FDA Holds LDT Workshop Amid Flurry of Debate as Comment Period Nears End

During and surrounding two days of public comment at an FDA-sponsored workshop, various stakeholders sounded off on the LDT regulation debate. As we reported, just prior to the FDA workshop, the American Clinical Laboratory Association issued a white paper with a not-so-veiled threat of litigation (See NIR, 1/8/15, p. 1). Additionally, JAMA published two Viewpoints highlighting the issues on each side of the debate, while AMP issued its own white paper addressing not only LDTs but genomic testing in general and the regulatory challenges and reimbursement barriers that together AMP asserts are brewing a “perfect storm.” With the period for public comment ending Feb. 2, we’ll take a look at the issues being debated with some feedback from the experts on what this all means. Varied Interests Represented A broad spectrum of interests were represented at the FDA Workshop including not only laboratories and laboratory-specific associations but other health care organizations such as the American Medical Association, American Heart Association, and organizations representing specific conditions such as Lyme disease, infectious disease, transplantation and cancer. The medical device manufacturing industry, academic institutions and even the venture capital investment sector also weighed in on the issues. Washington, D.C. health care attorney, Barbara Cammarata, of Sidley Austin LLP, sums up the varying stakeholder positions noting “there are so many [stakeholders] in the industry with different needs and everyone is looking for that level playing field.” Many stakeholders also spoke about the interests of physicians and patients, highlighting the potential that regulation could prevent key tests from making it to market. This would hurt patients from a diagnostic and treatment standpoint and “treating physician won’t have access to the same arsenal of tests that they otherwise would have,” says Richard S. Cooper, of McDonald Hopkins, in Cleveland. Although Palmetto GBA did present and participate in a panel discussion, Cammarata notes that perhaps the most notably absent party was CMS – whose absence she characterizes as the “elephant in the room” due to the importance of reimbursement to the discussion. Working Out the Details The FDA workshop organized public comment and panel discussions around six topics focusing on components and labeling, clinical validity and intended use, categories for continued enforcement discretion, adverse event reporting, classification, and quality system regulation. Throughout those six sessions, repetitive issues and concerns were raised about how this regulation will be implemented and what details are still needed. Beyond whether the FDA has the legal authority to do this or whether they ought to do it from health care quality standpoint there is “just the issue of clarity, how it’s really going to work in practice,” says Cooper. Classifications Many speakers questioned the current proposed framework’s classification of LDTs into categories and asked for more detailed guidance from the FDA on how tests would be classified. “They talk about certain factors that are going to be considered but I’m not sure anyone is comfortable looking at their test menu and saying which tier their tests are going to fall into,” says Cooper. “There needs to be greater clarity about which tests are going to fit in which category and which elements are going to be used to make that determination,” he adds, echoing the sentiment expressed by many of the workshop presenters. Washington D.C. lawyer, Jeffrey N. Gibbs, of Hyman, Phelps & McNamara P.C., who spoke at the workshop about categories for enforcement discretion, adds: “We are talking about classifying thousands of different tests and we don’t know what the criteria will be. … It makes it difficult to comment on this aspect of the proposal.” Those details impact financial concerns, explains Cooper, because “the cost structure will be affected by which tier you fall into and that has to get factored into your business plan.” The uncertainty is due in part, he adds, to the fact that this proposed regulation is “sort of based on what the FDA does in the medical device area” and there is uncertainty as to how that will translate to lab testing. “Not everything will neatly apply to the lab setting,” he says. Continued Enforcement Discretion Some of the most concrete suggestions raised at the workshop related to categories for continued enforcement discretion and treatment of modifications to approved tests. During his workshop presentation, Gibbs asked the FDA to make the enforcement discretion exemptions “as broad as possible.” He explained that doing so would make enforcement more “manageable” given the FDA’s limited resources. He also suggested the FDA “scrap” the inclusion of modifications to existing and FDA approved tests, noting the difficulty in deciding when a new 510(k) would need to be submitted for a test modification—which “creates another regulatory burden and quagmire.” Gibbs and others emphasized that modifications to existing tests are essential to patient care and improve existing tests. Summing up the comments made at the workshop, Gibbs advises: “We heard labs say they need to modify tests – they often need to optimize it for their facility. Not allowing them to do this would lock them into a system that may not work so well for them, and that can’t be good for patient care.” Many workshop presenters addressed the exemption for tests for rare diseases, asserting that the proposed threshold of 4,000 tests is too low. “4,000 cases would be the minimum that would be reasonable,” asserted Gibbs during his presentation. Gibbs and several other speakers referenced the orphan drug definition and 200,000 cases as a preferable alternative. Timing and Resources Cooper indicates that the biggest concern he hears from the industry is that the FDA “will lack the resources to practically regulate [LDTs] in the manner that they say they are going to” and “that it will result in very substantial time delays.” “If you need a PMA – if it doesn’t happen expeditiously – if it takes a year or years to get an approval that could make all the difference in whether the test ever makes it to market or a lab stays in business,” says Cooper. Even well funded labs will feel a significant impact, he predicts. “Some of these test are not long lived tests either,” he adds, “if your test gets held up, it’s usable life time gets significantly shortened.” Cammarata indicates she is hearing the same concern. “The perception is that the FDA may not be aware of how many tests are actually out there” and the number of tests they anticipate being subject to the