[00:00:00] Speaker 04: Mr. Jed, you may proceed. [00:00:03] Speaker 04: I think everybody's getting settled here. [00:00:09] Speaker 01: Good morning, Your Honors. [00:00:10] Speaker 01: Adam Jed on behalf of the United States, and if I might save five minutes for a model, please. [00:00:16] Speaker 04: Okay, watch your clock. [00:00:18] Speaker 01: Thank you, Your Honor. [00:00:19] Speaker 01: May it please the Court. [00:00:20] Speaker 01: Defendants create and sell a substance, SVF, that they market as a cure-all for a range of diseases, what one defendant called liquid magic. [00:00:29] Speaker 01: But unlike others using similar treatments, they assert that they can do so without any FDA review for safety and efficacy. [00:00:36] Speaker 01: Their primary submission is that the court should reject the conclusions of other courts that these products are drugs by urging what they admit is an atextual exception. [00:00:45] Speaker 01: That is foreclosed by the statute as originally written, which the Supreme Court has said is intended to have its entire breath. [00:00:52] Speaker 01: And it is foreclosed by the statute as amended in 2016, which created an expedited pathway for drug approval for substances like this. [00:01:00] Speaker 01: In other words, presupposing that substances like this are drugs. [00:01:03] Speaker 01: And regardless, the creation and use of SVF is unlike anything that even today, let alone 1938 as my friend's urge, would be considered surgery. [00:01:13] Speaker 01: Now the practical concerns that my friends raise are addressed elsewhere. [00:01:17] Speaker 01: Those are addressed by a narrow regulatory exception called the same surgical procedure exception. [00:01:22] Speaker 01: The 11th Circuit correctly held that that exception does not apply here. [00:01:26] Speaker 01: Defendants remove adipose tissue and they implant SVF. [00:01:30] Speaker 01: Therefore, they do not remove HCTPs and implant such HCTPs. [00:01:35] Speaker 01: I welcome the court's questions. [00:01:38] Speaker 02: I'm wondering about their argument that you can't really label this drug in this procedure and what your response is to that. [00:01:46] Speaker 02: I didn't quite understand how you thought this could be treated as a drug as a practical matter. [00:01:52] Speaker 01: Sure. [00:01:52] Speaker 01: So first, just maybe to kind of frame and understand their argument. [00:01:56] Speaker 01: Nothing in the statute requires any kind of particular kind of labeling, and I think that may be exemplified by the fact that when they make that argument, they're citing a Wall Street Journal op-ed rather than the statute itself. [00:02:07] Speaker 01: The statute generally assigns to FDA the mission of sort of figuring out what the correct sort of labeling would be. [00:02:13] Speaker 01: Now, as a practical matter, this has worked out fine on the ground. [00:02:16] Speaker 01: I think we have some examples. [00:02:18] Speaker 01: It's maybe around page nine of our reply brief of various patient-specific drugs unmade through a manual process, [00:02:25] Speaker 01: Some, in fact, even involving autologous stem cells, where this has not been a practical problem. [00:02:30] Speaker 01: And I think maybe just to sort of clarify a little bit, the word labeling is a term of art in the FDCA. [00:02:37] Speaker 01: It does not just mean what we might colloquially think of as a label. [00:02:40] Speaker 01: It's not just kind of the sticker that you put on. [00:02:41] Speaker 04: You wouldn't just remove the adipose tissue, mix it all up, and then stick a label on it. [00:02:48] Speaker 04: You could accomplish that goal by other means. [00:02:52] Speaker 01: Well, you know, obviously, I don't want to get ahead of FDA, of course, of what the labeling requirement is. [00:02:57] Speaker 04: So they haven't established any labeling requirements for this particular thing that you're calling a drug. [00:03:04] Speaker 01: I think that's correct. [00:03:05] Speaker 01: So ordinarily, when FDA approves a drug, the approval will include kind of qualifications about what the labeling would be. [00:03:13] Speaker 01: The labeling can include things other than the sticker label, things like the instructions discussing how it's created or used or the dosage. [00:03:20] Speaker 01: As for a sort of physical label, if Your Honors are interested in an example in our reply brief where we kind of identify some of these kind of newfangled cellular drugs, I apologize, you'll have to sort of click through a couple of links, but if you click through the links and kind of work into some of those approval packages, you can, the drug called Zintelgo may be the best example, you're going to see a photograph of the label, the label as compared to the labeling, [00:03:43] Speaker 01: And just as a basic matter, again, I don't want to get ahead of FDA of what a label in this, if this sort of drug were approved, what it would look like, but oftentimes it will have, if nothing else, like the name of the product, the name of the patient, just sort of basic things that prevent just a mix-up. [00:03:58] Speaker 01: And the mix-up, I mean, even if it's being used in a clinic is a concern, but especially because, remember, they're manufacturing some of their products in laboratories on the other side of the country. [00:04:08] Speaker 01: even just having the patient's name, the dosage, what the substance is in it serves a kind of practical function. [00:04:14] Speaker 01: But again, just to be clear, what you may be picturing as the sort of label that's attached to a bottle of penicillin that you pick up at CVS is not anything that's required in the statute. [00:04:24] Speaker 01: And so it really would provide no basis for them to draw an inference about what the word drug means when it's defined in the statute. [00:04:33] Speaker 04: So the other concern is how has the FDA, if this were to be considered a drug, how would it impose the good manufacturing processes in this process? [00:04:50] Speaker 01: Sure. [00:04:50] Speaker 01: So I think my answer to that question is going to be pretty similar to the answer to the labeling question, which is, [00:04:56] Speaker 01: Again, the statute does not require any particular set of manufacturing processes. [00:05:00] Speaker 01: This is accomplished by regulation, the existing regulations kind of speak in broad terms, but indicate that FDA can essentially sort of elsewhere. [00:05:08] Speaker 01: And normally that occurs through the approval process, make clear that, you know, kind of certain requirements for manufacturing are applicable or not applicable. [00:05:16] Speaker 01: And again, that's what's happened in