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Q&A: Lawyer Jeff Gibbs On Future of FDA Regulation of Lab-Developed Tests Under New Administration


NEW YORK (GenomeWeb) – The US Food and Drug Administration has said it is delaying finalizing regulatory guidelines for lab-developed tests (LDTs), but people closely following the decades-long controversy believe that the draft document released two years ago is dead in the current political climate.

This is welcome news for those in the lab industry that have fought the FDA's every attempt, over more than 20 years, to regulate LDTs under the device law.

During that time, both the agency and lab industry players have presented their case as a public health issue. The FDA believes the current system of oversight for LDTs under the Centers for Medicare & Medicaid Services has critical gaps that place patients at risk. The lab industry thinks FDA hasn't provided convincing evidence of public harms under the current system, and has countered that shifting the oversight paradigm from CMS to FDA would place patients at risk because labs wouldn't be able to meet burdensome requirements and would have to stop performing critical tests.

Two years ago, FDA came the closest it has to lifting its so-called "enforcement discretion" over LDTs, when it released a nine-year plan for phasing in regulation for such tests. The already contentious issue quickly became political. Some lab industry players were ready to take the agency to court. Despite these pressures, the agency was steadfast that it would finalize the draft LDT guidance.

That resolve undoubtedly became harder to maintain after Donald Trump's election win and with both legislative chambers going to Republicans, suspects Jeffrey Gibbs, an expert on regulatory law at Hyman, Phelps & McNamara.

The agency announced earlier this month what many stakeholders were already speculating in policy circles — that it would hold off on finalizing its regulatory plans for lab tests. But even if the FDA's regulatory reform framework is quashed, the issues that spurred the agency to try to extend oversight remain, as does the need to modernize regulations for technologically advanced and increasingly complex tests, suggested Gibbs, who also advises medical device and diagnostic companies.

Long before the agency issued the draft guidance, FDA used its enforcement powers to restrict marketing of certain tests. Gibbs told GenomeWeb in a recent interview that the agency can continue to use, or even step up these activities on a case-by-case basis instead of lifting enforcement discretion over all LDTs as it had intended with its guidance. But since Trump campaigned on a platform promising less regulation in general, Gibbs acknowledged the possibility that the new administration could find ways to curb the agency's powers.

Below is an edited transcript of the interview.

What factors do you think went into FDA's decision to delay the draft LDT guidance?

Politics and the election. It has to be primarily political in the sense that the idea of having an extensive new regulatory regime was something unlikely to survive scrutiny by the incoming administration. It would have been extremely easy for the Trump administration to reverse the final guidance. So, if it had gone out as a guidance document, it could have been suspended on Jan. 20.

My assumption is there was a political calculus that this was not worth pursuing. It was not feasible under the new administration and it wouldn't be worth the effort to try to get something out during the waning days of Obama administration. 

Do you think a final guidance was more likely if the outcome of the elections had been different? There were a lot of predictions throughout this year, different time frames, for when the FDA might have finalized guidance. But none of those came to pass. Do you think FDA was waiting to see the outcome of the elections?

We know it was being reviewed. We had heard reports that the guidance had been forwarded for review and approval. I think many people expected it was going to come out months ago. It's not completely a given that if Hillary Clinton had won then the FDA or the Office of Management and Budget or the White House would have released this anyway.

Whether the Trump administration would rein in the FDA is a very different kind of question. I don't think anyone knows the answer to that right now.

The groups that have long fought FDA oversight of LDTs, lab industry and pathologist interest groups, saw the agency's decision to delay final guidance as a positive. But long before the draft guidance was out, the FDA was sending letters and taking other types of enforcement action against lab test developers it thought was putting the public at risk. Do you think the agency will still be able to do that and regulate in instances where it felt the public may be harmed under the new administration?

There are two questions. One is would the FDA have the ability to do that? And to me the answer is yes. The agency has done it before, as we saw with ovarian cancer [screening tests] a few months ago, and they've done it at other times. I expect that they think they can.

Whether the Trump administration would rein in the FDA is a very different kind of question. I don't think anyone knows the answer to that right now.

