Following a lengthy litigation, the co-founders of the Stem Cell Institute of America and related companies have been prohibited from promoting and selling stem cell therapies under a federal district court order. The court, in the case of Federal Trade Commission and State of Georgia v Steven D Peyroux and others, also issued a separate order requiring the defendants to pay $1,845,0000 in civil penalties and $3,310,146 in refunds to 479 consumers, totalling $5,155,146 million.
This was the result of a complaint lodged in 2021, where the Federal Trade Commission (FTC) and the Attorney General's Consumer Protection Division of Georgia jointly sued the defendants for advertising stem cell treatment to the senior and disabled communities by providing false representations that it would treat various orthopaedic conditions including arthritis. These statements are not backed up by concrete evidence.
The allegation in the complaint was that the stem cell treatment that the defendants provided was comparable or superior to surgery, steroid injections and painkillers. Each procedure was priced at $5,000. Some patients received more than one injection. In addition, the complaint stated that the defendants provided chiropractors and other practitioners with different methods of misleading the patients about these therapies.
Peyroux, trained as a chiropractor, was both the founder and owner of Superior Healthcare LLC (SHC). This entity offered a number of healthcare services, including stem cell procedures. He initiated Physicians Business Solutions LLC (PBS), a consulting commercial practice that provided courses to chiropractors and other practitioners on business developments. Detelich, an ex-chiropractor and associate of Peyroux's, started employment with PBS and he managed the daily operations.
Peyroux and Detelich established Stem Cell Institute of America (SCIA), an entity that delivered coaching to chiropractors and other practitioners regarding the strategies to incorporate stem cell therapies in their business operations. SCIA introduced its clients to patient recruitment via commercials, organising free-of-charge seminars and performing consultations.
The regulatory bodies also alleged that the defendants sent invitations to the public to attend free-of-charge seminars, during which they promoted SHC as a SCIA clinic that would offer stem cell therapies as medical procedures for joint pain and several orthopaedic conditions. When the sessions concluded, the employees on duty endeavoured to arrange consultations for interested attendees.
According to the complaint, the defendants began offering a stem cell therapy course via PBS that was similar to SCIA's services in 2018. PBS trained the clients regarding the creation and promotion of regenerative programme in multiple pathways including meetings, workshops as well as one-on-one consultations. Furthermore, the clients can access to PBS University, an online course which include recordings. In addition to providing false and misleading statements, the allegation was that the defendants violated Georgia's Fair Business Practices Act (FBPA), which was connected to delivering false or deceptive material via a computer network. SHC filed for bankruptcy after the investigation began.
On all counts, the US District Court for the Northern District of Georgia issued a summary judgment in March 2024 favouring the AG of Georgia and the FTC. The court held that the defendants had engaged in false and misleading representations regarding the effectiveness of the medical procedures, which amounted to unlawful acts and practices under Georgia's Act (FBPA).
It is interesting to note that collaborations exist between diverse regulators when it comes to enforcing the regulation in the stem cell field; in this present case, it is the FTC and the state AG. Usually, the Food and Drug Administration (FDA) functions independently, but this is not desirable as this agency alone cannot effectively take enforcement action against multiple errant businesses. Various obstacles have gotten in the way of effective enforcement by the FDA, such as the limited resources they encounter. Indeed, there is a need for stringent laws and effective enforcement over these dodgy private establishments that provide stem cell therapies that the FDA does not endorse.
According to Leigh Turner, professor of Health, Society and Behaviour at the University of California, Irvine, 'This collaborative effort involving the Federal Trade Commission and the Georgia Attorney General’s Consumer Protection Division is a good example of how federal and state agencies can work together to investigate and take legal action against businesses using deceptive marketing claims to sell purported stem cell treatments.
'Appreciating the important role of the FDA in responding to companies selling unapproved and unproven stem cell interventions, it is vital that the FTC and state agencies such as Attorneys General Offices and state medical boards also respond to the proliferation of businesses violating laws and regulations while marketing purported stem cell treatments and other regenerative medicine products. This case reveals how such collaborative efforts can lead to consequential outcomes that will help better protect patients and consumers from predatory businesses.'
State Attorneys General have, on their own, taken enforcement action against unscrupulous stem cell businesses resorting to applying their respective state consumer protection and false advertising statutes. Moreover, the FDA and FTC have collectively sent warning letters to those errant businesses. While the FDA performs a vital role in regulating drugs and biologics, it is crucial that multiple other government regulatory organisations (federal as well as state), such as the state AGS, state medical boards and the FTC, play dynamic roles in backing the FDA's duties to protect public health and to preserve the legitimacy of the stem cell field.
As Professor Hank Greely at Stanford Law School, California, said: 'Having multiple agencies trying to regulate stem cells can be a good thing, especially if they coordinate on targets and share information. A big advantage is that having different jurisdictions involved (state and federal) means political resistance in one jurisdiction might not stop action by a second. Thus, I will be surprised if the second Trump Administration goes after illegal or even fraudulent stem cell remedies and clinics very hard (or perhaps at all), which makes state attorneys general very important (at least, in states that favour regulation).'
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