the various examples that we cite in the reply brief. [00:05:20] Speaker 01: There's some trial testimony. [00:05:22] Speaker 01: We cite the trial testimony in the reply brief that discusses, you know, again, obviously making no assurances on FDA's behalf, but sort of discusses how a manufacturing process might look and among other things, why it is that it is at least kind of scientifically possible to provide certain verification that when you claim that the SVF actually includes [00:05:42] Speaker 01: certain type of stem cell, maybe a certain quantity of stem cell, or, you know, kind of any other sort of claim that you're making, that there are at least some basic ways to test whether that's true. [00:05:50] Speaker 01: There are some basic ways to at least kind of try to accomplish the goal of making sure that you're creating the product that you intend to create. [00:05:59] Speaker 04: Your friend suggests that we ought not to decide this and we should invoke the [00:06:06] Speaker 04: major question doctrine because this is such an overreach by the FDA to regulate its stromal vascular fraction. [00:06:19] Speaker 04: How do you respond to that? [00:06:21] Speaker 01: Sure, you know, we address that at some length in the reply brief. [00:06:23] Speaker 01: I mean, frankly, the fact that they're pointing to the major questions doctrine, I think just kind of underscores both the textual and the conceptual weakness of the argument that they're making. [00:06:32] Speaker 01: I mean, you know, the Supreme Court has applied the major questions doctrine when you're looking at something that would entirely revamp the economy. [00:06:39] Speaker 01: We kind of work through some of the key examples, you know, hundreds of billions of dollars of cost, keeping hundreds of maybe tens of millions of people kind of still on their homes. [00:06:48] Speaker 01: What we're talking about here is basically the opposite of that. [00:06:51] Speaker 01: I mean, it's a, you know, regulation of a very specific sort of product. [00:06:54] Speaker 01: And, you know, just to be clear, I think the Supreme Court has always made clear that the major questions doctrine is it's somewhat contextual. [00:07:02] Speaker 01: And in fact, the kind of classic application of that [00:07:04] Speaker 01: in the FDCA space would be FDA versus Brown and Williamson. [00:07:08] Speaker 01: And the various arguments that kind of counted against regulating tobacco, at least without kind of other drug indications, not as a drug in FDA versus Brown and Williamson, are arguments that count in our favor here, among other things you do have a subsequent statute. [00:07:23] Speaker 01: that explicitly presupposes that products of this type are drugs. [00:07:27] Speaker 01: This isn't the sort of product that kind of existed when Congress passed the statute nobody thought would ever be regulated. [00:07:33] Speaker 01: I mean, instead, this is a new technology being applied to a statute, but the whole point, as the Supreme Court spelled out in the BactoDIS case and in the Sullivan case, [00:07:42] Speaker 01: was that you were going to have these kind of expansive definitions meant to address evolving science. [00:07:47] Speaker 01: And FDA, if it decides that it's unnecessary to regulate something, can then apply its scientific expertise and to paraphrase the Supreme Court in Sullivan, not regulate something unnecessarily. [00:07:59] Speaker 02: We've been talking about whether this is a drug, but can we shift to the same surgical procedure exception? [00:08:09] Speaker 02: So you didn't challenge the district court's finding that the cells are not altered, and so I think you [00:08:16] Speaker 02: need us to think that tissue is the right level to look at instead of cells for you to win on this. [00:08:21] Speaker 02: Am I right about that? [00:08:22] Speaker 01: Yes, I think that's correct. [00:08:23] Speaker 01: I mean, I guess I'd sort of append a footnote to that answer, which is, as we point out, because it's an exception, they have the burden to establish it. [00:08:30] Speaker 01: I don't think they've disputed that. [00:08:31] Speaker 01: Obviously, we have the sort of our deference argument. [00:08:34] Speaker 01: in backup so conceptually they need to establish that they can meet the burden of showing that our interpretation is an unreasonable one but your honor is of course correct we have not challenged i mean they are somewhat hedged factual findings the district court does later clarify they don't change substantially but we're not taking on those factual findings our argument is a legal one and so um [00:08:56] Speaker 02: I agree that you have two layers because you think it's unambiguous and then you go to our deference next. [00:09:01] Speaker 02: But can you start with why it's unambiguous? [00:09:03] Speaker 02: Because I'm having trouble seeing how we can really tell that this means tissue instead of cells. [00:09:09] Speaker 01: Sure. [00:09:09] Speaker 01: Well, so I think the way to understand it is not to think that it kind of necessarily means tissues or cells, but to kind of read that relevant sentence in context when it says remove HCTPs. [00:09:20] Speaker 01: and implant such HCTPs, obviously just textually, that puts a focus on what is removed and that puts a focus on what is implanted. [00:09:27] Speaker 01: And as the agency said, I mean, if you read the regulations, it's a sort of somewhat unusual regulation and it's written in this very sort of practical question and answer type format. [00:09:35] Speaker 01: So, just think of this in a very practical way. [00:09:39] Speaker 01: If you were in defendant's clinic watching this being produced, you would say they have removed adipose tissue, they have removed fat, and then if you kind of watched them manufacture the SVF, you would say they have put back something that's entirely different than that. [00:09:51] Speaker 02: Maybe I could just give your honor a sort of- But, like, I think they will probably get up and say, no, we removed cells and we put back cells, and there's a finding that the cells aren't changed, and they didn't contest that. [00:10:00] Speaker 01: No, I mean, of course, your honor is right that their view is that they're removing cells. [00:10:03] Speaker 01: And all I'm saying is just from a very sort of practical perspective, if you were to sort of watching this, I think kind of anyone ordinarily would say they've removed fat, even within the fat are some cells, by the way, as I think they don't dispute, they then end up creating, of course, cellular debris that was not itself removed. [00:10:18] Speaker 01: Maybe here's just a kind of practical example, just