris was the removed skin.

In contrast to the lower court's conclusion that what was removed and returned were unaltered cells, Jed argued the clinic's process was "turning one thing into another."

Nathaniel Garrett, an attorney for the California Stem Cell Treatment Center, argued in response that the FDA was trying to rewrite the same surgical procedure exemption to get around the uncontested fact that the cells that are injected into the patients are the same as those that were removed, minus any superfluous tissue.

Focusing on the regulatory language, Garrett told the panel that the same surgical procedure exemption applies to clinics that remove human cells, tissues, and cellular and tissue-based products, or HCT/Ps, from an individual and implants such HCT/P’s into the same individual during the same procedure.

According to Garrett, the FDA is now trying to smuggle in processing and handling restrictions on the same surgical procedure exemption that weren't part of it when the rule was formulated 25 years ago.

"When they do care about processing and handling, they put it in the regulation," Garrett said. But when the FDA enacted the exemption for same surgery procedures, they said "processing controls are not going to apply. We are not going to impose processing limitations on the SSP exemption."

Clinics offering newfangled and unapproved stem cell therapies have sprung up all over the country in recent years, promising treatment for a host of chronic diseases and ailments, from multiple sclerosis and Parkinson’s disease to dementia and erectile dysfunction.

Stem cells have the ability to self-renew and to regenerate specialized cells in tissues. Given these unique regenerative abilities, they have been used as therapies to generate tissues but only a limited number of medical conditions can be safely and effectively treated with stem cell therapies, according to an amicus curiae brief filed by the International Society for Stem Cell Research and the International Society for Cell and Gene Therapy in the Ninth Circuit case.

One such treatment is the transplantation of blood-forming stem cells derived from bone marrow or umbilical cord blood for the reconstitution of the blood-forming and immune systems after chemotherapy or systemic radiation therapy.

"Unproven stem cell therapies marketed directly to consumers by clinics have resulted in patients being blinded, paralyzed, and infected with dangerous pathogens," the two organizations said in support of the FDA's appeal. "A lack of FDA oversight, caused by reduced federal regulation or by companies that evade FDA regulation, undermines adverse event reporting requirements and makes it harder to identify unapproved stem cell therapies that cause serious illness in patients."

The three-judge panel included U.S. Circuit Judges Kim McLane Wardlaw, a Bill Clinton appointee, Michelle Friedland, a Barack Obama appointee, and Jennifer Sung, a Joe Biden appointee. They did not indicate how or when they would rule.

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