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Lab Group to Ask Congress for Statutory Changes to Keep LDTs Under CLIA


Originally published April 29.

By Turna Ray

While the US Food and Drug Administration is taking steps to bring laboratory-developed tests under its regulatory purview, a lab advocacy group is in discussions on Capitol Hill about enacting statutory changes that would keep LDTs under the Centers for Medicare & Medicaid Services' oversight.

The American Clinical Laboratory Association's board has "conceptually agreed" to ask Congress for statutory changes to both the medical devices regulations under the Federal Food, Drug, and Cosmetic Act and to the laboratory oversight rules in CMS' Clinical Laboratory Improvement Amendments. "We're still finishing the details of it, and we hope to have something on paper in the next couple of weeks," ACLA President Alan Mertz told PGx Reporter.

LDTs have traditionally been overseen by CMS under CLIA, while the FDA has restricted its regulation to medical device kits developed by test manufacturers, certain high-risk LDTs, and analyte-specific reagents (PGx Reporter 07/21/2010). Now, recognizing that the technology underlying LDTs has become more complex and that companies are broadly marketing these tests, the FDA has decided to lift its longstanding practice of "enforcement discretion" over LDTs and begin regulating such tests. To this end, the agency gathered stakeholder input last summer in a public meeting, and is planning to release a draft guidance in the coming months.

According to Mertz, ACLA's constituent labs recognize that there are oversight gaps for LDTs, but they feel that the majority of these tests are developed and used in a way that makes them distinct from medical devices regulated by the FDA. As such, Mertz said, most LDT developers wish to keep their testing services under CLIA oversight.

"We have a consensus of all the different labs within ACLA," Mertz said. Lab and medical services-focused publication G2 Intelligence originally mentioned ACLA's intent to seek statutory changes for LDT regs in a report. Mertz had discussed the issue at ACLA's annual meeting.

ACLA, a non-profit advocacy organization for laboratory services providers, has members spanning the gamut of the industry, including university hospital labs, genetic testing labs, esoteric labs, reference labs, and national labs. Once a formal proposal for changing the existing regulatory statutes is laid out, ACLA plans to go to other laboratory groups for backing.

Deepening Rift

ACLA's plan to take its case to Congress suggests a deepening rift among disparate players in the diagnostics industry about how tests based on emerging technologies and marketed under complex business models should be regulated.

One side — represented by the FDA, drug developers, and large diagnostics shops — feels that the agency's old practice of enforcement discretion isn't sufficient to manage public health risks in the face of new testing methods and evolving business models. On the other side are labs and test developers that believe overly burdensome FDA regulation will stifle innovation in molecular diagnostics and genomics.

FDA officials have characterized the current dual regulatory pathway as a "loophole" that allows companies to market molecular diagnostics with questionable clinical validity and utility. Through CLIA, CMS can oversee the performance of the lab where the tests are being conducted, but it doesn't have the authority to look at a specific test's clinical validity.

While LDTs were traditionally low-risk tests developed by single laboratories for a limited population in a hospital setting, the FDA has pointed out that in the current landscape, many tests sold as LDTs aren't really developed by a single laboratory, are launched commercially through laboratories before the tests are fully validated clinically, and are aggressively marketed to a broad consumer market.

The agency's 2008 warning letter to the Laboratory Corporation of America about its OvaSure test is an example of the types of activities that moved the agency to lift its enforcement discretion over LDTs. In the letter, the FDA informed LabCorp that its OvaSure test was not an LDT but a "medical device" requiring its approval, mainly because the test was “designed, developed, and validated by investigators at Yale University and not LabCorp” (PGx Reporter 10/29/2008).

In its response to the FDA letter, LabCorp disagreed with the agency's classification of OvaSure as a medical device and noted that even though it had licensed certain aspects of the technology from Yale, the company developed OvaSure internally and the test "meets all applicable CLIA regulatory requirements."

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The reference lab added that it believes that "laboratory developed assays are not medical devices within the meaning of the FDC Act and that they are not subject to regulation as medical devices” — an argument that many in the laboratory community would agree with, according to Mertz.

"LDTs are not devices in the sense that they are developed within a laboratory, and they are never sold to another laboratory. If they are [sent to another lab,] then they become a kit that is regulated by the FDA," Mertz said.

Mertz said that most LDTs are low-volume, and performing them at a single lab allows technicians to quickly make necessary changes to improve the tests' performance. Using pap smears as an example, Mertz noted that those tests "are not machines," but "more of a process, and the practice of medicine.

"The FDA doesn't regulate the practice of medicine," he said.

The easiest fix in addressing the gaps in LDT oversight, according to ACLA, is to work within the existing regulatory framework and give CLIA the authority to oversee LDTs in a manner that would ensure their safety but wouldn't stifle innovation.

"Most of the advances in genetic medicine are occurring within LDTs," Mertz said. "The lab industry believes that it should be made clear in the CLIA statute that [CMS] has the authority to actually regulate the clinical validity of a new test and … that you have to submit something to CLIA to indicate that you're marketing the test to doctors and other hospitals."

