ST. LOUIS — Vitti Labs, a tissue bank with more than 20 years of experience providing human tissue products to healthcare professionals, has filed a lawsuit against the U.S. Food and Drug Administration for imposing what the company describes as unnecessarily restrictive regulations on one of its products.
Derived from ethically donated umbilical cord tissue, CORDGRAFT is designed to serve as a protective barrier and cushion for exposed nerves and tendons during surgical procedures, according to a complaint filed Jan. 7 in U.S. District Court for the Western District of Missouri.
The dispute centers on the FDA’s decision to classify CORDGRAFT as a "biologic" product under Section 351 of the Public Health Service (PHS) Act, subjecting it to stringent premarket authorization requirements.
Vitti Labs claims that the product should instead be regulated under the less burdensome Section 361 framework, which governs minimally manipulated human tissue products.
The crux of the FDA’s ruling lies in a single step of CORDGRAFT’s manufacturing process: cutting the umbilical cord tissue lengthwise to flatten it before creating sheets.
According to the FDA, this step transforms the tissue into a biologic product, requiring extensive regulatory oversight.
Vitti Labs argues that this interpretation is inconsistent with the agency’s longstanding policies, which recognize cutting as a form of minimal manipulation that does not alter the tissue’s fundamental characteristics.
In its complaint, Vitti Labs alleges that the FDA violated the Administrative Procedure Act (APA) by failing to adhere to its own regulations, provide a reasoned explanation for its decision, and consider relevant evidence supporting the classification of CORDGRAFT as a Section 361 product.
The company claims the FDA’s actions represent a departure from its established approach to regulating human tissue products, which aims to balance public health protection with fostering innovation and accessibility.
The Section 361 framework, established in 2001, is designed to regulate human cells, tissues, and cellular and tissue-based products (HCT/Ps) based on their potential risks.
Products qualifying under this category are exempt from the rigorous premarket review process required for biologics or drugs.
Vitti Labs argues that CORDGRAFT meets these criteria, as the tissue is minimally manipulated and intended for homologous use.
Vitti Labs is seeking a court order to vacate the FDA’s decisions and remand the case for reconsideration.
The company claims that the FDA’s actions could hinder innovation in the tissue banking industry and limit the availability of affordable and effective surgical products for healthcare professionals and patients.
"FDA’s final decision violates the APA because it is contrary to the plain language of the HCT/P regulations or any reasonable interpretation thereof, and is also arbitrary and capricious because FDA fails to adhere to numerous statements in the preamble to such regulations and in FDA guidance indicating, inter alia, that merely cutting an umbilical cord lengthwise would not alter the relevant characteristics of its component part (Wharton’s jelly) to serve as a barrier, cover, or cushion in a recipient," the complaint states. "Again, FDA fails to adequately explain its decision or its departure from well-established positions regarding minimal manipulation, and accordingly also constitutes a lack of fair notice and unfair surprise."
The plaintiff argues that the FDA’s final decision also violates the APA and constitutes arbitrary and capricious decision-making because it does not consider all relevant evidence demonstrating that CORDGRAFT is eligible for regulation exclusively under Section 361 and would not otherwise qualify as a biologic product under the PHS Act.
"FDA also acted in an arbitrary and capricious manner when it treated CORDGRAFT differently than similarly situated HCT/P products, including the Stravix products and DBM," the complaint states."
Vitti Labs is seeking an order vacating and remanding FDA's RFD and RFR decisions and an order declaring CORDGRAFT meets the criteria to be regulated solely under Section 361 of the PHS Act.
Vitti is represented by Michael F. Barzee of Shaffer Lombardo Shurin; and Eric P. Gotting of Keller and Heckman.
Attorneys for the parties did not respond to requests for comment before publication.
U.S. District Court for the Western District of Missouri case number: 4:25-cv-00011