United States v. Loran Medical Systems, Inc.

District Court, C.D. California
1997 WL 1008675, 25 F. Supp. 2d 1082 (1997)

ELI5:

Rule of Law:

The FDA possesses broad statutory authority to regulate novel cellular therapies as both "biological products" under the Public Health Service Act and "new drugs" under the Food, Drug, and Cosmetic Act if they are intended to treat disease and lack general recognition of safety and effectiveness.

Facts:

Defendants Loran Medical Systems, Bent Formby, and Ernest Thomas, M.D., imported neonatal rabbit and human fetal cells (the "Cell Product") from Russia.
Defendants promoted and used the Cell Product for the treatment of human diabetes.
Defendants claimed that injecting the Cell Product into patients would stimulate the body's natural production of insulin.
The treatment involved injecting the cells into a specific area of the abdomen designed to evade the human immune system's rejection response.
The procedure was intended to allow rabbit cells to produce insulin immediately while the human fetal cells matured.
Defendants did not obtain FDA approval before importing, selling, and using the Cell Product.

Procedural Posture:

The United States (Plaintiff) filed suit against Loran Medical Systems and associated individuals (Defendants) in federal district court seeking to enjoin the use of the Cell Product.
The district court granted a temporary restraining order (TRO) enjoining Defendants from importing the Cell Product.
The district court entered a preliminary injunction against the Defendants, finding the government showed a reasonable probability of success on the merits.
Plaintiff filed a motion for summary judgment seeking a permanent injunction.
Defendants filed a cross-motion for summary judgment arguing the product was outside FDA jurisdiction.

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Issue:

Does the FDA have regulatory jurisdiction over a medical product consisting of imported animal and human fetal cells used to treat diabetes, thereby requiring premarket approval as either a biological product or a new drug?

Opinions:

Majority - District Judge Wilson

Yes, the FDA properly exercises jurisdiction because the Cell Product qualifies as both a biological product and a new drug under federal law. The court applied the Chevron deference standard, finding the FDA's interpretation of the relevant statutes to be reasonable. First, the product is a "biological product" because it is analogous to a toxin or antitoxin; it functions through a "specific immune process" by attempting to evade the body's natural immune response to foreign cellular material. The lack of genetic alteration is irrelevant to this classification. Second, the product constitutes a "drug" because it is intended to treat disease (diabetes). Furthermore, it is a "new drug" because it is not generally recognized among experts as safe and effective. The Defendants failed to provide consensus of expert opinion, adequate well-controlled clinical investigations, or published medical literature supporting the product's safety. Consequently, the FDA has the authority to regulate the availability of the product, and the court granted the permanent injunction.

Analysis:

This decision reinforces the FDA's expansive authority to regulate emerging biotechnologies, specifically somatic cell therapies, even when they do not fit traditional definitions of "drugs" or "vaccines." By applying Chevron deference, the court validated the FDA's ability to adapt statutory definitions—such as "biological product"—to cover novel treatments that manipulate the immune system. The ruling also clarifies the high bar for the "practice of medicine" exemption, establishing that while the FDA cannot tell doctors how to practice, it absolutely controls the availability of the substances they wish to prescribe. Additionally, the case underscores the strict evidentiary burden required to bypass FDA review under the "generally recognized as safe and effective" (GRASE) exception.

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