I think might be a useful way to wrap one's head around it. [00:10:23] Speaker 01: So skin grafting is the kind of classic application of the same surgical procedure exception. [00:10:29] Speaker 01: 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. [00:10:36] Speaker 01: If instead you removed the skin and you 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, [00:10:46] Speaker 01: it would be very unnatural, as I think the 11th Circuit explained in their decision, it would just be very unnatural to say that what you had removed were whatever particular combination of cells and platelets and growth factors, and of course cellular debris, which you created in the manufacturing process, that that's what you had removed. [00:11:02] Speaker 01: The sort of far more natural, I think, application of that sentence would be you remove skin and then you return that kind of hypothetical slurry. [00:11:09] Speaker 01: But, you know, obviously our argument does not depend kind of solely on that sentence. [00:11:13] Speaker 01: As we point out, [00:11:14] Speaker 01: The kind of context and structure and history and purpose of this regulatory structure sheds quite a bit of light on what that sentence means, because I mean, among other things, this is a complete exemption. [00:11:25] Speaker 01: from the sort of rest of this regulatory structure. [00:11:28] Speaker 01: And if you just look at what those other exceptions are, there are things like scientific research, commercial couriers, storage. [00:11:34] Speaker 01: So to interpret it in the way that my friends interpret it would be so incongruous with those other exceptions. [00:11:41] Speaker 01: And it really would mean, I mean, it leads to a certain absurdity that I've never really heard my friends provide an answer to, because it seems to me that you can remove something. [00:11:49] Speaker 01: You can manipulate it, reorient it. [00:11:52] Speaker 01: I mean, frankly, probably in some science fiction way, [00:11:55] Speaker 01: take each individual cell, if you had the sort of scientific capability, and rebuild something that, you know, no one would ever say ordinarily exists in the human body. [00:12:04] Speaker 01: And as long as the thing that they end up putting back into the human body is composed of cells, or I suppose cell debris, that at some point came out of the human body... Isn't there also an enzyme added? [00:12:15] Speaker 01: There is an enzyme added as well. [00:12:18] Speaker 01: I believe there may have been some dispute at trial about whether any enzyme ends up getting returned to the body. [00:12:24] Speaker 01: I think the defendant's position is that that gets removed by the centrifuge. [00:12:28] Speaker 01: I'm going to mispronounce this word, but the centrifugation or however one pronounces that verb. [00:12:33] Speaker 01: But you know, the fact that they are using an enzyme is, you know, again, just to take the core back to the 11th circuit decision. [00:12:39] Speaker 01: I think that does illustrate why there's kind of so much transformation happening here. [00:12:44] Speaker 01: This is something so different from cutting or sizing or shaping. [00:12:48] Speaker 01: They really are turning one thing into another. [00:12:50] Speaker 02: But that whole argument, I think, depends on thinking that we're looking at the full thing taken out instead of just the cells within it taken out. [00:13:00] Speaker 02: So it seems like you're using a lot of expertise and explanation for the purpose that maybe comes in an hour deference, but I don't know if it's really unambiguous. [00:13:11] Speaker 01: Well, so I mean, you know, look, to be clear, obviously, we're happy to win on any ground that we can win on. [00:13:16] Speaker 01: But I do want to explain why we think it's unambiguous, maybe not in the kind of colloquial way that one might use the word unambiguous, but in the way that the Supreme Court in Kaiser kind of uses the term, which is our deference comes in once you've utilized every available tool of construction. [00:13:31] Speaker 01: So that is [00:13:32] Speaker 01: text, context, history, structure, sort of all of those available. [00:13:35] Speaker 04: What the 11th Circuit said was this stromal vascular fraction solution is the product of an intensive cell isolation process involving enzymatic digestion that goes much farther than simple rinsing or sizing. [00:13:51] Speaker 04: And so it held that it's an ambiguously not the same [00:13:58] Speaker 04: What was implanted is not the same as what was removed. [00:14:04] Speaker 01: That's correct. [00:14:05] Speaker 01: And maybe just to sort of pair up that point with the question that Judge Freeland was just asking, which is it's not just that we are looking at the amount of manipulation and kind of broadly thinking, therefore, because it's so manipulated, we must be right and the other side must be wrong. [00:14:23] Speaker 01: I mean, I think that is a sort of fair way to think about how to apply the same surgical procedure exception. [00:14:28] Speaker 01: Often, if you are applying a provision in a regulation, you would look at how the other provisions operate, but there's also a textual element to that argument. [00:14:36] Speaker 01: I do just want to make sure I have a chance to tease that out, which is, ultimately, you're trying to interpret the term such HCTP. [00:14:45] Speaker 01: Essentially, the disagreement, at least the textual disagreement here is, how do you conceptualize the HCTP that was removed and the HCTP that was returned? [00:14:54] Speaker 01: Our answer to that question as I was discussing before is the sort of practical you look at what you kind of immediately take out and you look at what you immediately take in the other side's argument is. [00:15:03] Speaker 01: You actually, they don't say it sort of follows automatically. [00:15:05] Speaker 01: They basically say one can choose. [00:15:07] Speaker 01: The surgeons or the manufacturers can choose what they want to kind of count as the relevant HCTP. [00:15:13] Speaker 01: And their view is that it can include sort of little small subcomponents within the sort of first order thing that you remove that can only be accessed through the sort of extensive chemical enzymatic digestion, Joe's word lies, you quoted, that they're using. [00:15:27] Speaker 01: And given that there are so many other provisions of this regulatory structure that are very concerned about manipulation. [00:15:34] Speaker 01: I mean, this is if you look through the drafting history from the original 1997 proposed approach on and you look at how that middle tier of regulation works where you're disqualified. [00:15:45] Speaker 