Despite MDUFA Setback, VALID Act Is Back on Track for Passage

Back in May, the House of Representatives made a bold move to pass laboratory developed tests (LDTs) regulatory reform by incorporating the Verifying Accurate Leading-edge IVCT Development Act (VALID) into the legislation that Congress had to pass by Sept. 30 to keep the FDA’s user fee system running:

• The good news: Congress did, in fact, pass the medical devices user fees bill before the Sept. 30 deadline;
• The bad news: The legislation was a “clean” version of the bill without the VALID rider;
• The good news: There’s a pretty good chance that Congress will adopt VALID and other regulatory measures that were stripped from the final version of the user fees bill as part of a separate reform bill by the end of the year.

There’s a lot to unpack, so let’s break it down.

The New MDUFA

The FDA spends a lot of money in carrying out its mandate to perform premarket review for moderate- and high-risk medical devices. To pay for these costs, the original Medical Device User Fee Amendments (MDUFA) gave the agency authority to collect user fees from medical device companies. But user fees are a two-way street. Amendments passed in 2012 require the FDA to pay back industry for user fee revenues by negotiating performance goals to make the premarket review process faster and more efficient. The agency also uses the MDUFA framework to set fees for biologics license applications, de novo requests, and 513(g) requests for information.

MDUFA negotiations take place every five years. The latest round, MDUFA V covering 2023 to 2027, got delayed for a year due to the COVID-19 pandemic. When negotiations finally began, the mood was contentious. Industry entered the talks out for bear given that the FDA failed to meet many of the performance goals set by MDUFA IV to repay the $1.1 billion worth of user fees it collected.

Although behind schedule, the sides managed to reach agreement on a new MDUFA V deal in March 2022 under which the agency will receive a minimum of $1.78 billion in user fees from 2023 to 2027. This could increase to $1.9 billion based on the FDA’s achievement of performance goals.

The agreement includes funding for the FDA’s proposed Total Product Life Cycle (TPLC) Advisory Program (TAP) meant to allow the agency to enlist physician advisors, private health insurers, and other outside stakeholders. The voluntary program aims to speed development of high-quality, safe, effective, and innovative medical devices, according to the FDA. However, while TAP would expand agency perspective, the investment required for the program means significantly higher user fees. Despite initial opposition to the TAP plan, industry reluctantly agreed to it—with some stipulations.

Instead of the comprehensive program the FDA asked for, TAP was launched as a pilot program on Oct. 11. According to media sources, the program will be funded by $110 million in funding left over from MDUFA IV and $45 million from agency base funding. The pilot program will also include a mid-point assessment so that both industry and the FDA can evaluate the program’s effectiveness.

FDA Medical Device User Fees for FY 2023

After passage of the MDUFA, the FDA announced the user fees for fiscal year 2023, which are effective October 1, 2022, through September 30, 2023. The registration fee will be $6,493 per establishment. The deadline to pay the fee is Dec. 31, 2022, and there are no waivers or reductions for small establishments, businesses, or groups. Other fees:

The Attempt to Reform LDTs Regulation

Authority over medical devices is also the basis of FDA regulation of in vitro clinical tests (IVCTs). Since the original Food, Drug, and Cosmetic Act didn’t address IVCTs, the agency has claimed that oversight of new lab tests is an extension of its powers to regulate medical devices. More problematic is how the agency has exercised this authority, regulating on an informal basis outside the federal rulemaking process designed to protect stakeholders from arbitrary and abusive regulations.

The end result has been to frustrate producers of LDTs and keep badly needed new tests from reaching the market. All acknowledge that the system needs to be fixed, but the reform process has dragged on for nearly a decade. The FDA floated a proposed rule in 2016. Congress also soon got into the act, generating a number of bills, some preserving and others stripping the FDA of LDTs regulatory authority. The COVID-19 pandemic and dire shortage of lab tests in its early months brought the issue to a head. In 2020, the Trump administration stripped the FDA of regulatory authority over LDTs, a move that the Biden administration reversed a year later.

The Latest VALID Act

Meanwhile, Congress proposed a new version of the VALID Act that would create a risk-based framework for IVCTs by requiring premarket review for high-risk tests while allowing lower-risk tests to reach the market after passing a far less stringent technological certification process. The new VALID Act would also allow labs and test makers to make changes to moderate-risk tests that reach the market without undergoing premarket FDA review. Certain LDTs already on the market before the new VALID Act took effect would also be exempt from premarket review requirements. However, the FDA would be able to impose the new regulations if the test is modified or the agency otherwise finds that:

• It’s backed by insufficient supporting scientific evidence;
• Deceptive or fraudulent claims about the test are made; or
• The test poses risks of serious adverse health consequences.

While supported by major labs like Quest Diagnostics and LabCorp as well as their representative, the American Clinical Laboratory Association (ACLA), the new VALID Act has drawn opposition from academic and other labs that actually develop LDTs. These labs say the bill is too financially onerous on smaller labs without the resources of the commercial lab giants.

While they both involve FDA regulation of medical devices, VALID and the MDUFA are separate issues. But they got tossed together unexpectedly when proponents of LDTs reform attached VALID as a rider to MDUFA V. The tactic failed when Congress stripped VALID and other riders from the final MDUFA bill.

VALID May Still Pass in 2022

While the last-minute setback is disappointing to proponents, VALID is a long way from dead. Congress is reportedly planning to introduce a new FDA reform bill at the end of the year, after the midterm elections, that would incorporate not only VALID but other riders that got cut from the House and Senate versions of the MDUFA bill at the last moment, including:

• Reforms to the accelerated approval pathway for drugs and biologics that would make it easier and faster for the FDA to withdraw products whose clinical benefits aren’t quickly verified after approval;
• New affirmative labeling requirements for drugs and biologics marketed under an accelerated approval;
• Express recognition that “real world evidence” may be used to support or augment the post-approval verification study;
• A mandate for the U.S. Department of Health and Human Services (HHS) to create new requirements to enhance diversity in clinical trials;
• Allowing importation of prescription drugs from Canada;
• A pilot program allowing the FDA to perform unannounced drug inspections of sites outside the US; and
• Requirements that medical device developers include cybersecurity in their device design and include information about the product’s cybersecurity in premarket submissions.