FDA Announces Intention to Regulate LDTs as Devices

Abstract

In 1992, the Food and Drug Administration (FDA) first stated that it had authority to regulate laboratory-developed tests. On July 31, FDA took its biggest step toward invoking this asserted authority by unveiling its “Framework for Regulatory Oversight of Laboratory-Developed Tests (LDTs).”

In the framework, FDA explains that while it had traditionally exercised enforcement discretion and not regulated LDTs, due to changes in the role and type of LDTs, the agency now intends to regulate LDTs as devices. The agency plans to do this in stages, phased in over a lengthy period of time.

The FDA released the framework in letters to Congress. Under 2012 legislation, FDA was required to provide Congress notice at least 60 days before the agency issued a draft guidance document or regulation. Complying with this obligation, FDA provided this notification just as Congress went into its lengthy August recess. FDA plans to issue the framework for public comment after the 60-day congressional notification period expires. FDA will then need to evaluate the comments and determine what changes to make. The revised guidance document will then undergo further review by the Administration.

If FDA ultimately does issue a guidance document, it will not be legally binding itself. Guidance documents do not create any legal obligations. However, a final guidance document would establish FDA's interpretation of the law. Thus, the guidance document is of critical importance to industry, patients, and clinicians: While it is not law, it will set forth how FDA plans to apply the law, which is binding.

LDTs as Devices

For several decades, FDA has taken the position that LDTs are devices, and therefore subject to all other device-related requirements contained in the Federal Food, Drug, and Cosmetic Act (FDC Act). The laboratory industry has challenged FDA's authority to regulate LDTs, saying that they are not devices within the meaning of the FDC Act and that Congress intended laboratories to be regulated exclusively under a separate law aimed at labs, the Clinical Laboratory Improvement Amendments (CLIA). The Washington Legal Foundation (WLF) had set forth these arguments in a citizen petition filed with FDA in 2006.

FDA rejected WLF's petition the same day it issued the framework. FDA reasserted that all tests made by labs are devices, and that there is no statutory distinction whatsoever between kits sold by manufacturers for sale to labs versus tests developed by a single lab for its own patients. FDA also shrugged off the CLIA argument, saying passage of that law did not affect the device status of LDTs. In addition, FDA dismissed WLF's argument that this fundamental revamping of laboratory regulation needed to go through rulemaking, rather than the less rigorous process of issuing guidances.

FDA's interpretation of the FDC Act may not be the final word on the subject. The agency's imposition of the full panoply of device requirements on LDTs may well prompt litigation, in which case a court will get to decide. However, in the interim, FDA is poised to move closer to issuing a final guidance document.

The Proposed Framework

Because all LDTs are deemed devices by FDA, all labs that make LDTs are subject to regulation under the FDC Act. FDA, however, does not intend to regulate all LDTs in the same manner. Rather, the agency has proposed a tiered, risk-based structure.

If the guidance is finalized, all labs with LDTs—except for those doing forensic testing or certain LDTs for transplantation—will need to comply with some basic statutory requirements, regardless of risks. These will include registering with FDA (or providing a special notification in lieu of registering), submitting Medical Device Reports (MDRs), and submitting notices to FDA in the event the laboratory initiates corrections or removals. These are nontrivial obligations, but significantly less burdensome than what will follow for many labs. All labs with LDTs will need to establish procedures to comply with the MDR and reporting regulations. They will also need to evaluate the complaints they receive and corrective actions they take to determine whether they need to submit reports to FDA.

With the issuance of this new framework, the debate over FDA regulation of LDTs is now going to be held in full public view

Some LDTs will be subject to only these basic requirements. One such group consists of low-risk LDTs. Those will be well-established tests, and thus new markers or new technologies generally will not fall within this category. FDA will also exempt “Traditional LDTs.” FDA identified four criteria that it will consider, including that the LDT is used to test patients only at the facility that made the LDT.

Another group consists of LDTs for “rare diseases.” However, that nomenclature is really a misnomer. The category is based on rarity of testing, not the rarity of the disease. It applies only if fewer than “4,000 patients a year…would be subject to testing using this device.” As a practical matter, this exemption is likely to be of little utility, since it may take hundreds or thousands, or even tens of thousands, of tests to identify one patient with a rare disease.

The final low regulation category is “LDTs for Unmet Needs.” FDA lists several factors it will consider, including that there is no FDA-cleared or approved test “for that specific intended use” and the LDT “is both manufactured and used by a healthcare facility laboratory” that is treating the patient. Although FDA does not say so explicitly, it appears that FDA would not accord “Unmet Need” status to an LDT unless it is offered only to patients of the facility where the test is conducted. If all of these elements must be met, this exemption would likely be of limited significance due to the geographic restrictions. Thus, while some LDTs will be exempt, those exemptions, as drafted, may be fairly narrow in scope.