01: If there's too much manipulation and you look at the other areas where there's no regulation at all. [00:15:50] Speaker 01: again, areas where there's absolutely no manipulation. [00:15:53] Speaker 01: Those are all contextual clues, we think, that when you're kind of parsing what such HCTP mean, that it's wrong to think of such HCTP as whatever little subcomponent you could only access through all of those kind of chemical-type steps. [00:16:08] Speaker 04: You wanted to save some time. [00:16:09] Speaker 01: I did, Your Honor. [00:16:10] Speaker 01: Thank you very much. [00:16:22] Speaker 00: May it please the court, Nathaniel Garrett for Appellees. [00:16:25] Speaker 00: I'd like to start where my friend left off on the SSP exception. [00:16:29] Speaker 00: This was an exception adopted 25 years ago, I think with some respect for the practice of medicine and surgery. [00:16:36] Speaker 00: And 25 years on, the government is effectively rewriting the provision in a way that's inconsistent with the text, the purpose, and the history. [00:16:44] Speaker 00: And I'd like to talk about all of those. [00:16:47] Speaker 00: The reason the SSP exception applies here is because the cells that the physicians implant [00:16:52] Speaker 00: The cells have to be the same as what was same cells that were removed. [00:16:56] Speaker 00: Judge Freeland, as you noted, the difference between this case and any stem cell case that's come before is there was a trial where the prime factual dispute was whether those cells were the same as what were taken out. [00:17:06] Speaker 00: The district court concluded on the facts that it was and that it hasn't been appealed. [00:17:10] Speaker 00: Now, admittedly, there is [00:17:12] Speaker 00: tissue that is or there are there are parts that are taken out that are not put back in sort of debris but that's not a drug it's not being used for the intention of treating a medical condition so we don't need an exception for it what we need an exception for is the cells now the district court found that this exception applies just based on a plain reading of the statute so that's where all the regulations so that's where all starts i think it's the most [00:17:34] Speaker 02: And so are you trying to distinguish the Eleventh Circuit on this fact finding? [00:17:38] Speaker 02: You're saying they didn't have such a fact finding? [00:17:40] Speaker 00: I think the Eleventh Circuit still would have come out the same way with that fact, but I think it's important if you start to understand what the text of the regulation really provides. [00:17:49] Speaker 00: I think it's actually the most critical. [00:17:51] Speaker 04: Before we get there, I just want to be clear that [00:17:55] Speaker 04: You are not arguing at all as to the other procedure where the patient goes away and you send out the adipose tissue to another place. [00:18:07] Speaker 00: Not for this exception. [00:18:09] Speaker 04: So what was the finding below on that? [00:18:12] Speaker 00: That, as to this specific issue, the finding was the SSP, the single surgical procedure, applies to the same day procedure, not the expanded procedure. [00:18:20] Speaker 04: Okay, and you're not appealing that? [00:18:21] Speaker 00: We're not appealing that decision. [00:18:22] Speaker 00: We have other grounds for the expanded cells, but for this is just the... Okay, so now you want to look at the regulation? [00:18:29] Speaker 00: Yes, please. [00:18:30] Speaker 00: So what it talks about is an established... It says the FDA won't regulate an establishment that removes HCTPs and implants such HCTPs into the same patient in a single surgical procedure. [00:18:40] Speaker 00: And I think, at root, what we're really talking about is just two terms in that regulation, such and HCTPs. [00:18:46] Speaker 00: And what the district court did is it just said, well, let's look at what are the meaning of those two terms. [00:18:50] Speaker 00: Let's start with HCTPs. [00:18:52] Speaker 00: The definition of HCTPs includes both cells and tissues. [00:18:57] Speaker 00: And by the way, that's not just how the regulation is written now. [00:19:00] Speaker 00: There were four years where this regulation was in process, where the FDA was saying what it was gonna do. [00:19:05] Speaker 00: And time and again, they told us in the guidance document, in the proposed rule, [00:19:09] Speaker 00: This includes cells and tissues or cells or tissues, includes both. [00:19:13] Speaker 00: So it can include cells or tissues. [00:19:14] Speaker 02: But couldn't that just be because sometimes all that is removed is an egg and it's a cell? [00:19:19] Speaker 00: So I think there's two problems with that, Your Honor. [00:19:21] Speaker 00: I mean, the first is there's no actual evidence that oversights can be removed. [00:19:25] Speaker 00: Somebody did testify, oversights can be removed. [00:19:28] Speaker 00: There was no follow up on that as to the fact of that. [00:19:31] Speaker 00: It's actually not true. [00:19:32] Speaker 00: But putting that aside, that would make... Well, isn't it true? [00:19:34] Speaker 02: Isn't that what IVF does? [00:19:35] Speaker 00: I think it still comes out with some tissue material, but even if that is right, Your Honor, that would make this an oversight in tissue regulation, which is rather odd. [00:19:44] Speaker 00: I mean, there's no indication in the regulatory history that what they were talking about, they intended to include eggs and tissues. [00:19:51] Speaker 02: Well, is there any indication that they meant something broader than eggs by cells? [00:19:55] Speaker 00: Well, no, other than they use the term cells repeatedly. [00:20:00] Speaker 00: And I think that would be odd if they just meant one cell. [00:20:02] Speaker 00: I mean, there are times when the FDA identifies certain types of cellular products or other bodily products. [00:20:11] Speaker 03: Even if we were to agree that there's some ambiguity when you look at the text of the exception in isolation, how do you deal with the rest of the 11th Circuit's analysis that's reading the regulation in context and all the things that the Supreme Court directed us to consider before deciding whether there's something. [00:20:29] Speaker 00: Thank you, Your Honor. [00:20:29] Speaker 00: I think it's important. [00:20:30] Speaker 00: So I think the FDA is actually, their interpretation is not consistent with the purpose and the history of this regulation. [00:20:38] Speaker 00: And let me explain why. [00:20:40] Speaker 00: I've talked about somewhat about the history, but they're being saying in the guidance documents that this was meant to be cells and