HHS' decision to abruptly restrict the Food and Drug Administration's ability to require premarket review of laboratory-developed tests (LDTs) through guidance and other informal communications has industry players scrambling to figure out how this impacts their diagnostic regulatory strategies.
HHS recently stated that FDA can't require premarket review of LDTs without notice-and-comment rulemaking—a much more protracted process than the agency's historical preference for guidance documents or communicating policy positions via a "frequently asked questions" section on its website during the COVID-19 pandemic. HHS said its decision is in line with two presidential executive orders and aims to streamline regulations during the pandemic. However, the move has far-reaching implications beyond coronavirus testing.
"When a stone is thrown into a pond there are ripples. It's really hard to predict where those ripples are going to land and what pattern they're going to take," said Jeff Gibbs, a director at the law firm Hyman, Phelps & McNamara, who formerly served as FDA's associate general counsel for enforcement. "HHS threw the stone into the pond and maybe wasn't thinking about all the ripples."
"The language HHS used is terse and ambiguous," agreed Gail Javitt, who as a director at Hyman, Phelps & McNamara provides strategic regulatory advice to drug and diagnostics companies. "HHS said that FDA can't require premarket review of LDTs without notice-and-comment rulemaking, but it never said FDA didn't have jurisdiction over LDTs."
Still, without actually stating FDA lacks authority to regulate LDTs, HHS' edict casts doubt on nearly three decades of FDA guidance and policy statements asserting its authority to regulate LDTs. "It's astonishing that something that has such a profound impact on such a large industry and on so many lives, was issued with so little notice and so little detail," Gibbs said.
The FDA under several presidents—George W. Bush, Barack Obama and Donald Trump—has maintained that it has legal authority to regulate all diagnostics, whether it's a test manufactured for use at multiple labs or an LDT developed, validated and performed in one lab. Although the agency has maintained authority, it has not regulated most LDTs, exercising "enforcement discretion," and left it up to CMS to oversee labs under federal standards outlined under the Clinical Laboratory Improvement Amendments (CLIA).
However, noting the growth and changing marketing practices within the lab industry, the FDA from time to time has tried to regulate LDTs in a piecemeal fashion through guidance. Some have taken hold and have been important to the advancement of personalized medicines. For example, based on FDA's guidance on companion diagnostics, which doesn't distinguish between manufactured test kits and LDTs, drugmakers routinely partner with diagnostics firms to garner premarket approval for tests used to identify which patients should or shouldn't receive their therapies.
Other guidelines, such as a 2007 draft guidance to regulate algorithm-based tests, dubbed in vitro diagnostic multivariate index assays, and a 2014 draft guidance describing an overarching framework for all LDTs, were never finalized due to widespread industry pushback. The loudest objections to these efforts came from laboratory and pathologist groups that have long held that CLIA is the appropriate oversight framework for ensuring the quality of LDTs, and that the FDA lacks statutory authority to regulate lab processes. After HHS released its statement, the American Clinical Laboratory Association and the Association for Molecular Pathology released statements supporting the move.
Even if the FDA had the statutory authority to regulate LDTs, many lab industry stakeholders have long insisted that the agency cannot advance what amounts essentially to a new regulatory framework over such a large swath of the diagnostics industry through guidance, but that it must go through notice-and-comment rulemaking. Creating regulatory policy through guidance is a far quicker process than rulemaking, which would require the FDA to give the public notice of its plans, take feedback, and in issuing a final rule, explain why it did or didn't take up certain suggestions.
Gibbs has said for years that the Administrative Procedure Act provides strong legal arguments against FDA's ability to promulgate new regulations or change existing policies through guidance. HHS has now bolstered this argument. "If the FDA were to try to regulate by guidance documents again, what was already a strong legal argument has just become a much stronger legal argument," he said. "The Trump administration has just made it much harder for future administrations to regulate through guidance documents."
Even if some labs may rest easier knowing that the FDA can't for the moment require premarket review of their LDTs, HHS' statement raises a lot of questions about the types of tests that are LDTs beyond the FDA's jurisdiction. Moreover, after considering the reimbursement and payment incentives in specific markets for FDA-approved or -cleared LDTs, such as for COVID-19 testing and next-generation sequencing cancer panels, some companies may still pursue FDA premarket review.
Importantly, the public may be reassured to see the FDA's stamp of approval. "It may be easier not to go through the FDA," said Robert Boorstein, medical director at Brooklyn-based Lenco Diagnostic Laboratories. "But that doesn't mean that the people who are ultimately deciding to use a test or the people deciding to pay for it are going to be enthusiastic about a lab providing non-FDA approved tests."
HHS hamstringing FDA enforcement of LDTs has raised concerns in the life sciences community that this will result in greater variability in lab test quality and increase the risk for public harm, especially during the pandemic, while federal and state authorities are limited in their ability to do unannounced lab inspections. "For labs that do want to cut corners, it allows them much easier access to the market," Boorstein said.