FDA Plans to Regulate Lab-Developed Tests Could Increase Time and Cost of Development

While it’s too soon to say what effect the Food and Drug Administration (FDA) decision to move forward with plans to regulate lab-developed tests (LDTs) will have on clinical and anatomic pathology laboratories, many in the lab industry believe that the move will increase the time and cost needed to develop such tests.

Reaction from industry groups to the July 31 announcement was mixed, with the American Clinical Laboratory Association (ACLA) urging caution, and other groups saying they need more time to assess the impact.

ACLA President Alan Mertz expressed concern that another layer of regulation could stifle diagnostic innovation and ultimately jeopardize patient access to timely and effective treatments. “Laboratories have been regulated for decades by the Centers for Medicare and Medicaid Services (CMS) under the Clinical Laboratory Improvement Amendments (CLIA) and by state law,” said Mertz. “Under the CLIA framework, a thorough and detailed regulatory process, we’ve seen an explosion of innovation in laboratory diagnostics that has allowed labs to diagnose and measure disease with an accuracy and precision never before possible.”

The College of American Pathologists (CAP), which had put forth its own oversight proposal based on a three-tier risk-based system, says it is still analyzing the FDA framework. Under the CAP proposal, each laboratory would determine the LDT classification based on the FDA’s criteria for low-, moderate-, and high-risks tests.

In its July 31 notice to Congress, the FDA outlined how it plans to regulate LDTs, previously known as “home brew” tests. Notably, the agency says it would phase in oversight requirements over nine years and would focus oversight on the tests where a wrong result would pose the highest level of risk to patients. Tests for which there are no approved alternatives and tests for rare diseases would be exempt from FDA regulation.

Test kits or components sold to hospitals, laboratories, and doctors’ offices have long been regulated by the FDA as medical devices. Tests developed and performed by a single laboratory, however, have been regulated by CMS under CLIA but have not been regulated by FDA. Although the FDA has claimed to have legal authority to regulate LDTs, it has said in the past that it was exercising “enforcement discretion” not to do so.

Agency officials now say that such discretion must end because LDTs, which were once fairly simple, are now more complex and are being developed by companies and marketed widely. Some common commercial tests have never been reviewed by the FDA, including Myriad Genetics’ breast cancer tests and the Oncotype DX tests from Genomic Health.

The FDA estimates that there are currently 11,000 LDTs offered by 2,000
laboratories.

In recent months, members of Congress have been putting pressure on the Office of Management and Budget (OMB) to release the FDA’s draft guidance, which has been under review for a couple of years. Subsequently, a group of physicians working in academic medical centers urged the OMB not to issue any guidance or rule that puts LDTs under FDA authority. The FDA first proposed regulating LDTs in 2006.

Three-Tiered Oversight
The FDA proposes to have a three-tiered system for oversight of LDTs, with high-risk tests receiving the most stringent oversight. According to the outline submitted to Congress, the agency will propose the following:

• High-risk LDTs (Class III medical devices). Registration and listing (with the option to provide notification) and adverse event reporting beginning six months after the guidance is finalized. Premarket review requirements begin 12 months after the guidance is finalized for the highest-risk devices and phased in over four years for the remaining high-risk devices. Devices would remain on the market during review and FDA’s consideration of applications. FDA’s focus on high-risk devices begins with the following: (1) LDTs with the same intended use as a cleared or approved companion diagnostic, (2) LDTs with the same intended use as an FDA-approved Class III medical devices, and (3) certain LDTs for determining the safety or efficacy of blood or blood products.

• Moderate-risk LDTs (Class II medical devices). Registration and listing (with the option to provide notification) and adverse event reporting begin six months after the guidance is finalized. Premarket review requirements begin after the high-risk (Class III) LDTs are completed, meaning five years after the guidance is finalized, and phased in over four years. FDA intends to utilize FDA-accredited third-party review of premarket submissions as appropriate.

The FDA intends to exercise enforcement discretion for applicable premarket review requirements and quality system requirements but enforce other applicable regulatory requirements, including registration, listing, and adverse event reporting, for low-risk LDTs (Class I devices), LDTs for rare diseases, and LDTs for unmet needs (meaning no FDA-approved or cleared equivalent device is available).

In addition, the FDA will continue to use enforcement discretion for LDTs used solely for forensic (law enforcement) purposes and for LDTs used in CLIA-certified, high-complexity histocompatibility laboratories for transplantation. For these tests, FDA does not intend to enforce applicable registration and listing (nor is FDA requesting notification), adverse event reporting, premarket review, or quality system requirements.

The FDA also says it will continue to exercise enforcement discretion with respect to premarket review requirements for “traditional LDTs, which are those IVD devices that reflect the types of LDTs available when FDA began its policy of generally exercising enforcement discretion over LDTs in 1976.” In considering whether to exercise enforcement discretion for traditional LDTs, the FDA intends to consider the following factors:

1. Whether the device meets the definition of LDT in the guidance (a device designed, manufactured, and used by a single laboratory);
2. Whether the LDT is both manufactured and used by a health care facility laboratory (such as one located in a hospital or clinic) for a patient that is being diagnosed and/or treated at that same facility or within the facility’s health care system;
3. Whether the LDT is composed of only legally marketed components and instruments (e.g., analyte-specific reagents, general purpose reagents, and various classified instruments); and
4. Whether the LDT is interpreted by qualified laboratory professionals, without the use of automated instrumentation or software for interpretation.

The FDA will officially publish its draft guidance around the end of September.

Takeaway: Industry groups are still analyzing the likely impact of the FDA’s proposal to regulate lab-developed tests.