tissues. [00:20:46] Speaker 00: But then you get to the word such, which is according to the government means in its original form, which only allows for certain types of processing, sizing, shaping, cleansing, rinsing. [00:20:55] Speaker 00: So the FDA gave two justifications for the SSP exception. [00:20:58] Speaker 00: They said there's a lesser communicable disease risk. [00:21:01] Speaker 00: and there's no risks associated with storage. [00:21:03] Speaker 00: That's true for our procedure. [00:21:04] Speaker 00: There's lesser communicable disease risk because it's autologous cells and we don't store it. [00:21:10] Speaker 00: Okay, the FDA doesn't actually argue that. [00:21:12] Speaker 00: What they do is they change both of those purposes a little bit. [00:21:16] Speaker 00: So with communicable disease risk, they actually shift to more of a generalized surgical risk. [00:21:20] Speaker 00: They say, well, this surgery is different than other surgeries. [00:21:23] Speaker 00: There's sort of additional risks at issue. [00:21:25] Speaker 00: I think there's three problems with that, Your Honor. [00:21:27] Speaker 00: One, [00:21:28] Speaker 00: As I hope we've established, the sort of question of surgical risk is really outside the FDA's purview. [00:21:34] Speaker 00: They certainly have purview over communicable disease risk, but not generalized surgical risk. [00:21:39] Speaker 00: Two, the language they're relying on comes from the 1997 guidance document where it says we're accepting all these surgeries because the risk will generally be no different from those typically associated with surgery. [00:21:51] Speaker 00: What it does not say is what the FDA is arguing, which is, well, that gives us authority to sort of pick and choose between different surgeries, those that have general risk and those that don't. [00:22:00] Speaker 00: It's not saying that. [00:22:01] Speaker 00: It's saying generally, not always, but generally, if you're doing a procedure where you take cells or tissues, put them back in, generally the risk will be no different. [00:22:08] Speaker 00: So I think the text is against them. [00:22:11] Speaker 00: And finally, there was no evidence at trial that [00:22:14] Speaker 00: at least district court rejected the proposition that the risks are different. [00:22:18] Speaker 00: So that's the first purpose. [00:22:20] Speaker 00: The second, as I said, was storage. [00:22:22] Speaker 00: Well, again, the FDA doesn't argue there's a storage risk. [00:22:24] Speaker 00: What they change to is there's a processing risk. [00:22:27] Speaker 00: This is, I think, a really significant and important point to show how far the FDA has come. [00:22:32] Speaker 00: If you look at the table attached to the 1997 guidance document, it talks about handling and processing controls for cells and tissues. [00:22:41] Speaker 00: And it says, as to the SSP exception, those don't apply. [00:22:45] Speaker 00: Processing and handling is not relevant for purposes of the SSP exception. [00:22:50] Speaker 00: It's relevant everywhere else. [00:22:52] Speaker 03: Why doesn't that just imply they assume there would be no significant processing and handling? [00:22:56] Speaker 00: Well, because they did impose limits on processing and handling in other contexts, Your Honor. [00:23:04] Speaker 00: I mean, it's not just that the FDA is telling us this isn't relevant for us, I think because it would intrude on the practice of medicine, but also because when they do care about processing handling, they put it in the regulation. [00:23:15] Speaker 00: That's the 1271.10 Minimal Manipulation Regulation, right? [00:23:19] Speaker 00: That regulation says you are accepted, there's sort of a middle level of exceptions where there's a certain type of processing. [00:23:28] Speaker 00: Right now, what the government is saying now is, well, actually, you could satisfy minimal manipulation, but not satisfy the SSP exception because our processing rules are stronger. [00:23:38] Speaker 00: I think that has it backwards. [00:23:39] Speaker 00: in terms of saying we're going to impose stronger processing controls on SSP when we told you before they're not relevant and we have this provision that talks about the type of processing permitted. [00:23:52] Speaker 00: I think it's also somewhat inconsistent, Your Honor, their position about processing. [00:23:57] Speaker 00: Their definition of such is in its original form, but I think my friend would concede that [00:24:05] Speaker 00: Tissues and cells are never sort of in their pure original form when they go back in. [00:24:09] Speaker 00: I mean, there's always modification in some way. [00:24:12] Speaker 03: Well, which is why I think they're saying a minimal amount of processing or handling would be permitted. [00:24:19] Speaker 00: And that's fine if that's in the minimal manipulation regulation, which is what it said, but our purpose here today, your honor, is to reconstruct the SSP exception's original meaning. [00:24:28] Speaker 00: And when it was originally enacted in 2001, they said processing controls are not going to apply. [00:24:33] Speaker 00: We're not going to impose processing limitations on the SSP exception. [00:24:38] Speaker 00: And then they have a separate one that does. [00:24:44] Speaker 00: I think there's several other problems with the government's interpretation we haven't talked about. [00:24:49] Speaker 00: One is the surplusage canon. [00:24:51] Speaker 00: We refer to it a little bit with whether I suppose it could be resolved a teeny bit if you say, well, this is an oversight and tissue regulation. [00:24:59] Speaker 00: But otherwise, they're reading cells out of the provision. [00:25:04] Speaker 00: Their answer to that is, well, this is a generalized HCTP definition. [00:25:08] Speaker 00: It applies everywhere. [00:25:09] Speaker 00: Fine. [00:25:10] Speaker 00: But again, if you look at the 1997 guidance, if you look at the proposed rule, it was written in a way to make clear it applied to cells or tissues. [00:25:18] Speaker 00: So it doesn't really account for the history to suggest that somehow in adopting the final rule, they really were just talking about tissues. [00:25:27] Speaker 00: And in terms of the 11th Circuit decision, I'll just hit on that because I recognize that we have a conflicting decision and I recognize we're asking the court to disagree with that decision. [00:25:37] Speaker 00: But I think there's good reason to do so. [00:25:40] Speaker 00: The three things I would highlight is one, the court said the most natural reading of such was in its ordinary form, which only allows for sizing, shaping, cleansing, and rinsing. [00:25:49] Speaker 