regulation they propose “might be larger than they are thinking.” The potential number of LDT approval applications “will create a logjam at FDA,” says Gibbs. “The volume of submissions could swamp the FDA’s ability to handle all the submissions” and there’s been “no indication how it will increase resources,” he adds. Speakers and the experts we spoke with indicate that the device manufacturers are also concerned about this issue and the potential impact on their own submissions for premarket approval. Laboratory resources were also a concern, with many presenters highlighting the additional staffing and new expertise that will be required for labs to navigate this new regulatory process. Gibbs explains that under existing premarket review requirements “companies taking time to get clearances now are often sophisticated companies accustomed to submitting 510(k)s;” labs on the other hand are not accustomed to the process. “Many won’t be able to do it,” he warns. Cooper agrees, noting that labs “won’t necessarily have people on staff adept at these types of regulation, unless they came out of the medical device industry.” So he predicts a lot of labs will need to use outside consultants. Clinical Validity FDA questioned participants about how to demonstrate clinical validity of IVDs and LDTs. Some participants who objected to regulation asserted that the determination of clinical validity is really part of the practice of medicine. Panelists and public comments discussed the difficulty in determining clinical validity, the fact that doing so may be affected by the individual nature of each test, and the types of evidence that might be relied on—such as clinical trials, case studies, and even literature. Where we are headed Many argue that more important than the debate about how this will be implemented, is whether the FDA has the authority to impose this regulation at all. Cooper sums up the debate as involving two legal questions: “Does the FDA have authority to regulate at all; and then, do they have authority to regulate through guidance rather than rulemaking.” Cammarata explains that perhaps the most significant difference between pursuing formal rulemaking and issuing guidance is the “economic impact analysis [which] is the key part of the rulemaking process that they won’t be getting.” Gibbs adds that without rulemaking, the FDA is not required to respond to every major comment or explain why they reject comments. Cammarata notes that affected stakeholders’ options if the proposal isn’t modified to their satisfaction are “to sue or try to get Congress to do something. Neither option is easy.” Cammarata, Gibbs and Cooper all indicated that litigation is likely. “Who will be behind it and how broadly it will be supported” remains to be seen, says Cooper. Cammarata suggests that “FDA, CMS and CLIA need to get together” and reach consensus on how to oversee personalized medicine. Reimbursement Issues Complicate the Landscape Health care attorney Barbara Cammarata highlights a critical and related issue that didn’t get nearly as consistent attention at the workshop as the issues discussed above: reimbursement. Several reimbursement issues collide with the regulatory burden proposed by the FDA for LDTs. The genetic/genomic testing industry was hit with an unwelcome economic development in the Myriad court decision removing patent protection for genes themselves (while permitting protection for certain synthetic versions of genes), which will have a negative financial impact for test developers who lose the financial opportunities derived from patents, she explains. At the same time, reimbursement is uncertain as well. “Medicare has been trying to figure out what they are paying for” with respect to genetic and genomic testing, she says, and the lack of clarity also affects commercialization and the financial value of developing such tests. The impact of PAMA remains to be seen as well, she adds, which will turn reimbursement policy “upside down” because the “private market will be the driver rather than Medicare being the leader as it usually is.” With the loss of patent protection, reimbursement in flux and new regulatory burdens being added, small companies will struggle to finance development and equity investment may be adversely impacted, explains Cammarata. Industry Impact: Viability of and Investment in Innovation Innovation was a term used by many on both sides of the debate. The most emphatic objections raised during the workshop involved the impact of this regulation on the viability of labs in general and innovative testing in particular. Many argued that regulation hampers innovation and threatens the very survival of some labs already financially strained by the reimbursement environment in which they operate (see box, p. X ). Echoing the concern about resources, presenters highlighted the cost to laboratories’ to comply with the regulation. Cleveland attorney Richard S. Cooper explains this “whole new set of regulations and the attendant cost structure” burdens laboratories at “the very time many of them are struggling to remain viable. For some labs its going to be the tipping point where they may not make it.” The impact on Investment in the sector was also highlighted. Cooper notes “molecular and genomic labs are having a difficult time getting investment dollars. It used to be that investors would be putting money in pretty early in the trajectory and now it’s coming in much later” because of reimbursement uncertainty. “This [regulation] adds another layer of uncertainty for investors,” he adds. Indeed, one presenter at the FDA workshop, Kelly Slone, speaking on behalf of the National Venture Capital Association, explained that investment in LDT companies has “dried up over the last several years.” She attributed the decline to regulatory uncertainty about LDTs and lack of reimbursement. But it’s not all bad news. Cooper notes that some labs that have “financial infrastructure and wherewithal” to handle the approval process “could see this as way to outpace their competitor.” Attorney Jeffrey N. Gibbs agrees that companies that get the FDA approval “may have better chance of getting reimbursement” and approval “can open doors in other countries,” providing some offsetting benefits. Barbara Cammarata, a Washington, D.C. lawyer, also notes: “Arguably, pharmaceutical and medical device companies who are more familiar with, and who often are already using, the FDA process, and who have greater resources, likely favor greater involvement by the FDA.” Takeaway: The debate about LDT regulation—whether and how it should happen—continues. After the Feb. 2 deadline for public comment, stakeholders with varied interests and needs will be waiting to see how FDA responds.