As the Food and Drug Administration (FDA) moves forward with its attempt to regulate laboratory developed tests (LDTs), the Association for Diagnostics & Laboratory Medicine (ADLM, formerly AACC) and many others in the lab community question whether the agency has the authority to pursue such oversight. ADLM also warns that the attempt could drastically limit patients’ access to critical laboratory tests, even crippling some labs.
The FDA on October 3, 2023, issued a proposed rule that would allow the agency to regulate LDTs as medical devices, much as they do in vitro diagnostic (IVD) test kits manufactured by IVD companies. Specifically, the FDA seeks to amend its regulations to make explicit that IVDs are devices under the Food, Drug and Cosmetic Act “including when the manufacturer of these products is a laboratory.” Although the proposed new regulatory text is only 10 words, the FDA devotes more than two dozen pages justifying what it sees as a need to regulate LDTs.
Historically, the FDA has exercised enforcement discretion over most LDTs because it has viewed them as lower risk because of their small volume. However, the agency states in the proposal that the LDT landscape has evolved significantly since 1976, when Congress first created a system to regulate medical devices. At that time, LDTs were mostly manufactured in small volumes by laboratories that served their local communities and were typically intended for use in diagnosing rare diseases for which there were no other tests.
Now, many LDTs rely on high-tech or complex instrumentation and software to generate results and clinical interpretations, and laboratories often provide them in high volume for large and diverse populations, according to the FDA. “Many LDTs are manufactured by laboratory corporations that market the tests nationwide, as they accept specimens from patients across the country and run their LDTs in very large volumes in a single laboratory,” the FDA said, arguing that the risks associated with most modern LDTs are much greater than they were in 1976.
The rule proposes a 4-year phase-out of enforcement discretion, beginning 1 year after publication of the final rule. The agency said this “phaseout policy should ultimately enable IVDs offered as LDTs that are supported by sound science to remain on the market.”
The agency asked for input in a number of areas, including:
- Whether it should maintain its current enforcement discretion approach with respect to premarket review and some or all quality system requirements for LDTs already on the market;
- Public health rationales for having a longer phaseout period for LDTs offered by laboratories with annual receipts below a certain threshold;
- Whether the FDA should implement a different phaseout approach for academic medical center laboratories;
- How the FDA might leverage programs such as the New York State Department of Health Clinical Laboratory Evaluation Program or those within the Veterans Health Administration as part of the phaseout approach;
- Any implication of continued enforcement discretion for LDTs used for law-enforcement purposes and any factors that the FDA should consider — particularly as it relates to civil rights and equity — regarding the scientific validity and accuracy of such tests.
This is not the first time the FDA has threatened to regulate LDTs, but this is the first time the agency has formally issued a proposed rulemaking timeline for enforcement. The agency has been discussing the need for more oversight of LDTs formally for more than a decade. It held a workshop on the issue in 2010, proposed draft guidance documents in 2014, issued a discussion paper in 2017, and gave input on proposed legislation in Congress several times, including in 2022.
ADLM has long opposed the FDA’s efforts to regulate LDTs and argued that these tests are already regulated by the Centers for Medicare and Medicaid Services (CMS) under CLIA. ADLM President Octavia Peck Palmer, PhD, said in a statement that the FDA’s proposal would create a dual, expensive, and potentially contradictory regulatory environment for clinical laboratories, eliminating most labs’ ability to perform LDTs.
“We continue to advocate for a balanced, evidence-based approach to regulating laboratory developed tests,” Peck Palmer said. “We must identify what problems we are trying to fix and correct them without hindering scientific advancement or limiting patient access to these innovative, often life-saving tests. We urge the FDA to join us in working within the regulatory system to advance patient care and prioritize health equity.”
IS A LEGISLATIVE SOLUTION OFF THE TABLE?
Many stakeholders had hoped that Congress itself would establish a regulatory framework for diagnostic testing, thus averting the FDA’s attempts to get involved. Legislation originally introduced in 2020 and again in 2022 that would have established a new risk-based framework for diagnostic tests at the FDA came close to passing but ultimately failed. The Verifying Accurate Leading-Edge IVCT Development (VALID) Act has been reintroduced again in the House this year, but not the Senate. ADLM and other laboratory advocates opposed VALID because it would have meant FDA regulation of LDTs, user fees for laboratories, and dual oversight under both CMS and the FDA.
