Blog | 12/13/2023
Testing, Testing, L-D-T: FDA Proposed LDT Regulations
By Olivia Foroughi and Kristen G. Amanti, PhD
In September of 2023, the U.S. Food and Drug Administration (FDA) published a long-awaited proposed rule that would have a substantial impact on the clinical lab and diagnostics industry. The new rule could enhance test consistency for clinicians and patients yet may have an undue impact on access to innovative diagnostics.
After years of indications from Congress and the FDA, the FDA has decided to act on test regulations with a new fervor. The proposed rule comes on the heels of a series of public challenges to Lab Developed Tests (LDTs), notably an investigation into Non-Invasive Prenatal Screening (NIPS) marketing and claims, that raised concerns around the FDA’s oversight of LDTs1. The NIPS story and others raised awareness and prompted the FDA to act in absence of Congressional direction.
The rule would phase out the current enforcement discretion approach of LDTs, and would clarify these tests are considered in vitro diagnostics, and are therefore overseen by the FDA under the Federal Food, Drug, and Cosmetic Act (FDCA). There is a long history here – for decades the FDA has asserted that LDTs are IVDs, yet has not enforced the same level of oversight as they have exercised for IVDs. Over the past ten years, through a series of guidance documents, public comments, and legislation, the FDA and Congress have both expressed concerns that the level of complexity and associated risk of LDTs have surpassed early cases and therefore should be regulated like IVDs. Congress’ multiple attempts to pass the Verifying Accurate Leading-edge IVCT Development (VALID) Act stalled which forced the FDA to act alone.
The FDA’s proposed rule lacks certain critical details, but largely relies upon a five stage, four-year phase out of the current enforcement discretion until LDTs are eligible for premarket review.
Stage 1
In the first year after publication of the final rule, LDT manufacturers would be required to start reporting adverse events and malfunctions, including instances where a company removes or corrects a test
Stage 2
In the second year after publication, LDT manufacturers would have to comply with all IVD regulations except quality system and premarket review
Stage 3
Three years after publication of the final rule, LDT manufacturers must comply with quality systems regulations, including design and purchasing controls, acceptance activities, corrective and preventative actions, and records requirements
Stage 4
Three and a half years after publication of the final rule (but not before October 1, 2027), the FDA would end enforcement discretion for high-risk LDTs (Class III), and require premarket approval compliance
Stage 5
In the fourth year after publication (but not before April 1, 2028), premarket review requirements would apply to moderate- and low-risk (Class I-II) LDTs that require premarket submissions
There are a few notable exceptions to the enforcement discretion phase out, including forensic tests used for law enforcement, human leukocyte antigen (HLA) tests, 1976-type LDTs that use manual techniques without automation performed by lab personnel, and tests for public health surveillance that are not reported to patients or healthcare providers. All of these tests would be exempt from FDA regulations. So far, there are no plans to grandfather any LDTs already on the market. The FDA suggests that based on risk classification, only 50% of LDTs would require premarket review2.
Unsurprisingly, stakeholders at clinical laboratory trade organizations, Members of Congress, and others have rung the alarm about feasibility, and claimed that this may lead to loss of innovation and hinderance of patient access. Stakeholders have noted that patients with rare diseases will bear the brunt of the regulations, as labs face costly regulations and data requirements that will limit access to potential lifesaving diagnostics. Specialty lab stakeholders have expressed fears that a longer path to commercialization and revenue will limit the number of novel diagnostics that come to market. Furthermore, stakeholders have raised concerns that regulating LDTs as IVDs would add to the existing FDA backlog, conjuring flashbacks of another COVID-19 scenario of too many tests and not enough capable FDA personnel. Finally, some stakeholders have stressed the impossibility of the scale of the rule, with the FDA estimating a cost to labs of ~$50B over the first four to five years, while the LDT market size in the US is only an estimated ~$24B3.
Practically, the proposed rule will impose onerous regulations upon academic and specialty labs with increased reporting and data generation requirements. While well-funded specialty labs may be able to weather the storm, academic labs will struggle under the weight of regulatory compliance, patient count and data requirements, and existing budget pressure from PAMA and post-COVID-19 losses. Beyond laboratories, biopharma companies that rely on companion diagnostics may see new barriers to access as academic labs reduce LDT use.
In the coming months, we will undoubtedly see legal pushback regarding the FDA’s authority and proposed timelines, as many stakeholders have already publicly signaled their intent to sue the FDA upon rule finalization. The American Clinical Laboratory Association has long held that the FDA lacks the authority to regulate LDTs under its medical device authority. For the FDA to have authority under the FD&C Act to regulate LDTs, the agency will have to prove that the LDTs meet the definition of interstate commerce, they are in “commercial distribution”, and the laboratories that run the tests are considered “persons”.
While nothing in Washington is ever certain, the FDA seems to be placing a greater emphasis on moving quickly to finalize the proposed LDT rule ahead of the 2024 election. The November election could shift the balance in Congress and the Administration and open the FDA rule to repeal via the Congressional Review Act. Further as noted by the FDA, if the rule is finalized by March of 2024, it could be included in the next MDUFA fee cycle that goes into effect in 20274.
Amid the noise (and 19,000 public comments) it’s important to recognize what this rule will do, and equally important, what it will not do. In theory, this rule will provide another layer of protection for patients to protect consistency of tests. While the proposed rule will likely enhance the uniformity of LDTs, it is not a silver bullet that will address the lack of education raised by news outlets, patients, and providers. Ongoing class action lawsuits allege that NIPS specialty labs falsely advertised tests as accurate and reliable, yet even if this rule was in place when the tests first came to market it would have little impact on the rate of false positives for rare genetic disorders5. NIPS are screening tests, and as such, should always be accompanied by further testing and genetic counseling.
Importantly, specialty and academic labs will face higher barriers to launch which may ultimately reduce patient access to diagnostics on the margin, and fundamentally alter the LDT landscape. Specialty labs will no longer have the opportunity to generate early revenue as they build evidence. Startup costs, timelines to launch, and time to return will all increase if the rule is finalized. Academic and specialty labs will be forced to cease performing tests that have been part of their menus for years without a sufficient volume of patients and data to validate LDTs as IVDs. The proposed rule represents a reactionary decision on the FDA’s part that may establish an unnecessary tradeoff between consistency, innovation, and patient access.
In the meantime, absent Congressional action to create a new pathway specifically intended for diagnostics (rather than piggybacking on an existing medical device review pathway), LDT manufacturers and labs should proactively start considering alternative solutions. Rethinking testing methodology, data collection capabilities, regulatory expertise will prove essential to preparedness should the FDA (finally) finalize the rule.
Sources
1. https://www.nytimes.com/2023/06/27/upshot/prenatal-testing-misleading-fda.html
2. https://www.federalregister.gov/documents/2023/10/03/2023-21662/medical-devices-laboratory-developed-tests
3. https://drive.google.com/file/d/1f65KyDJ3o-6RDRi7CrQrrmLtyZ9aafzj/view?usp=sharing
4. https://www.federalregister.gov/documents/2023/10/03/2023-21662/medical-devices-laboratory-developed-tests
5. https://www.genomeweb.com/molecular-diagnostics/natera-hit-multiple-class-action-suits-over-unreliable-nipt-results
Authors
Olivia Foroughi, is a consultant and member of the Precision Medicine Practice at Health Advances.
Kristen G. Amanti, PhD, is a partner and leader of the Precision Medicine Practice at Health Advances.