00: Again, I think our position is that's not a natural reading. [00:25:53] Speaker 00: There's a dictionary definition of such that can be applied here. [00:25:59] Speaker 02: How do you, so you want us to say the only way such can be used here is to say that it is only referring to the cells and not the tissue. [00:26:08] Speaker 02: You're unambiguously, such means we're looking at the cells. [00:26:11] Speaker 00: Well, it means, it means or, it means or. [00:26:13] Speaker 00: It depends on what the, is the sort of HCTP definition I think indicates. [00:26:19] Speaker 00: What really matters is what is the physician intending to implant? [00:26:23] Speaker 00: Sometimes they may be, the HETB definition says articles consisting or containing cells or tissues that are intended for implantation. [00:26:31] Speaker 04: So it's not the intent, it's what the object is, right? [00:26:35] Speaker 00: that is implanted. [00:26:37] Speaker 03: I think the difference is we're looking... It's removed and the tissue is implanted. [00:26:42] Speaker 03: So, I mean, your interpretation is also adding a whole bunch of words that are not in there and we'd have to find ambiguity to even consider that. [00:26:49] Speaker 00: I want to answer that question, but I'm not sure I understand it. [00:26:52] Speaker 03: I mean, the way I read the regulation first is something being removed and then implanted again. [00:26:57] Speaker 03: So you're saying that [00:27:01] Speaker 03: That somehow implies that they're only talking about what the physician intended to implement again. [00:27:06] Speaker 00: No. [00:27:07] Speaker 00: I'm saying the difference between the government and us is that we acknowledge the HCTP definition is written that it could apply to tissues or cells. [00:27:17] Speaker 00: So if what you're intending to implant is cells or tissues, what the SSP regulation is really getting at is, are you putting that back in from the same patient? [00:27:26] Speaker 00: I mean, what it's really worried about is, what it's really trying to do is say, we're not gonna let you put in cells or tissues from somebody else. [00:27:34] Speaker 00: That raises a whole host of communicable disease concerns. [00:27:37] Speaker 00: But if in one procedure, you're doing surgery, you're taking out cells or tissues, you're putting in cells or tissues, [00:27:42] Speaker 00: it applies. [00:27:43] Speaker 02: So we're saying that you don't dispute that you're taking out tissue. [00:27:48] Speaker 00: We don't. [00:27:48] Speaker 00: And we don't dispute that in every surgery you are taking out more than you are putting back in. [00:27:53] Speaker 00: You're changing it in some way. [00:27:55] Speaker 02: And so you need it to be unambiguous that even though you're taking out tissue, you can be intending only to be taking out cells and putting back cells. [00:28:03] Speaker 02: And maybe you can make an argument that that's a good, you know, somehow the better reading. [00:28:09] Speaker 02: But I don't see how you can say it's the unambiguous reading. [00:28:11] Speaker 00: Well, again, I think it's, as Judge Bernal found, it's putting the language again with the history and purpose. [00:28:19] Speaker 00: I mean, I think the history and purpose is really, as we're saying, really about using the cells or tissues from that patient. [00:28:26] Speaker 00: It's not about processing. [00:28:28] Speaker 00: The FDA told us it wasn't about processing or the steps. [00:28:31] Speaker 02: It told us... But so where in this... I guess I'm not seeing where in this history we get the idea that if you take out tissue, you can still consider it to be putting back cells and that that's all that matters. [00:28:41] Speaker 00: Well, I think that's where we go back to the concession the government made at SCR 252 that, you know, they had this oversight example, but otherwise conceded, you can't remove cells without tissues. [00:28:53] Speaker 00: So if cells mean something, if the repeated use of cells or tissues by the FDA before they enacted the rule means something, it means they were thinking about [00:29:05] Speaker 00: taking out cells isolating them and putting back in whether it's from blood. [00:29:08] Speaker 02: But given that there is the egg example I guess I don't see how you can get to it being unambiguous. [00:29:18] Speaker 00: The egg example let me be clear. [00:29:21] Speaker 00: There was a witness who said, I think you can do one. [00:29:23] Speaker 00: They didn't mention that at that position. [00:29:25] Speaker 00: They didn't actually explain the factual basis for that. [00:29:29] Speaker 02: I mean, what the witness may be stumbled at in this trial, it's pretty obvious you can take out eggs. [00:29:35] Speaker 02: And so that could be what the FDA meant. [00:29:37] Speaker 02: I don't know how that went. [00:29:38] Speaker 00: I don't think there's any evidence about the FDA intending in 1997 when they started writing this regulation that they meant this to be an egg. [00:29:47] Speaker 00: and tissue rule, which would be particularly odd since there are specific regulations about reproductive cells and tissues. [00:29:54] Speaker 00: I mean, for example, you are completely exempt if you transfer reproductive tissue between sexually active partners. [00:30:01] Speaker 00: I mean, they were thinking. [00:30:02] Speaker 03: I mean, I think the agency was writing a rule that was [00:30:06] Speaker 03: I mean, to be fair, couldn't necessarily anticipate all the things that the medical community would come up with to try and do. [00:30:16] Speaker 03: So I don't think the fact that there may be a limited number of procedures in which you could only extract cells right now means that that regulation unambiguously must contemplate [00:30:32] Speaker 03: the processing, removal of tissue and the processing of that down to cells? [00:30:37] Speaker 00: I think it's probably right, Your Honor, that they didn't anticipate where we are today 25 years later. [00:30:44] Speaker 00: But I think then we're left with two options. [00:30:46] Speaker 00: One is to interpret [00:30:48] Speaker 00: the regulation according to the definitions provided, the dictionary definitions of the term, or the other is to, I think what the FDA is really doing is rewriting the regulation without going through notice and comment. [00:31:00] Speaker 00: I mean, to import the term in its ordinary form, which only allows for these four types of processing, into one word, such, I think is a weight it cannot bear. [00:31:10] Speaker 00: And I think that's why the district court said, I'm just going to give such its dictionary definition. [00:31:15] Speaker 00: