Final FDA Guidance on RUO, IUO Products Raises Compliance Concerns for Labs

Laboratories that market or sell laboratory-developed tests (LDTs) are facing new compliance challenges because of the Nov. 25 issuance of a final guidance document from the Food and Drug Administration (FDA), “Distribution of In Vitro Diagnostic Products Labeled for Research Use Only or Investigational Use Only.” While the guidance is focused on manufacturers of in vitro diagnostic (IVD) products, there may be downstream consequences for clinical laboratories if the laboratories’ LDTs use any reagents or instruments that are labeled by the manufacturer as Research Use Only (RUO) or Investigational Use Only (IUO). Many of the tests involved are on the cutting edge of laboratory medicine today and represent genetic testing, personalized medicine, and companion diagnostics. A manufacturer might use the RUO or IUO exemption to get a product to market without having to comply with onerous and costly FDA requirements under the Federal Food, Drug, and Cosmetic Act regulations for premarket notification and premarket approval. If the FDA finds reason to audit or review a manufacturer’s marketing and promotional information about a product and subsequently finds the RUO or IUO designation is not correct, it could potentially force the company to stop selling or distributing the product or device. In this case, laboratories would find themselves without the components necessary to perform their tests. Further, laboratories may want to seek legal counsel concerning any testing they have performed and billed for Medicare patients using the tests involved. FDA’s Concern for Patient Safety The Nov. 25 document is the final guidance issued by FDA after receiving and reviewing public comments and other stakeholder input on a draft guidance issued June 1, 2011. It represents the FDA’s current thinking on this topic and is seen by some to be the final step by FDA to provide meaningful clarification for manufacturers concerning what is and is not an RUO or IUO product and how these products should be labeled and used. The draft guidance instructed manufacturers that they should not sell or distribute these products or devices in any case where they know, or have reason to know, that customers are using the products for diagnostic purposes. This was removed from the final guidance and replaced with a process that uses objective information, such as sales and marketing practices, to determine if the manufacturer is promoting the product for diagnostic use. According to the guidance, “FDA is concerned that the distribution of unapproved and uncleared IVD products labeled RUO or IUO, but intended for purposes other than research or investigation (for example, for clinical diagnostic use), has led, in some cases, to the clinical diagnostic use of products with unproven performance characteristics, and with manufacturing controls that are inadequate to ensure consistent manufacturing of the finished product. Use of such tests for clinical diagnostic purposes may mislead health care providers and cause serious adverse health consequences to patients, who are not aware that they are being diagnosed with or treated based on the results of tests with research or investigational products.” The draft proposal did not go over well with the laboratory industry or with the manufacturers. Laboratories and manufacturers are concerned that the draft guidance will have a chilling effect on the development and use of LDTs, in part because of the increased risk and uncertainty created by the guidance. Knowledge and Intent In order for a product to be legitimately labeled as an RUO or IUO product and receive the exemption, it must meet certain criteria. Simply placing a label on a product saying it is intended for research or investigational purposes only does not make the device exempt. The FDA will make its determination based on the totality of circumstances, including marketing practices and the “objective intent” of the manufacturer. Examples provided in the guidance:

• »Any kind of written or verbal statements or actions that indicate the product may be used for clinical diagnostic purposes suh as providing interpretation information, how the product is named or designed, and workshops or presentations that describe clinical use of the product.

• »Suggestions by the manufacturer that a lab can validate the test that contains the RUO or IUO component itself and then offer it as an LDT.

• »Selling the product to clinical laboratories that do not perform research or investigational studies.

• »Provision of specialized technical support for a clinical lab.

Potential Risks and Compliance Problems According to the guidance document, if evidence shows that an IVD product is inappropriately labeled RUO or IUO and that the product does not qualify for an investigational device exemption, and is not cleared, approved, or exempt, the device would be misbranded and adulterated under FDA regulations. A laboratory that is performing and billing such a test for Medicare beneficiaries could find itself under scrutiny for billing the test to Medicare because it should not be used for diagnostic purposes. It is not much of a stretch to consider that the Centers for Medicare and Medicaid Services would finally have a document to support claims denials or overpayment demands for any LDT that incorporates an RUO or IUO component. Another concern for laboratories is a supply chain kind of problem. For instance, if a manufacturer is investigated by FDA and found to have mislabeled a product as RUO or IUO when it does not meet necessary criteria, the manufacturer could be prohibited from continuing to sell or distribute the product, leaving the laboratory unable to continue to provide the test. Finally, there is some potential for a civil action should a patient have an adverse outcome because of an incorrect diagnosis that was based on the results of an LDT that included RUO or IUO components. Takeaway: Regulation of research-use-only and investigational-use-only products will be an area of focus for the FDA in 2014 and beyond. Laboratories and their compliance officers must take this into account when planning their compliance activities in the coming year(s).