Laboratory Developed Test Regulatory Reform Moves Closer to Reality

For decades, laboratories and test producers like Abbott, Quest, and LabCorp have sought relief from the FDA’s arbitrary “system” of regulating laboratory developed tests (LDTs). Now, after a series of false alarms, there is new reason for optimism. Newly proposed legislation would finally untangle the mess and establish a risk-based regulatory system for LDT regulation. The new Verifying Accurate Leading-edge IVCT Development (VALID) Act is not terribly dissimilar from previously proposed bills bearing the same name. However, what has changed is the political dynamic and urgency of the situation.

Current FDA Regulation of LDTs

No legislation expressly authorizes the FDA to regulate in vitro clinical tests (IVCTs). The agency has claimed, some would say usurped, that power as an extension of its authority to regulate medical devices under the Medical Device Amendments of 1976. The agency also asserts that it has authority over LDTs, i.e., in-house tests developed and performed by CLIA-certified, high-complexity laboratories subject to U.S. Department of Health and Human Services (HHS) regulation. But rather than develop a full regulatory system the way it has with medical devices, the FDA has regulated LDTs on a piecemeal, informal basis that circumvents the formal federal rulemaking process designed to protect stakeholders from arbitrary and capricious regulation.

Over the past decade, the agency has resisted and, finally when it looked like the train was leaving the station, sought to control regulatory reform. But nothing tangible came out of it. As a result, Congress got more involved in the process.

And then came the COVID-19 pandemic, which laid bare what the laboratory industry had been arguing for decades, namely, that current FDA rule stifles innovation and keeps desperately needed LDTs from reaching the market. In 2020, the Trump administration stripped the agency of regulatory authority over LDTs; a year later, the Biden administration restored that authority. This back-and-forth tennis match has left test makers, providers, and patients frustrated and confused.

VALID Act, Redux

Last month, Republican and Democratic members of the Senate Committee on Health, Education, Labor and Pensions (HELP) proposed a modified version of legislation that would allow the FDA to continue to regulate IVCTs, including LDTs, on a risk-tiered basis. The fact that LDT legislation is now back on Congress’ agenda is hardly surprising. But the legislative strategy is a bit surprising. The Senate bill was proposed as part of the FDA user-fee bill that is working its way through the Senate. It is also a revised version of the VALID Act that has been around in several different incarnations for a number of years, most recently in 2020.

Like previous incarnations, the new VALID Act would establish formal FDA oversight of IVCTs, including premarket review, registration and listing, test design and quality, labeling, adverse events, and corrections and removals. It would also provide for postmarket surveillance obligations and specify how a test may be considered adulterated or misbranded for purposes of enforcement. In addition, it would end the FDA’s current regulation by website diktat regime and require the agency to follow standard notice and comment rulemaking to implement and revise regulations.

What the VALID Act Does

Also, like previous versions, the new VALID Act would base IVCTs regulation on the risks that a particular test poses. But the new risk-based system has some significant, and controversial, differences. LDTs would be treated the same as tests developed by commercial companies with all IVCTs grouped into three tiers:

• High-Risk tests, i.e., those whose inaccurate results would be likely to cause death, serious harm, or other negative outcomes, would be subject to FDA premarket review;
• Moderate-Risk tests whose inaccurate results would likely cause only non-life threatening or medically reversible injury or treatment delay, could be brought to market via a voluntary “technology certification” program requiring companies to demonstrate merely that they have appropriate internal test validation processes; and
• Low-Risk tests would be exempt from premarket review.

Laboratories and test makers would also be allowed 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 takes 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 is 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.

Significantly, grandfathered tests would still meet VALID Act listing requirements within one year from the date the listing system becomes available.

Once the new VALID Act took effect, the FDA could accredit persons for the purposes of both reviewing applications for premarket review and inspecting developers submitting premarket application. The agency would have 30 days to review recommendations submitted by accredited persons in connection with such an application.

The VALID Act Controversy

While all acknowledge the need for reforming LDT regulation, the new VALID Act has received mixed reviews. The first controversy is in regard to tactics, namely, attempting to use the FDA user-fees bill to push through systematic changes to laboratory test regulation, an issue that has been subject to longstanding debate across industry, Congress, the FDA, and other stakeholders. The “The VALID Act remains a complex bill that will have far reaching implications for clinical microbiology laboratories and infectious disease diagnostic testing,” stated the American Society for Microbiology (ASM), while urging lawmakers “to address these concerns before advancing the bill as part of [the user-fees bill], which is a fast-moving legislative package.”

But the really divisive aspect of the new VALID is its regulatory leniency. The American Clinical Laboratory Association (ACLA), which has advocated for a risk-based regulatory framework, has embraced the bill, characterizing it as a “pivotal moment in the multiyear effort on diagnostic regulatory reform.”

But others have expressed concern about the implications of allowing laboratories and test makers to have such easy access to the market. The bill’s exemptions “need to be narrowed to ensure that high-risk tests are subject to the appropriate oversight,” wrote the Pew Charitable Trusts. The nonprofit also called for giving the FDA discretion to evaluate tests when it deems it necessary.

Key groups in the medical community also raised concerns about the FDA even having the capacity to regulate LDTs, with the American Association for Clinical Chemistry (AACC) stating in a recent press release that “VALID would drown FDA in new responsibilities while the agency does not have the necessary resources to perform its current regulatory function efficiently.” The association pointed out that the agency currently reviews around 4,000 510(k) submissions each year, and if VALID passes, it could mean an additional 132,000 submissions from the 11,000 US labs currently qualified to perform LDTs.

Others have criticized the bill for its provisions imposing user-fees for IVCTs review and the financial burdens it would cause to laboratories. There are “vast differences between large commercial test developers and individual, nonprofit laboratories at academic and other medical centers that develop LDTs,” wrote the ASM. “Clinical microbiology laboratories already operate on a thin margin within the health care facilities and are not profit centers.” Lumping them together with big commercial entities for user-fees purposes is “unreasonable,” it added.

And, of course, there is also the issue of whether the FDA should even be in the business of regulating LDTs. Many believe that the agency’s assertion of control over LDTs exceeds its legal authority under the Food, Drug, and Cosmetic Act. Thus, rival legislation called the Verified Innovative Testing in American Laboratories (VITAL) Act of 2021 would strip the FDA of any oversight of LDTs and give HHS sole jurisdiction to regulate such tests under the Clinical Laboratory Improvement Amendments of 1988 (CLIA).

Takeaway

Given the current mood, experts believe that the new VALID Act stands a far better shot at passage than any of its predecessors. More precisely, the belief is that Congress will pass some form of LDT legislation this time around. But the VALID Act that ultimately emerges from the hearings and markup, if any, is bound to differ from the one on the table today. It is also possible that Congress will dump VALID and come up with a totally different bill. Even if the new VALID Act does pass, it will take years to implement. While portions of the bill, including sections on registration and listing rules, could go into effect as early as October 1, 2024, most provisions would take effect on October 1, 2027. Equally significant, the FDA will have to create detailed regulations to implement the key operational requirements, which could not take effect until the act does. Bottom Line: Laboratories should have at least five years to transition to the new rules.