What You Need to Know About FDA's Proposed Regulation of LDTs

One of the most controversial topics in the diagnostics space is FDA’s proposed regulation to oversee laboratory-developed tests (LDT). Most recently, FDA and the Centers for Medicare and Medicaid Services issued a joint statement supporting the proposed oversight.

Benjamin Zegarelli, of counsel at Mintz, and former guest of Let’s Talk Medtech, spoke with MD+DI about the controversy surrounding the proposal and what 2024 holds for LDTs.

Let’s first define what is considered an LDT. 

Zegarelli: A laboratory-developed test, or LDT, is a type of assay that is ordered by a physician and conducted on a biological specimen, such as bodily fluid or tissue samples, in a clinical laboratory using various equipment to process the specimen and analyze specific proteins, genetic material, or other biomarkers, typically for the purpose of aiding the diagnosis of a patient. Specifically, FDA defines an LDT as an in vitro diagnostic test, or IVD, that is designed, manufactured, and used within a single clinical laboratory licensed under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, to perform high complexity testing. Currently, there are LDTs for a broad range of intended uses, from measuring vitamin or mineral deficiencies to aiding the diagnosis of cancer or other life-threatening conditions.

Related:Exploring FDA's Stance on LDTs & AI

 Why is LDT regulation such a controversial topic and why is it causing so much concern? 

Zegarelli: FDA’s proposal to begin actively regulating LDTs is controversial for many reasons, the principal one being that the LDT industry has experienced meteoric growth in the past 20 years, in large part due to FDA’s policy of enforcement discretion for such tests, meaning that the agency did not require clinical laboratories to comply with medical device regulations, such as registration, listing, pre-market review, and adverse event reporting, with respect to LDTs. The application of medical device regulations to LDTs is a sea of change for the industry as it will add numerous burdensome and expensive requirements to clinical laboratory operations and will surely lead to lower revenues as laboratories have to implement new quality systems and obtain marketing authorization for moderate- and high-risk assays.

FDA regulations requiring separate authorization for many types of modifications to devices will also constrain clinical laboratory flexibility to adapt assays to different customer needs, such as adding specimen types, accommodating different lab equipment, or multiplexing in new biomarker detections. On the other side, IVD manufacturers, which are already regulated by FDA as medical devices because no enforcement discretion has ever applied to them, have been clamoring for greater oversight of clinical laboratories that create LDTs.

Related:Medtech Is Missing the Forest for the Trees in the LDT Debate – But So Is FDA

They argue that FDA oversight purportedly leads to higher quality tests and lower risks to patients, and they also would like to see a more level playing field for developers of “test kits” and single-lab assays since the products can directly compete in the marketplace. In addition, healthcare professionals and institutions that use LDTs to help diagnose patients are on the fence with some arguing that greater regulatory oversight is necessary to ensure LDT quality and patient safety while others argue that applying FDA’s device regulations will make LDTs less available.

 Can you give us an update on where FDA stands now on regulating these tests? Were they regulated in the past? What would fall under FDA’s purview? Or has that been defined? 

FDA has maintained for decades that it has always had the authority to regulate LDTs under the Federal Food, Drug, and Cosmetic Act's medical device authorities. In the immediate aftermath of the 1976 amendments that established those authorities, the agency implemented an enforcement discretion policy for LDTs because at that time, such tests were mostly low-complexity assays for single analytes and generally considered lower-risk. As described in the Notice of Proposed Rulemaking (NPRM) FDA chose to begin phasing out enforcement discretion now because of numerous observations it has made regarding the quality of certain LDTs and the risks of patient harm associated with such tests, which have increased exponentially in complexity over the past 40+ years and for which there is not always scientific consensus or sufficient validation.

By expanding the device regulations to expressly capture all IVDs manufactured in a laboratory (i.e., all LDTs), if the final rule is implemented, FDA would have regulatory authority over all tests and assays intended for a medical or clinical purpose, whether marketed as a “test kit” or an LDT. However, FDA is proposing to continue its policy of enforcement discretion for specific types of LDTs, including certain histocompatibility tests and so-called “1976-Type LDTs” that require the use of manual techniques, laboratory personnel with specialized expertise, use of components for clinical use, and that are designed, manufactured, and used within a single CLIA-certified laboratory.

 I see that FDA and CMS have both issued a letter supporting the increased oversight of these tests. Will the letter move the needle, or does it underscore how important this topic is? 

Zegarelli: The joint statement by FDA and CMS probably will not convince those already against the rule that FDA oversight of LDTs is necessary or justified, but it reiterates a position that FDA and CMS together have held since they jointly re-assessed the regulation of LDTs back in 2015, which is that the agencies have complementary authority over clinical laboratories and LDTs and that FDA’s regulation of these tests as IVD devices would not be duplicative of existing CLIA oversight. CMS has the authority and expertise to regulate clinical laboratory facilities and laboratory operations, but FDA has the authority and expertise to evaluate the quality and validity of LDTs and their components.

A common argument against FDA’s proposed rule is that CMS and state agencies already regulate clinical laboratories through CLIA and such oversight is sufficient to assure adequate LDT quality and validity, but if it is not sufficient, CMS’s authority should be expanded by statute to cover LDTs. The joint statement refutes that argument by asserting that FDA has the necessary experience and authority to regulate LDTs and indicating that CMS itself does not support the expansion of CLIA in such a way, which in the agencies’ view would be neither practical nor a more efficient solution for the industry.

 Paint the landscape of LDT’s right now what spurred the use of more oversight? 

Until about 20 years ago, most LDTs were simple laboratory tests (then called “homebrew tests”) to detect or measure certain substances in the body, such as the level of vitamins, minerals, cholesterol, or certain proteins, and were considered low-risk, so FDA adopted a policy of enforcement discretion because laboratory and health care professionals appeared able to adequately manage the risks associated with LDTs.

Today, many LDTs claim to provide a definitive diagnosis of a patient’s condition, including for serious life-threatening diseases like cancer, and some of these assays are based on specimens collected by the patients at home with no supervision by a healthcare professional. As laboratory tests become more sophisticated and intended to detect or help diagnose more serious diseases and conditions, the risk to patients from false negatives and false positives rises, as well. FDA has noted this rise in risks associated with LDTs and is taking the position that active regulatory oversight and quality controls are necessary to mitigate such risks.

 What happens next? What's your prediction for the regulation of LDTs in 2024? 

Zegarelli: FDA will likely move quickly to review the comments submitted to the docket for the NPRM and prepare the Final Rule for publication in April 2024. However, laboratory and healthcare industry associations are preparing to challenge the Final Rule in federal court in an attempt to prevent the rule from becoming effective. Whether the courts will ultimately strike the Final Rule down completely is a much larger question, but it’s possible that courts will prevent the rule from becoming effective until a final decision is reached, meaning that the FDA may not be able to start phasing in regulatory requirements for LDTs in 2024 as described in the NPRM. While litigation is ongoing, the regulation of LDTs and clinical laboratories will continue as it has in the past, but such a continuation of the norm is likely to be short-lived because there is a good chance that FDA will assert some form of regulatory control over LDTs at some point in the future, even if that ends up requiring Congress to take action.