News at a Glance – May 2016

PAMA Final Rule under OMB Review. The Centers for Medicare & Medicaid Services’ final rule implementing the Protecting Access to Medicare Act of 2014 (PAMA) is now under review by the White House Office of Management and Budget (OMB). The highly anticipated rule is expected to require Medicare payment for clinical laboratory tests to be based on private payor rates beginning Jan. 1, 2017. OMB began its review of the final rule on April 21. Regulatory clearance—and subsequent publication in the Federal Register—is widely expected to be imminent. A proposed version of the rule, published in the Federal Register on Oct. 1, 2015, outlined CMS’ plan for determining commercial rates. It called for collecting price data from laboratories that receive at least half of their Medicare revenues from lab-test reimbursement. Industry concerns include potential that exclusion of hospital-based labs would yield CLFS rates not representative of overall market rates and the schedule for implementation of CMS’s new reporting and payment methodology. “We believe the critical alterations to the CLFS must be accomplished in a deliberate and measured manner, so that laboratories have sufficient time, once the final rule and sub-regulatory guidance are issued, to comply,” wrote House Ways and Means Health Subcommittee Chairman Pat Tiberi and 26 other committee members in a March 31 letter to Acting CMS Administrator Andy Slavitt.

Sequenom to Petition U.S. Supreme Court to Regain MaterniT21 Test Patent. Molecular testing firm Sequenom has decided to petition the United States Supreme Court in an attempt to regain a patent for a genetic test it lost three years ago. The petition is centered around what has been referred to as the “540 patent,” in reference to the last three numbers of a patent Sequenom held until 2013 that it applied to its MaterniT21 test. That assay is used to analyze cell-free fetal DNA (cffDNA) in a mother’s blood to diagnose genetic conditions. Sequenom had claimed that Ariosa Diagnostics’s Harmony Prenatal Test and Natera’s Non-Invasive Paternity Test (licensed to DNA Diagnostics Center, Inc.) infringed the ‘540 patent. Last year in June, the Federal Circuit Court of Appeals affirmed a ruling that Sequenom’s ‘540 patent relating to cffDNA failed to assert claims that were patent eligible. In December, the appellate court denied Sequenom’s request for a rehearing. However, one dissenting judge, Pauline Newman, an appointee of President Ronald Reagan, observed that “the new diagnostic method here is novel and unforeseen, and is of profound public benefit” and claimed that “[p]recedent does not require that all discoveries of natural phenomena or their application in new ways or for new uses are ineligible for patenting; the Court has cautioned against such generalizations.” Sequenom argues “overly-expansive patent eligibility criteria have not only negatively impacted Sequenom’s patent, but have put into jeopardy the patentability of existing and future diagnostic method patent claims.”

Labs Want Congress to Intervene on LDT Regulation. A pending FDA/agriculture appropriations bill in Congress includes a provision that would suspend final regulations for the FDA’s oversight of laboratory-developed tests (LDTs). Instead, the agency would be directed to work with federal lawmakers to create a pathway for regulating such assays. The bill was approved by the House Appropriations Committee on a voice vote and likely has significant supporters in both the House of Representatives and the Senate, according to Alan Mertz, president of the American Clinical Laboratory Association (ACLA). “It should send a message to the FDA that Congress is interested in a legislative solution,” Mertz said, acknowledging that while Congress has weighed in on reimbursement issues for the sector on multiple occasions, it has not really involved itself on the regulatory end for decades.