What are some mechanisms the agency has used in the past to extend oversight?

One way is questioning whether the test is an LDT at all. We saw that most notably in the warning letter that was sent to LabCorp in 2008 about its ovarian cancer test. FDA also sent a similar letter [in 2007] to Exact Sciences for its colorectal cancer test. [Editor's note: In both letters, the FDA said these tests don't fit the definition of an LDT, because they are not developed, sold, and performed by the same entity. As such, the agency said it would regulate them as devices under the Federal Food, Drug, and Cosmetic Act.]

There have been other letters to labs asking if a test is an LDT, but those weren't warning letters so they may not have gotten the same publicity. Most of them weren't in the public domain at all. But the FDA has from time to time checked to see if something is an LDT. So, one option for FDA would be to crack down on what is an LDT, and become more aggressive in saying something is not an LDT, [by questioning] whether a lab really developed a test, or a third party developed it and a lab just ran the test.

A related tack could be to question if it is a direct-to-consumer test. FDA has said that these DTC tests do not qualify for its exercise of enforcement discretion. We've seen that come up multiple times. It would not at all be surprising if FDA challenged more tests that they believed [are] DTC, and therefore not exempt from enforcement discretion.

A third route is when FDA thinks a test is dangerous. That's different. There they are not saying that a test is outside of their enforcement discretion. They are saying even though it's a test for which they exercise enforcement discretion, they are voicing concerns about the test. There the FDA isn't saying a test has fallen outside of its policy but that it is worried about the test.

Could the guidance on research-use only and investigational-use only in vitro diagnostic products offer another mechanism? Historically, the FDA hasn't done much enforcement based on those guidances. 

There have been companies that have arguably been making claims for RUOs, where FDA has not acted. So, it is somewhat of a surprise that FDA hasn't been more aggressive in trying to enforce that guidance. Perhaps there are fewer companies that go beyond the guidelines than is perceived. But there has been very little enforcement action.

That would be one way for FDA to try to cut back on LDTs. If FDA curbs the supply of RUOs, saying they're unlawful, that would affect LDTs. Ditto for analyte-specific reagents. If FDA were to challenge more ASRs as not being compliant, that would be another way to prevent LDTs, because labs wouldn't get the raw materials that they would need.

Warning and untitled letters have been a major way the FDA has kept tabs on the lab industry. There's some history there in terms of how those powers were curbed under the Bush administration and somewhat eased under the Obama administration and former FDA Commissioner Margaret Hamburg. What might happen to that power under the current administration?

FDA is subject to oversight under the Department of Health & Human Services and ultimately by the White House. There can be restrictions put in place on FDA's ability to take enforcement action. One could imagine a policy that told the FDA that labs aren't under its purview, labs are regulated under a separate set of laws, and FDA is not to take action against labs. One could imagine that could be a policy decree.

There was a period where all warning letters were reviewed by the Office of the Chief Counsel. There could be a policy that says, those letters have to go through chief counsel review or they have to go through review by HHS to make sure they are consistent with its overall policy on labs. I have no information to suggest that this will happen, but you could envision restrictions like that being set up.

[Editor's note: From 2002 to 2008, HHS required FDA's regulatory letters be reviewed and approved by the Office of Chief Counsel for "legal sufficiency and consistency with agency policy" before they could be issued. During that period, the agency sent out fewer regulatory letters to companies than during the second Clinton administration or in the first years of the Obama administration.] 

Ultimately, FDA's choice of going with a guidance document doomed any possibility of it coming out.

The American Clinical Laboratory Association hired lawyers to make the case that the agency lacks statutory authority to regulate LDTs, which many interpreted as a sign that if the agency finalized the guidance that the group would sue. Even though FDA has backed off the draft LDT guidance, ACLA hasn't backed off its position on FDA's oversight authority. In the current political climate could that relationship get worse if FDA continues to take enforcement action against certain labs?  

