Dive Brief:

• A proposed rule issued on Friday by the Food and Drug Administration would bring laboratory-developed tests under the agency’s purview, closing a regulatory loophole.
• Laboratory-developed tests are designed, manufactured and used within a single clinical laboratory. The FDA has exempted these tests from some regulatory requirements, such as premarket review, but it now seeks to bring all tests under one regulatory framework.
• The agency said the changes should better protect public health by ensuring the safety and effectiveness of tests. But it is “unclear if and when the FDA will finalize the rule as it will likely face opposition,” analysts with TD Cowen wrote in a research note on Friday.

Dive Insight:

Lawmakers have discussed regulating lab-developed tests for years, spurred by changes in technology and high-profile incidents such as Theranos’ faulty blood tests. Last year, a bipartisan group of representatives introduced the VALID Act, which would clarify the FDA’s authority to regulate lab-developed tests, but it was omitted from a year-end spending package. U.S. Reps. Diana DeGette, D-Colo., and Larry Bucshon, R-Ind., reintroduced the legislation in March. Patient advocacy groups asked the FDA to act if Congress does not. 

In the proposed rule, the FDA says that it has the authority to regulate lab-developed tests as medical devices and that the rule would “make it explicit.” 

The agency plans to phase in the changes over a four-year period, targeting lab-developed tests made by facilities certified under the Clinical Laboratory Improvement Amendments program for high-complexity testing. Some types of tests would still be exempted from enforcement, including donor screening tests, tests intended for emergencies, and direct-to-consumer tests. 

The FDA estimates the legislation could save billions of dollars by averting health problems and lawsuits from problematic tests. But it would cost the agency and laboratories anywhere from $2.5 billion to $19.5 billion per year, according to estimates included in the proposal.

Changing testing landscape

The FDA’s policy of enforcement discretion for lab-developed tests dates back to the Medical Device Amendments of 1976. At the time, lab-developed tests were mostly manufactured in small volumes by laboratories that served their local communities and were typically intended for diagnosing rare diseases or other local needs, the FDA wrote in its proposal. 

Since then, the testing landscape has changed significantly. Many lab-developed tests now use complex instrumentation, are manufactured in high volumes and are marketed nationwide, the FDA added. They include tests for serious conditions such as cancer, neurological diseases and cardiovascular illness. 

“The risks associated with LDTs are much greater today than they were at the time of enactment of the MDA,” the agency said in its proposal. 

The FDA said it has observed laboratories that fail to perform adequate validation studies, or that have data demonstrating a test does not work as intended, but offer the test anyway. 

“FDA has received submissions for [in-vitro diagnostic tests] offered as LDTs to diagnose Alzheimer’s disease, predict heart disease risk, diagnose Fabry disease (a rare neurological disorder), and inform treatment considerations for a rare blood cancer, all of which lacked adequate validation to support authorization,” the agency said. 

The FDA believes that regulating all tests under one framework could protect public health and encourage innovation in diagnostics. 

Possible pushback

Experts cautioned that the FDA is likely to face pushback on its proposal, if it goes into effect at all. 

Allyson Mullen, a director at Washington, D.C.-based law firm Hyman, Phelps & McNamara, said the change could result in “thousands and thousands” of tests that will need to be regulated by the FDA, putting pressures on staff. Labs may also stop offering some tests if they determine it’s not worth the cost, Mullen added.

Analysts with TD Cowen expect “a ton of pushback questioning whether [the FDA] has the statutory authority to regulate LDTs.” If the rule is finalized, they expect a legal challenge from stakeholders, including academic medical centers. The American Clinical Laboratory Association, in a Friday statement, said the FDA does not have the authority to regulate lab-developed tests, and that any regulatory framework should come from Congress. It also questioned whether the FDA had sufficient resources to enforce the changes. 

Medical device trade group AdvaMed also urged congressional action. 

“To better support patient care and public health, AdvaMed supports establishment of a single, modernized, diagnostics-specific, risk-based regulatory framework for all in vitro clinical tests, regardless of where developed, and overseen by FDA,” AdvaMedDx Executive Director Zach Rothstein said in a statement. “Such a framework would increase the reach of cutting-edge diagnostics, allowing patients to benefit more rapidly and broadly, and increase the confidence of patients and providers in the latest diagnostic technologies.” 

The VALID Act would be better for the industry because it would exempt tests already in commercial use from the new requirements, and wouldn’t affect newer tests for several years, the Cowen analysts wrote.

Mullen added that it was logical the the FDA would go to the rulemaking process after past attempts. 

“If the rulemaking works, FDA got what they want. They are now able to regulate LDTs. If it doesn’t happen for some reason, it’s yet another piece of information for FDA to push Congress to say, you have to be the one to act,” she said.