Moreover, ADLM has argued that the best legislative approach would be to modernize CLIA to require that laboratories demonstrate a test’s clinical validity, among other updates. “The development and utilization of a vast majority of LDTs is a shared responsibility between clinician and laboratory — it is the practice of medicine in action," said Dennis Dietzen, PhD, DABCC, FADLM, professor of pathology and immunology at Washington University School of Medicine and medical director of laboratory services at St. Louis Children’s Hospital. "These lab-developed procedures are regulated by CLIA today. A refresh of CLIA regulations is the most appropriate way to fix existing regulatory gaps.”
Legal observers believe it’s unlikely that VALID will move forward. “I think the FDA proposed this rule because it was frustrated with the lack of action that Congress has taken to implement comprehensive diagnostics reform,” said Christopher Hanson, an FDA Regulatory Partner with Nelson Mullins. “There has been a clear push for five or six years to come to a resolution about how LDTs and conventional IVD test kits can be regulated under the same framework. I think this was the FDA’s last resort.”
Hanson believes that the FDA has made finalizing its LDT proposal a priority, noting that the agency declined requests to extend the 60-day comment period. ADLM joined with 88 other organizations in seeking to extend the comment period to 120 days. In an Oct. 31 letter to FDA Commissioner Robert Califf, MD, the groups said they needed additional time to fully assess, research, and understand how the proposed rule would affect their constituencies. They noted that similar legislation, enacted in Europe in 2017, experienced multiple delays, which led regulators to issue grace periods for classes of devices to avoid widespread diagnostic shortages. Comments on the FDA proposal were due Dec. 4, 2023.
“I think the FDA will push very hard to get this rule finalized in 2024 before the presidential election,” said Hanson.
Joyce Gresko, a partner with Alston & Bird, agrees that the FDA appears eager to finalize the rule next year, but said she has not given up all hope of a legislative solution.
“Will this light a fire under Congress? Maybe,” she said. “One possibility is that lawmakers bring up the VALID Act again. Another possibility is that Congress could pass legislation that says the FDA does not have the authority to regulate LDTs. It may spur some activity that isn’t necessarily Congress taking the VALID Act over the finish line.”
PARSING A CLOUDY DEFINITION OF LDTS
Part of the difficulty with LDTs lies in the fact that there is not a precise definition of what a lab developed test actually is. Tests with mass-produced reagents that are marketed widely, such as those mentioned by the FDA in its discussion, should not be considered LDTs, said Dietzen.
“This is a loophole for mass-produced IVDs to avoid FDA regulation,” he argued. “Lumping all LDTs into the same bucket is not the right solution.” Dietzen, an ADLM past president, believes that FDA oversight of LDTs would have a dramatic impact on his lab as well as many others and that patient access to necessary testing would suffer.
“The LDTs we maintain in our lab are already resource-intensive,” he said. “The additional regulation and user fees that this proposal promises would make it very difficult to continue testing. Diagnoses would be missed or delayed. Treatment would get delayed. Patients would suffer unnecessarily.”
OBSTACLES AHEAD FOR FDA’S RULE
Even if the FDA finalizes its proposal to regulate LDTs, it is likely that the agency will face lawsuits, which could delay implementation of the rule, Hanson and Gresko both believe.
“This could very well get tied up in court if there is some type of injunction,” said Gresko. Depending on the judge and the court, it could have applicability nationwide, at least for a time.
Hanson thinks a lawsuit challenging the rule, if filed, could even make its way to the Supreme Court, where it’s anyone’s guess as to how the high court would rule.
“To the casual observer, it might seem that the conservative nature of the court would mean it would rule against regulatory overreach by the FDA, but we have found that the court can surprise us,” he said. “We often find interesting voting blocs on different cases, so it’s hard to predict where it might come out on this.”
Then there’s the question of cost and resources. Many have questioned whether the FDA has sufficient staff to review the additional submissions it would receive if this proposal were finalized. The FDA estimates that its regulatory plan will cost the industry an average of about $5 billion per year and would have annualized benefits of about $31 billion per year.
However, diagnostic consultant Bruce Quinn, MD, PhD, said a deeper dive into FDA’s calculations show that the actual cost to the industry would be $43 billion over the first 5 years while concurrently requiring an additional $4 billion in FDA staff resources. This compares with the FDA’s total annual budget of $8 billion for all its operations.
In a white paper published Oct. 10, 2023, Quinn of Bruce Quinn & Associates, said that FDA’s estimated annualized benefits of about $31 billion per year are based on projected life values at several million dollars per patient while the costs to the industry are actual cash costs. Any way you look at it, the costs just don’t add up, he argued.
“My conclusion is that when costs are scrutinized, the FDA’s LDT proposal is simply impossible to execute as proposed (in five years), and it’s difficult to foresee a timetable under which it could be executed,” Quinn said.
Kimberly Scott is a freelance writer who lives in Lewes, Delaware. +Email: [email protected]