LDT developers are currently operating in an uncertain atmosphere. Little is known about what the FDA is envisioning in terms of regulation. At FDA's public hearing on LDTs last year, the agency said it intends to issue regulations in line with the risk and intended use of a given LDT.

FDA is said to be considering ideas such as downgrading in risk classification certain regulated tests as a way to manage its limited resources; phasing in regulation of LDTs that aren't currently regulated; collaborating with the National Institutes of Health to develop a test registry that could serve FDA's purposes for keeping an eye on all test developers; and possibly enlisting the help of third-party inspectors to help the agency with its increasing regulatory burden. At the minimum, the FDA has indicated its intention to coordinate its LDT regulatory activities with CMS to ensure that labs don't have to meet the same requirements for two agencies.

ACLA's leadership has discussed with FDA officials some of the lab community's concerns about LDT regulation, but the organization fears that many LDTs would not fit into the agency's risk classification system.

"They are falling back on the concept that a LDT that's for a serious and life-threatening disease … would be high risk, [and you] have to get premarket approval from FDA," Mertz noted. This can be problematic, because "sometimes, a test can be for a serious and life threatening disease, like a pap smear … but it's only a screen and there are several follow-up tests that would be done to confirm the diagnosis.

"So, this isn't like a drug you put in your body, or a heart valve, or a pacemaker. If those devices or drugs don't work, they can be life threatening," Mertz continued. For many LDTs, "it's like fitting a round peg in a square hole … And we can't figure out how FDA would reclassify these tests."

Engaging Congress

ACLA is in the beginning stages of its efforts to endorse legislative changes for LDT regulation and is just starting talks in Washington, DC. As such, it's too early to name a standout Congressional champion for ACLA's cause.

There are forces already in play on Capitol Hill attempting to alter diagnostic regulation through legislation. Among the diagnostics community, there is much support for creating a separate division at the FDA for reviewing diagnostic products. The Coalition for 21st Century Medicine and the Personalized Medicine Coalition are working with Senator Orrin Hatch (R-Utah) on legislation that calls for a new FDA division called the Center for Advanced Diagnostics Evaluation & Research.

An early version of the Hatch bill, reviewed by PGx Reporter, proposed that all sponsors of diagnostics, whether a lab or a company, register their tests as part of a database managed by the new FDA agency. Developers would need to identify whether their tests fell under one of three categories, based on whether the diagnostic has a low, moderate, or high health impact. Consistent with current practices, the FDA would require premarket clearance for tests with greater impact on public health, and the Center for Advanced Diagnostics Evaluation and Research would work with the Centers for Medicare and Medicaid Services to certify laboratories where certain tests are developed.

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It's unclear whether ACLA's membership would be amenable to working with Hatch Bill supporters in the diagnostics community. The ACLA has not taken a public position on the bill since it's still on the drafting table. Once the bill is introduced, it will certainly offer ACLA and others in the lab industry an in-road to making legislative changes that specifically address LDTs.

On the other hand, there are powerful groups on the Hill that would likely push back against ACLA's proposal to maintain a dual regulatory pathway. A Citizen Petition that Genentech filed in 2008 urging the FDA to regulate all predictive LDTs was backed by other pharmas, biotechs, and even diagnostic shops that felt the existing regulatory framework fostered an uneven playing field (PGx Reporter 12/17/2008). These industry players would likely not be happy with any legislative proposal that would maintain a dual regulatory framework for diagnostics.

However, since Congress is in a belt-tightening mood right now when it comes to funding, Mertz believes there are significant resource arguments to be made in support of keeping LDT regulations under CLIA.

Lab reviews conducted under CLIA are funded entirely by user fees from the laboratories, but medical device reviews by FDA are paid for by a mix of medical device user fees and congressional appropriations. Mertz said that CLIA has around $45 million per year to conduct lab reviews. "If some additional user fees would be needed by CLIA to look at the clinical validity of the LDTs, we'd be willing to do that," he said.

President Barack Obama's proposed budget for the 2012 fiscal year seeks $2.74 billion for the FDA, up from $2.37 million budgeted for the agency in fiscal 2010. The agency said it expects to add $1.62 billion to its revenue from changes to user fee policies. Congress is still mulling the budget proposals.

For test developers, there is a significant cost differential for taking a test through FDA or through CMS. Biennial fees for CLIA certification range from $150 for a waived lab to $7,940 for labs whose annual volume exceeds 1 million tests.

The FDA's standard fee for a PMA is $236,298. The PMA fee is reduced to $59,075 for small businesses with annual gross sales and revenues of $100 million or less and is waived for the first PMA submission from firms with gross receipt sales of less than $30 million. FDA's standard 510(k) submission fee is $4,348 and $2,174 for small businesses with less than $100 million in gross receipt sales.

By keeping its proposal for statutory changes focused on reducing administrative waste and cutting out duplicative processes, Mertz believes that ACLA could also have the backing of the White House. An executive order issued by Obama in January requires all government agencies, including the FDA, to conduct a cost-benefit analysis before promulgating new regulations and to ensure that any adopted regs are least burdensome. "So, even the administration would look at a proposal like this," Mertz said.

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