FDA Watch: How Could the Change in US Government Affect IVDs and Labs?
Experts say new leadership could impact the cost and availability of IVDs as well as patients’ ability to afford lab testing
With the Donald Trump administration soon to take office, laboratory leaders may be wondering how the change in leadership may impact the diagnostics industry. Trump’s plans to slap tariffs on imported goods, as well as his choice of Robert F. Kennedy Jr. as secretary of the Department of Health and Human Services (HHS), which includes the FDA, could potentially impact the cost and availability of medical devices—including in vitro diagnostics (IVDs)—according to analysts.
Other experts note that Trump’s choice of celebrity doctor Mehmet Oz to head the Centers for Medicare & Medicaid Services (CMS) could impact the ability of certain patients to afford lab testing services. However, some are hopeful that a change in leadership could put a halt to the agency’s laboratory-developed test (LDT) rule, which the industry believes would stifle innovation and availability of such tests.
Specific impact on in vitro diagnostic devices
Though concerns have been raised about the impact to medical devices overall, when it comes to in vitro diagnostic devices specifically, the change in administration may not have a huge impact on approvals, “because life-saving health care is everything,” says Selena Yu, senior medical analyst at data and analytics company GlobalData, via email. “I can potentially see a hesitancy to approve non-US manufactured products [in relation to] Trump’s tariffs but that’s unlikely if the product is life saving because he really stands on the grounds of making America healthy again.”
Bruce Carlson, market research consultant and publisher of the Eye On IVD newsletter, pointed out in a recent post on the Eye on IVD website that IVDs will likely be under the radar for the new administration, with pharmaceutical companies a bigger target. However, he added that IVD companies could be indirectly impacted, particularly those that produce companion diagnostics. He added that if, as promised, the new administration cuts staff from regulatory agencies “without corresponding regulatory legal changes,” this could mean slower approvals for certain products. But, Carlson wrote, if Kennedy instead focuses on reducing regulatory burden, this may help increase competition and innovation in the IVD industry.1
Healthcare affordability and lab testing
Kennedy’s position on the Affordable Care Act and Medicare spending is also unclear, Carlson added in his post, but any changes that could harm subsidized health care would mean less money for some patients to spend on laboratory testing. “Absent funding, poorer patients vote with their feet and do not go to the doctor,” Carlson wrote. “The IVD industry thrives on doctor visits. Anything that reduces visits reduces preventive care, [which affects] testing and…volume for test makers.”1
Trump’s pick of Oz to head the CMS has also raised concerns related to healthcare affordability.
Many have pointed out conflict of interest issues related to Oz’s ownership of stock in private US health insurance providers, including UnitedHealth Group, as well as his support for expansion of the privately administered Medicare Advantage program. Though it’s unclear whether Oz plans to divest these holdings, if he still has them and he’s confirmed for the CMS role, some believe he would prioritize the interests of private payers over patients.2
“If Dr. Oz had his way, Medicare would be wholly replaced with private insurance plans that cost taxpayers more and leave patients vulnerable to denials of care and higher premiums,” said Tony Carrk, executive director of government watchdog Accountable.US, in a recent press release.3
What about LDTs?
As for those concerned about FDA regulation of LDTs under the agency’s LDTs rule, lab leaders shouldn’t assume a quick end to the rule once a new government is in place. As noted by speakers at our November 2024 Lab Institute Virtual Event, stopping the rule isn’t a priority for the new administration. In addition, legal actions to halt the rule likely won’t be resolved before the May 2025 deadline to comply with Stage 1, so lab leaders will probably at least need to meet those early requirements, the experts add.4
However, the American Clinical Laboratory Association (ACLA), which filed one of the legal challenges against the FDA over the LDTs rule, has reached out to the Trump transition team to press key issues for the lab industry, including stopping the LDTs rule.
“With the new administration, we’ve had the opportunity to have some engagement with the president-elect’s transition team,” ACLA president Susan Van Meter said in a recent interview with Lab Industry Advisor. “We’ve been focusing in particular around the LDT rule, as you would imagine.”
She added that ACLA, along with five other lab associations, recently sent the Trump transition team a letter urging the new administration to not enforce the LDT rule once they take office, and then begin the process to withdraw the rule afterward.5
“We’ve made that very direct request,” Van Meter said. “We’ve had some informal discussions as well, and we really look forward to having robust engagement with our new colleagues in HHS, FDA, CMS, CDC, the White House—across the board—to help support our laboratories and the patients they serve. We’re looking forward to getting a lot of work done in the new year.”
