Scott Bruder, MD, PhD, speaks at an Instructional Course Lecture at the AAOS 2022 Annual Meeting focused on the complex regulations surrounding the use of orthobiologics

AAOS Now

Published 10/11/2022
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Patrick Daly

ICL Elucidates Regulatory Guidelines on Orthobiologics

Orthobiologics was a burgeoning topic at the 2022 AAOS Annual Meeting, held March 22 to 26 in Chicago. Scott Bruder, MD, PhD, founder and CEO of Bruder Consulting & Venture Group, was the first presenter in the Instructional Course Lecture (ICL) titled “Orthobiologics Use and Marketing: U.S. Food and Drug Administration, Federal Trade Commission, and Ethical Compliance,” which discussed the complex regulations surrounding the use of orthobiologics.

How big is the orthopaedic products industry?
Dr. Bruder provided an overview of global orthopaedic product sales—a $47.5 billion market in 2020, according to the OrthoWorld Annual Report. Nearly 10 percent of that market, or approximately $4.5 billion, represented the orthobiologic market share.

He stated that about two-thirds of the orthobiologics market belonged to the 10 largest names, but the other third, almost $2 billion in sales, came from more than 200 companies—each with an average of about $10 million in sales. Dr. Bruder attributed the rapid growth of the orthobiologics industry in part to increased patient interest driven by an aging population seeking to preserve an active lifestyle or delay total joint replacement surgery.

“We are now in the age of biology,” Dr. Bruder said. “Patients are coming in with questions, and they are also coming in with stuff like this,” he said, bringing up a photo of a dubious “stem cell therapy” product package which proclaimed to require: no makeup, no injections, no surgeries, and even no doctors.

What FDA guidelines mean for surgeons
Given the growing relevance of orthobiologics in 2017, the FDA began publishing guidelines on what it categorized as “human cells, tissues, and cellular and tissue-based products (HCT/Ps).”

Dr. Bruder emphasized that surgeons need to understand the FDA regulations on HCT/Ps to avoid violating regulations by unintentionally acting as a biological manufacturing facility, which requires a biologics license application (BLA) designation.

The “same surgical procedure” exception
The first FDA document that Dr. Bruder focused on included the “same surgical procedure” criteria. In practice, HCT/Ps that are removed and implanted within a single surgical procedure do not violate FDA regulations so long as they are performed without what the FDA calls “additional processing.”

Dr. Bruder provided examples of exempt procedures, including vascular grafting in coronary artery bypass surgery, harvesting of the iliac crest in autogenous bone grafting, meshing of skin grafts in burn wounds, cutting of parathyroid glands, and adipose tissue recovery and removal of blood and debris “without disrupting the microarchitecture or isolating cell fractions for re-implantation.”

On the other hand, procedures that use enzymatic or mechanical methods on adipose tissue, bone marrow, or even soft connective tissues in order to activate or isolate a subpopulation of cells would not be exempt. “If you are doing things like that, you are out of specification, and you are acting like a [biological] manufacturing facility, for which you need a biological license,” Dr. Bruder cautioned.

Minimal manipulation and homologous use
The more nuanced guidance, according to Dr. Bruder, is the “minimal manipulation and homologous use” documentation. In practice, these guidelines allow physicians to utilize adipose tissue, bone matrix, allografts, and certain kinds of amniotic membranes, as long as they are left intact. For instance, amniotic tissue cannot be chemically extracted, ground up, and injected, and it cannot be claimed to treat osteoarthritis, heal wounds, reduce scarring, or decrease inflammation, Dr. Bruder said. “These things are indications that require a biological license for a sponsor to sell that product.”

Additionally, procedures that involve any type of cell culturing, manipulation, culture expansion, or collection of exosomes are subject to BLA criteria. Here, Dr. Bruder’s slides referenced “hundreds of strip-mall stem-cell clinics and physician-owned ambulatory surgery centers” which are in clear violation of FDA guidelines.

According to Dr. Bruder, the FDA sent those clinics warning letters due to promotional claims on their websites or marketing materials which suggested they may be using some of these products in a way that would require a BLA.

FDA designations: 361 versus 351
Orthobiologic products that meet all the exemption criteria are granted allowable indications in orthopaedic surgery under Section 361. However, nonexempt products must go through the 351 Pathway, the longest and most costly regulatory review pathway, to acquire a BLA for a specific indication. Notably, products that have acquired premarket (PMA) or BLA approval have the highest chance to be covered by insurance and reimbursed, Dr. Bruder explained.

Although some products are eligible for expedited review programs, such as the Regenerative Medicine Advanced Therapy (RMAT) designation, only two products had been granted RMAT clearance for orthopaedic indications at the time of the presentation. Specific reimbursement carve-outs for platelet-rich plasma, bone marrow aspirate concentrate, and other novel orthobiologic therapies are “years away,” according to Dr. Bruder.