I'm going to conclude this, the FDA intended to allow both cells or tissues to be the HCTP. [00:31:22] Speaker 00: And if you do that, then it includes this surgery. [00:31:26] Speaker 00: It really includes all surgeries where, now there is a limiting principle, which we acknowledge, that may not be met in other cases like this. [00:31:33] Speaker 00: The cell has to be the same biologically unaltered cell that was removed. [00:31:39] Speaker 00: And that was, again, the sort of focus of the trial. [00:31:41] Speaker 00: So it may be that cells are altered in some meaningful way in other surgeries. [00:31:47] Speaker 03: I mean, the 11th Circuit clearly disagreed and found that the regulation considered all the things we're supposed to consider was unambiguous in favor of the FDA's interpretation. [00:31:57] Speaker 03: I think for you to avoid even what the district court decision [00:32:04] Speaker 03: that preceded the 11th Circuit decision, which essentially reached our deference, right? [00:32:09] Speaker 03: You'd have to say that the regulation unambiguously means what you think it means. [00:32:14] Speaker 03: But what if we think it's ambiguous? [00:32:16] Speaker 03: How do you deal with the our deference? [00:32:17] Speaker 00: Sure. [00:32:18] Speaker 00: So turning to our deference, Your Honor, I don't think the government meets any of the three criterion for our deference. [00:32:26] Speaker 00: I think we've talked about the first. [00:32:30] Speaker 00: element and I think your question presupposes I'm wrong on that about it being genuinely ambiguous after going through all the canons of construction but I will note I don't I don't beyond the sort of question the questions I've been asked which is sort of what was the FDA's intent originally I don't think the FDA has a good answer to the canons of construction arguments we make in terms of [00:32:50] Speaker 00: their interpretation violates several canons. [00:32:53] Speaker 00: But putting that aside, so the interpretation has to be reasonable, which the Supreme Court has said sort of means within the zone of ambiguity that's created. [00:33:03] Speaker 00: I think our basic point there is, again, that to the extent HTTP is already defined, so I'm not sure how much ambiguity is in that, but such is not defined [00:33:15] Speaker 00: I think our basic point, as I've already said, is to the extent that term is ambiguous, to import these processing in its ordinary form requirements is really a rewriting rather than an interpretation. [00:33:28] Speaker 00: And then in terms of the authoritativeness, Kaiser cited a Seventh Circuit case called Exelon for the proposition that the government can sort of disclaim the authoritativeness of the document it's seeking to rely upon. [00:33:42] Speaker 00: And Exelon was a case involving the nuclear, I'll just give the background because I think it's analogous. [00:33:48] Speaker 00: The Nuclear Regulatory Commission had a manual that they said was not binding and they didn't expect their licensees to commit to using it. [00:33:56] Speaker 00: And the seventh circuit said you sort of taken away the authoritative gloss of that document and our point is the 27 guidance document is what they're seeking deference to and that document says it's not binding creates no responsibilities on us or you. [00:34:10] Speaker 00: These are only recommendations. [00:34:12] Speaker 00: So I don't think there's much daylight between those [00:34:15] Speaker 00: uh... two scenarios where they're in excellent the regulation explicitly said other than written other than a written interpretation by the general counsel and that wasn't what the thing was we don't have anything as expresses that in this regular what we do we do have a statute that the government relies on i think actually hurts them which which talks about uh... congress telling the secretary they they should be what can create or confer any rights on people through these guys documents i mean i think in a way that's congress saying [00:34:42] Speaker 00: You can issue guidance documents, but they're not going to be sort of authoritative on these issues. [00:34:49] Speaker 02: Well, they don't get Chevron deference, I guess. [00:34:52] Speaker 02: But is there any doubt that this is the FDA's position on this issue, such that we could look at it for our deference? [00:35:01] Speaker 00: Well, I don't think it's a question of that it's the FDA's position. [00:35:06] Speaker 00: I think it is. [00:35:07] Speaker 00: But I think our point is simply that under Exelon, if they [00:35:11] Speaker 00: if they sort of say this is just the recommendations, you don't have to follow it, there's sort of an unfair surprise element to it in then saying this gets deference later on. [00:35:22] Speaker 04: Is there anything in the record about how prevalent this process is now across the United States? [00:35:33] Speaker 00: Not that I can recall, Your Honor. [00:35:34] Speaker 00: There was testimony, Judge Wardlaw, about how often these physicians have done the practice, but not have the prevalence of it across the United States. [00:35:47] Speaker 00: Any further questions from the panel? [00:35:50] Speaker 00: Thank you, Your Honor. [00:35:51] Speaker 04: Thank you. [00:35:56] Speaker 04: Mr. Jed? [00:35:57] Speaker 01: Just a few quick points, Your Honors. [00:35:59] Speaker 01: First, my friend tried to, I think, make some hay of the kind of intended for implantation clause at the end of the sentence in the same surgical procedure exception. [00:36:10] Speaker 01: I just want to make sure that this doesn't get confused. [00:36:13] Speaker 01: That modifier at the end, intended for implantation, [00:36:16] Speaker 01: applies to, it's basically saying that if you remove something where there's then kind of something in it that you intend for implantation, then it counts as an HCTP. [00:36:25] Speaker 01: So I just want to make sure, because in district court, my friends had made some argument that maybe definitionally adipose wasn't an HCTP in the first place, because the modifier wouldn't apply. [00:36:35] Speaker 01: I don't think that's what they're saying here, but I do just want to make sure that that hasn't gotten confused. [00:36:39] Speaker 04: I think what they're saying, or at least what I understand they're saying, [00:36:44] Speaker 04: is that in the definition of what HCTPs are, that they're cells or tissues, so that we can freeze those to look at the adipose tissue as opposed to the cell, that are intended for implantation. [00:37:01] Speaker 04: And they're using that language to say, because the doctor intends for implantation only the cells and not the tissue, that