There are still significant legal issues that remain. The broadest issue came up with FDA saying it wanted to regulate all labs through the LDT guidance. That would have posed major legal issues. If ACLA didn't sue, others would have almost certainly. I don't know what FDA is planning to do now as their next step. But if FDA were to take ad hoc actions against individual labs, it would make it much harder for there to be a lawsuit by an industry organization challenging a policy because there may not be a policy.

But there certainly could be litigation brought by individual companies that are the target of FDA action. So, if an individual lab were told that what it was doing was illegal and that it needed to get a 510(k) or a PMA to run a test, rather than treat it as an LDT that's exempt, they could resist, and that matter could wind up in litigation.

While it is unclear what FDA plans to do next, a number of groups have advanced alternative regulatory proposals for LDT oversight, most notably the Diagnostic Test Working Group, which the House Energy & Commerce Committee used to write draft legislation. ACLA has said it is working with legislators to "advance comprehensive statutory reform" on LDT regulations. But at this point is there much political will to push any alternative proposal forward? 

I don't know. Pushing for something that wasn't as bad as the LDT draft guidance — the impetus to do that is off the table. To the extent people are saying, 'We have a regulatory structure that really should be modernized and rationalized, because this dichotomy between labs and in vitro diagnostics doesn't make sense,' that issue still exists. IVD companies are looking at this and saying, 'The statute and regulations that apply to other devices are really not a perfect match for us.' For them the same underlying issue exists — the need to have some changes even if the LDT guidance is gone.

There is also the possibility that four years from now you have an administration with a different bent, and the FDA revisits the LDT guidance. This issue has been percolating for decades, so one should not assume that the issue is permanently buried with the Trump administration. There still might be incentive to go ahead and deal with it in a systematic way, because there are many good arguments for the idea that we should have a rational, thoughtful [regulatory] system. Those issues are not weakened.

The acute pressure to do something may be gone because of the FDA's action and the Trump administration, but the long-term need to address this remains. As far as political will, who knows? I can't actually make predictions anymore. If you had interviewed me in November 2015 and asked, 'What do you think the view of the incoming Trump administration is going to be on FDA regulation of labs?' I would have been astonished to contemplate that and so would everybody. So, I think prognostication is tough.

When I was thinking about the results of the election, I immediately thought the LDT guidance is almost certainly dead. Because it's a guidance.

Anticipating greater FDA regulation of LDTs, some developers of diagnostics, companion tests, and next-generation sequencing tests have already gotten clearance or approval or are in the process of doing so. Foundation Medicine recently announced it would take its NGS panel through FDA and CMS's Parallel Review program, which only one company has successfully completed. 

That was a real surprise to people that Foundation Medicine would embark on that.

And I asked if they would back off those plans now and they're not. They're still going through with it when I checked last week. So, do you think there is still value to companies that are already in the process to continue with FDA review of their products or do you think some companies might now say, 'Well, we don't have to get clearance or approval, so we won't'?

There will be different reactions. I'm sure there will be companies that were thinking of going through FDA as a hedge against LDT regulation that will say they won't embark on that process because it's too costly, too unsure, too long, and too demanding. There might also be companies that continue to pursue it because they think there might be other advantages of FDA clearance or approval, perhaps relating to reimbursement or the way they're viewed by doctors and patients. For companion diagnostics, the economics there is very different if you're getting the work funded by a pharma partner.

Were you surprised that the FDA decided to delay the guidance or did it kind of make sense?

When I was thinking about the results of the election, I immediately thought the LDT guidance is almost certainly dead. Because it's a guidance.

One of the main criticisms throughout this entire process has been that the FDA chose to issue guidance rather than rulemaking. Had they issued a rule and the rule had been issued earlier in 2016, before the rollback period for regulations that exists in the law, it would have been very hard to undo. But with a guidance document, on Jan. 20, it could be undone with an executive order.

So, ultimately, FDA's choice of going with a guidance document doomed any possibility of it coming out. If they had gone with a rule and pushed it along faster, the world could be very different. The Obama administration will try to get certain things done in the last couple of months. It never occurred to me that they would spend political capital, time and effort, on this — such a controversial action, which can be undone.