Impacts to medical device industry overall
As for the healthcare and medical device industries overall, Kennedy is seen as a concerning choice for HHS secretary by many, due to his history of spreading misinformation related to vaccines and COVID-19, among other unproven science-related claims.6 Kennedy stated in a recent NPR interview that Trump has given him three key instructions: remove corruption and conflict from regulatory agencies, return these agencies “to the gold standard empirically based, evidence-based science and medicine that they were once famous for,” and “end the chronic disease epidemic.”7
Though Republican governments are often seen as against overly harsh regulations, Ashley Clarke, senior medical analyst at GlobalData, said following these instructions could mean Kennedy implementing tougher oversight of medical devices.
“Kennedy’s leadership could impact device approval processes, data transparency, and manufacturing practices,” Clarke said in a recent press release. “A cautious regulatory stance for AI [artificial intelligence] in medical devices would result in slower approvals but could help establish higher safety standards, similar to the European Union’s approach.”8
Clarke said that Kennedy’s focus on holding large corporations to account through greater transparency could mean higher compliance costs but may also foster more trust in these companies.
“The added regulatory burden could slow innovation if companies must allocate more resources toward meeting new standards, potentially widening the gap between established giants and startups,” Clarke said in the release. “However, with appropriate balance, transparency could also foster trust in the industry and guide innovation in the right direction.”8
A boost for portable technologies?
She added that Kennedy’s appointment could accelerate the recent trend toward decentralized health care, including portable diagnostics, and that his “environmental concerns and distrust of large corporations may influence HHS funding priorities, directing more support toward smaller companies, and investing in sustainable manufacturing practices for medical devices.”
However, this support of smaller companies could be undone by the administration’s push to avoid foreign imports and increase domestic production at a higher cost for companies, Clarke said.8
Effect of tariffs on the medical devices industry
In addition, Trump’s plan to put tariffs on imported goods, if he goes ahead with it, would affect the prices of “the 69 percent of available US-marketed devices that are manufactured solely outside of the US,” a second GlobalData press release recently pointed out.9
Such tariffs would mean companies needing to increase prices for patients to make up for losses, GlobalData medical analyst Aidan Robertson said in the press release. He added tariffs would also cause supply chain disruptions, reducing access to medical devices and further inflating prices due to high demand and lower supply.
Also, since roughly 14 percent of US medical devices are manufactured in China, Trump’s additional proposal to place 60 percent tariffs on all Chinese imports would negatively affect the industry, GlobalData stated.9
However, companies that produce most of their products in the US and aren’t reliant on foreign supply lines may end up with “a more secure position in the US market,” the GlobalData press release added.9
Impact on hospitals
It’s important to note that tariffs on medical products from China aren’t new. In May 2024, current president Joe Biden proposed increasing tariffs on several Chinese-made products, including medical supplies such as gloves, respirators, masks, and syringes. At the time, the American Hospital Association (AHA) said such tariffs would only add further financial pressures on hospitals.10
“AHA supports efforts to incentivize domestic manufacturing of essential medical supplies to improve the resiliency of the healthcare supply chain,” the organization said in a fact sheet on Biden’s proposed tariffs. “However, higher prices for high-volume medical supplies, such as personal protective equipment and syringes, are likely to exacerbate and prolong the financial headwinds that hospitals already face today.”10
References:
- https://eyeonivd.com/rfk-jr-and-ivd-contract-ivd-boom-and-siemens-heart-attack-risk/
- https://www.npr.org/sections/shots-health-news/2024/11/22/nx-s1-5201663/trump-dr-oz-investments-cms
- https://accountable.us/president-elect-trumps-nomination-of-dr-oz-means-health-care-at-risk-for-seniors-and-vulnerable-americans/
- https://www.g2intelligence.com/special-report-preparing-for-stage-1-of-the-fdas-ldts-final-rule/
- https://myadlm.org/advocacy-and-outreach/comment-letters/2024/acla-letter-to-trump-transition-on-fda-ldt-rule
- https://www.bbc.com/news/articles/c0mzk2y41zvo
- https://www.npr.org/2024/11/14/nx-s1-5188411/robert-kennedy-trump-administration-health
- https://www.globaldata.com/media/medical-devices/rfk-jr-s-appointment-us-hhs-secretary-reshape-regulatory-market-landscape-medical-devices-says-globaldata/
- https://www.globaldata.com/media/medical-devices/trump-tariffs-directly-impact-prices-majority-us-medical-devices-says-globaldata/
- https://www.aha.org/2024-07-01-fact-sheet-impact-tariffs-health-care-equipment
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