it's not [00:37:14] Speaker 04: it's not, it satisfies the same procedure exception. [00:37:20] Speaker 01: Well so remember we're looking at that definition of HCTP and so if they were saying, and I don't think this is what they're saying, this certainly isn't what the district court was saying, but if they were saying that by definition the adipose is not an HCTP because the only intent was to return the cells, [00:37:36] Speaker 01: Not only is that not what the district court said, but more to the point, it says consisting of or containing cells that are intended for implantation. [00:37:45] Speaker 01: So that modifier at the end, just under the rule of the last hand to seed it. [00:37:48] Speaker 01: sort of applies to anything as long as they're kind of components that are intended for implantation. [00:37:53] Speaker 01: On their other definitional argument, their superfluidity argument, I mean, as an initial matter, as we point out, because the definition is meant to apply to this entire regulatory structure, even were the word cell superfluous as applied to one particular subsection that wouldn't create a superfluidity problem. [00:38:10] Speaker 01: But I do just want to flag, I think a number of questions from the panel were pointing out, you know, look, this was obviously meant to address an area of evolving science. [00:38:17] Speaker 01: And you don't have to take my word for it or just sort of take the obvious conclusion from a regulatory structure that addresses [00:38:24] Speaker 01: tissues and cells. [00:38:25] Speaker 01: If you look at, I think it's page eight of the 1997 proposed approach, there FDA makes clear that one of the points is to develop a framework that will operate as science continues to evolve. [00:38:36] Speaker 01: Finally, I just want to briefly talk about the issue of our and Kaiser deference. [00:38:40] Speaker 01: I took my friend as an initial matter to be saying that somehow because FDA didn't anticipate this development of science, that therefore they would have to amend the regulation. [00:38:50] Speaker 01: I mean, I think it's sort of black letter law and Kaiser spells this out pretty clearly that as new unanticipated things come up where Kaiser deference is appropriate, the agency applies its expertise and sort of figures out how that maybe undeveloped fact kind of slots into the relevant regulation. [00:39:06] Speaker 01: The Supreme Court in Kaiser actually gives an example of trying to bring truffle pace through a security checkpoint at an airport. [00:39:13] Speaker 01: and whether truffle paste is a liquid, probably something that the TSA didn't think too hard about when they devised those initial regulations. [00:39:20] Speaker 01: But nonetheless, it's a sort of policy expertise-driven consideration that FDA had to apply to those facts. [00:39:26] Speaker 01: My friend's other main argument is just that FDA are not surgery experts. [00:39:31] Speaker 01: Obviously, this sort of depends on his idea that a lot of this seems like surgery. [00:39:34] Speaker 01: But I just want to sort of step back for a moment and say, I take the point of the same surgical procedure exception to be, [00:39:40] Speaker 01: If you are creating something that is entirely new, and then you're going to inject it into a patient, at that point, FDA no longer thinks of it as surgery. [00:39:49] Speaker 01: The whole point of the statutory framework is if you create something new, as these folks do, and the new market is a cure for a bunch of disease, then you have to go through the normal steps for getting FDA assurance of safety and efficacy. [00:40:01] Speaker 01: And just in case this has gotten confused, and Judge Ward, I think this may answer one of your questions as well. [00:40:06] Speaker 01: We're not saying that they can never manufacture or create this. [00:40:09] Speaker 01: All that we're saying is that they have to go through some of the relevant steps. [00:40:13] Speaker 01: Judge Ward, the district court record actually includes a discussion by an FDA official about the fact that they're pending investigational new drug applications for products like this one. [00:40:21] Speaker 01: If Your Honor is interested in extra record material, I can tell you that there are a number of pending and actually in effect INDAs, and although the content of INDAs is not really confidential, if Your Honor Googles, you can actually find some companies that have issued press releases announcing that. [00:40:36] Speaker 02: Sorry, could I ask just one more question? [00:40:38] Speaker 02: I know we're over the time, but if we were to agree with you in reverse, and I don't know if we're going to do that, but if we were, are there issues that still need to be resolved? [00:40:46] Speaker 02: Like, do we need to give any instructions to the district court? [00:40:49] Speaker 02: What is going on procedurally at that point? [00:40:51] Speaker 01: So I think it would effectively be a vacate and remand. [00:40:55] Speaker 01: So, you know, obviously the district court issued judgment against the government based on its two main conclusions that none of the products at issue are drugs and that the same surgical procedure exception applies. [00:41:06] Speaker 01: So I think essentially this court would need to say that both of those are wrong and send those back, although [00:41:11] Speaker 01: We think that whether these things are adulterated or misbranded is kind of approaching the level of legal conclusion. [00:41:17] Speaker 01: It does depend at least a little bit on some facts that were put on in trial, because you, of course, do need to actually know how the thing is manufactured, what's put on it. [00:41:26] Speaker 01: And although I suppose it might be theoretically possible on the existing record for this court just to straight out reverse, that's not what we've asked for. [00:41:33] Speaker 01: I think it would go back before the district court to make those conclusions in the first instance. [00:41:37] Speaker 02: And it would go back to your request for an injunction. [00:41:40] Speaker 01: That's correct. [00:41:41] Speaker 02: And what scope that should have or anything. [00:41:43] Speaker 02: All of that would be for the district court. [00:41:44] Speaker 02: That's correct. [00:41:46] Speaker 01: Unless the court has any other questions. [00:41:48] Speaker 04: All right. [00:41:48] Speaker 04: Thank you very much, both counsel. [00:41:50] Speaker 04: Excellent argument. [00:41:52] Speaker 04: US versus California Stem Cell Treatment Center is submitted, and the session of the court is adjourned for today. [00:42:18] Speaker 02: This court for this session stands adjourned.