Misrepresentation of FDA status
When companies misrepresent the FDA status of biologic products, healthcare providers may be liable, Dr. Bruder described. He shared anecdotal stories of healthcare providers who had been lied to by manufacturers and sales representatives who claimed their products were self-certified as Section 361 exempt, when they were actually subject to BLA regulations. In some cases, physicians were told that they could send reimbursement claims for these misrepresented products to Medicare using a specific “Q-code.” However, Q-codes do not signify any level of FDA clearance, approval, or exemption, and Q-codes notably cannot be used to reimburse anything that was used for an off-label indication. “If you use an incorrect code for billing with an unapproved product, that’s fraud,” Dr. Bruder warned.

Dr. Bruder reported that almost a billion dollars in fraudulent charges related to misrepresented orthobiologic products were made to the Centers for Medicare & Medicaid Services, leading to the federal “clawback” program on incorrectly coded claims processed and paid on or after Dec. 6, 2019. “They are coming to recoup that money, and they are not fooling around,” Bruder said.

Regarding fraudulent coding for orthobiologic products, Dr. Bruder implored: “If you were involved in any of this, stop now.” Though he assured that manufacturers would be subject to other federal and state penalties, he stated that healthcare providers would be the first group that federal agencies target for these clawbacks and that physicians were unlikely to obtain money from either manufacturers or patients.

Dr. Bruder noted that the claims for just five injections per week would equate to roughly $1 million dollars in fees. As such, Dr. Bruder advised that physicians should immediately engage legal counsel and consider negotiating for a payment plan if contacted by federal agencies. He argued that federal leniency was “unlikely” given the advanced warnings about these payments.

The most important guideline
Dr. Bruder also highlighted the “most essential” guidance from the 2017 HCT/P FDA documents, which established that physicians can use any legally available product that has any basis for commercial sale however they see fit, according to their best clinical judgment—including Section 361 exemptions and 510(k), PMA, and BLA designations.

However, the guidelines do not protect physicians who use exosomes, stem cells, or other products that do not yet have regulatory clearance for sale (except in the course of FDA-registered studies under review).

Dr. Bruder closed that it is necessary for clinicians, scientists, and sponsors to understand the FDA, U.S. Federal Trade Commission, and ethical guidance regarding orthobiologic therapies, and he reemphasized that the FDA does not govern the “practice of medicine.” He also advised that providers challenge sales representatives for FDA documentation and carefully control the claims they present related to orthobiologic products, especially testimonials.

Overall, Dr. Bruder called for physicians to hold themselves to a high standard, educate themselves and their patients, and encourage their peers to do the same.

The other panelist in ICL 203, “Orthobiologics Use and Marketing: U.S. Food and Drug Administration, Federal Trade Commission, and Ethical Compliance,” was Joanne Halbrecht, MD, FAAOS.

Patrick Daly is a medical writer for AAOS Now.

References

  1. OrthoWorld: The Orthopaedic Industry Annual Report ® 2021. Available at: https://www.orthoworld.com/form-the-orthopaedic-industry-annual-report-2021/. Accessed Aug. 8, 2022.
  2. FDA: Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue-Based Products: Minimal Manipulation and Homologous Use. FDA-2017-D-6146. Nov. 17, 2017. Updated July 2020.

The AAOS Biologics Dashboard is a trusted, ongoing resource

Recognizing the need for clarity and conciseness in the evolving field of biologics, AAOS hosts the Biologics Dashboard, an interactive resource to help orthopaedic surgeons navigate the use of biologic-based interventions.

Using four basic pieces of information on a biologic product (tissue type, tissue source, processing, and intended use); members can view relevant regulatory guidance, rationale for guidelines on treatment and intended use; and a red, yellow, or green stoplight recommendation for the product. The stoplight metaphor allows the Dashboard to synthesize complex information in a way that is intuitive and easy to use, while retaining scientific accuracy and providing references to the source material.

The Biologics Dashboard is applicable for biologic interventions whether they are regulated as human cells, tissues, or cellular and tissue-based products (HCT/Ps) or devices. For HCT/Ps, the Dashboard also considers the criteria required for regulatory exemption under Section 361, including the defined criteria for minimal manipulation, homologous use, combination with another article, and autologous use, citing relevant published guidance in its categorizations.

AAOS members can access the Biologics Dashboard at www.aaos.org/biologicsdashboard. Additional information about the tool is outlined in the AAOS Now article titled “AAOS Presents the Biologics Dashboard: An Intelligent Information System,” published in November 2020.