All other LDTs will face the full panoply of FDA regulation. This includes registration or notification, MDRs and recall reporting, premarket review, and compliance with the Quality System Regulation. Implementation of these provisions will be phased in.

The first LDTs that will need to comply with these requirements are the high-risk LDTs. FDA plans to require that companies with the highest risk devices submit marketing applications within 12 months of the finalization of the guidance. These first-in-line LDTs include ones that have the same intended use as a companion diagnostic that has been cleared or approved by FDA, and LDTs that have the same intended use as kits that have been approved by the premarket approval (PMA) process. One of the many details that will need to be ironed out is what exactly “the same intended use” is in this context.

The second batch of LDTs that will undergo FDA review are those high-risk devices that do not fall into the first tranche. It is unclear which of these LDTs will be the first to be the subject of a marketing application. FDA says it will develop a plan to decide the sequence in which this next tranche gets called, and will solicit public feedback in developing this prioritization scheme.

FDA expects that it will take five years to work through the process with the high-risk LDTs. The agency then intends to proceed with moderate risk devices. That phase is expected to last four more years. Thus, the framework contemplates a very long process, lasting nine years from initiation to completion.

Under the framework, labs that create high-risk LDTs will be grandfathered for existing tests if they submit their marketing applications when called for. (Presumably, grandfathering will extend to moderate risk tests as well.) On the other hand, labs that want to offer new LDTs will need “to comply with premarket review requirements before marketing of such LDTs” (emphasis added). This grandfathering may well spur labs to introduce new tests ahead of any call for submissions.

What's Next

Now that Congress has been notified, it could theoretically seek to block issuance of a final guidance. However, given Congress' complete inability to legislate, this possibility seems very remote.

The proposal is sure to elicit numerous comments, both favorable and unfavorable. Some companies believe that there should be a level playing field, and that manufacturers that submit applications to FDA for kits are strongly disadvantaged vis-a-vis LDTs. There will undoubtedly be comments that echo FDA's concerns that LDTs are not properly vetted, and that greater controls are needed to ensure the clinical validity of assays and their analytical quality, and to promote patient safety.

On the other hand, there will certainly be comments expressing concerns over the impact of FDA regulation on innovation and patient care. The framework discusses the risks FDA perceives with LDTs, but glosses over any discussion of benefits. Nor does the framework discuss the costs that will be imposed on labs—which are sure to be substantial—or whether FDA has the resources to cope with this large volume of extra work. Commenters will probably also note that the current FDA regulatory system discourages diagnostic manufacturers from modifying cleared or approved devices, tending to freeze them in place. LDTs are more flexible, allowing labs to more readily expand markers or update technology.

FDA's issuance of the framework is likely to have a significant effect, as labs, investors, and healthcare facilities digest this proposal and assess what it means for them. However, the issuance of the framework is a step in the process, and not its culmination. The debate over FDA regulation of LDTs, which has been long-simmering, is now going to be held in full public view. The debate is likely to be both fascinating and sharp, raising fundamental questions about the role of FDA and innovation in the healthcare system.

LDTs Present a Test for FDA and Labs

Alex Philippidis

Balancing the need to bring innovative laboratory-developed tests (LDTs) to market with the need to ensure those tests are safe and effective is pitting nonprofit academic medical centers against for-profit diagnostic developers—with the FDA intent on subjecting the academic labs to the same rules governing diagnostics companies.

The FDA has signaled to Congress its intent to regulate LDTs that it deems “high-risk” as Class III medical devices. The agency said July 31 it will issue within “at least” 60 days a formal draft guidance laying out a detailed, risk-based framework for approving such LDTs.

While FDA has long reviewed diagnostic tests, the agency has historically exercised only enforcement discretion over LDTs designed and used within a single laboratory, and had not sought to regulate their entry to market as is now required for Class III devices.

That would change under the guidance. FDA plans to begin pre-marketing approval (PMA) review requirements within 12 months after a final guidance for the highest-risk devices, and phase it in over four years for the remaining high-risk devices. The devices would stay on the market during FDA review.

FDA said it will begin with LDTs having the same intended use as a cleared or approved companion diagnostic, followed by LDTs with the same intended use as an FDA-approved Class III medical device; and some LDTs designed to determine the safety or efficacy of blood or blood products. FDA said it “intends to” publish priority lists for its review of high-risk LDTs within 24 months of a final guidance, and “moderate-risk” LDTs within four years.

Labs would have to begin registration, listing and adverse-event reporting for “moderate risk” LDTs, which would be deemed Class II medical devices, six months after a final guidance is set. PMA for these LDTs would begin five years after final guidance, and be phased in over four years.

The FDA has justified its interest in regulating LDTs in part on what Commissioner Margaret A. Hamburg, M.D., has called “faulty or unproven” tests leading to over- or undertreatment for disorders that included heart disease, cancer, and autism. In April, the CDC expressed “serious concerns” about the potential for misdiagnosis due to false positive results from a Lyme disease LDT that used a culture method to identify Borrelia burgdorferi. CDC recommended that the diagnosis of Lyme should be left to FDA-approved tests.

The FDA took two years to approve the Western blot diagnostic test.

Venerable ‘Western’

Academic labs, however, cite the story of the Western blot, a confirmatory clinical diagnostic for HIV-AIDS and Lyme disease that is among the most widely used tests in molecular biology. Developed in 1981 by W. Neal Burnette, then working in the lab of Robert Nowinski, Ph.D., at the Fred Hutchinson Cancer Research Center in Seattle, the test's name pays homage to the Hutch's West Coast location and the test's similarity to Edwin Southern's namesake “Southern” blot technique, where gel, nitrocellulose, and blotting paper are used for identifying DNA sequences in complex organisms.

The academic labs note that while clinical labs developed Western blot tests to establish definitive diagnoses of HIV-1 in 1985, soon after the virus was identified, an FDA-approved Western blot test didn't become available until 1987 (from DuPont), and hasn't changed much since then.

“Because obtaining additional FDA approvals for test kit modifications would be so burdensome, the manufacturer has not modified the test to keep up to date with the medical science. As a result, FDA regulation has stifled that test's improvement and product innovation,” lab directors from 23 academic medical centers wrote in a July 16 letter to Brian Deese, acting director of the U.S. Office of Management and Budget.

AdvaMedDx, the diagnostics manufacturers' division of the Advanced Medical Technology Association (AdvaMed), contends the guidance will protect academic labs by leaving with them enforcement discretion for LDTs for rare diseases and for unmet medical needs, when no other testing options exist. However, the labs will be required to register and list these tests with FDA. And the agency will exercise enforcement discretion for forensic-exclusive LDTs and transplantation LDTs when used in high-complexity histocompatibility labs certified under Clinical Laboratory Improvement Amendments (CLIA) standards.

It is expected that the new regulations will encourage larger labs to focus less on creating me-too products and more on developing their own products to meet more unmet needs.

“FDA has worked to support health care professional labs through proposing to except rare disease and unmet needs testing, and thereby continue to promote public health and innovation,” Khatereh Calleja, AdvaMed's vp, technology and regulatory affairs, told Clinical OMICs. “Even in other testing areas, FDA is allowing significant transition time for higher and moderate risk products to permit laboratories time to complete requirements and to support continuity in availability of testing.”

While AdvaMedDx represents corporate diagnostics developers, it denies trying to squelch competition from academic labs: “AdvaMed has supported risk-based regulation for all diagnostics, regardless of where they are made. Risk to patients is irrespective of where tests are made,” Calleja said.

Defining LDTs

FDA and the Centers for Medicare and Medicaid Services, which oversees CLIA, view LDTs as medical devices since the tests have entailed chemical reads, instruments, and systems used to diagnose, cure, mitigate, treat, or prevent disease.

The academic labs view the tests as “laboratory testing services” subject to the Food, Drug, and Cosmetic Act. At present, labs certified under the CLIA waiver program may develop and use their own diagnostic tests internally, without FDA oversight. The Association for Molecular Pathology (AMP), whose membership includes academic and community medical centers, agrees: “, said in a statement.

A former senior reviewer and policy advisor at FDA's Center for Devices and Radiological Health told Clinical OMICs that larger diagnostic manufacturers experienced in FDA regulations won't see much of an effect. Smaller academic medical labs will face a greater challenge than larger ones, which are likely able to meet FDA's Guidance within a reasonable period.

“The labs' business model will slightly change,” Lakshman Ramamurthy, Ph.D., director of FDA strategy and regulatory policy for Avalere Health, an advisory company focused on healthcare business strategy and public policy, and based in Washington, DC. “Many of the larger labs attached to universities are at the very source of discovery and innovation. So they have an existing pipeline of new things to innovate and work on. Therefore, they will probably focus less on creating say a me-too for an existing FDA-approved product, and instead innovate by developing their own products to meet more unmet needs.”

“The labs will have to figure out how to work around and maintain financial liquidity while also contributing clinical quality,” he added.

The labs will also have to figure out which tests the FDA will deem high-risk. “I would imagine companion diagnostics would always range high. Cancer screening devices will range high, because when you screen an average risk person for cancer, you are making a life altering decision for them, rightly or wrongly. So, therefore, the risk associated with that is very high,” Dr. Ramamurthy said.

Helping drive LDTs toward FDA regulation are several payers. In 2011, Palmetto GBA, a Medicare administrative contractor, disallowed labs from submitting claims for all non-standardized organ or disease-oriented LDTs that, among other criteria, were not FDA-cleared. A similar policy was introduced by TRICARE, the healthcare program for active and retired uniformed military members and their families—though on July 15 it said it will allow reimbursement for some non-FDA-approved LDTs under a pilot program.

“This has to sort itself out,” he said. “It will take some time. But I am optimistic that in the long term, it will sort itself out.”