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Children's Hospitals Brace for Reduced Test Access, Higher Costs Under LDT Final Rule


NEW YORK – As the US Food and Drug Administration phases in oversight of laboratory-developed tests (LDTs), pathology directors at children's hospitals said they are concerned that the new rules could reduce future access to the types of tests that they and their partner hospitals rely on for cancers, genetic disorders, and infectious diseases as well as discourage the development of new tests.

For such facilities, the new rules create unique burdens, the directors said, because diagnostics for pediatric and very young patients may not be available from vendors, so the hospital have to develop their own tests.

In addition to new LDTs to be developed, they said that they anticipate unknown but substantial costs and labor to maintain their current LDT menus.

The FDA published on May 6 its final rule on the oversight of LDTs and a planned end to the agency's decades-long policy of general enforcement discretion for those tests. While that plan is being contested in a federal lawsuit, the agency intends to phase in through May 2028 requirements for premarket authorization of new tests, quality systems, adverse event reporting, establishment registration and test listing, and the investigational use of tests.

That plan would exempt from premarket review and most quality system requirements a broad range of LDTs including tests that were on the market prior to the issuance of the final rule, are used within a single healthcare system to address unmet patient needs, are approved under New York state's Clinical Laboratory Evaluation Program, and are modified in minor ways from 510(k) cleared or de novo authorized tests. However, all test makers will need to meet some new requirements including test listing, labeling, and adverse event reporting.

Pathologists at children's hospitals across the country said that as the premarket review requirements take effect in November 2027 for high-risk LDTs and May 2028 for moderate risk and some low-risk LDTs, they worry that they will become unable to offer new tests to outside patients or modify existing tests to keep up with advances in the field or the replacement of legacy instruments unless they submit those tests for FDA review, which they expect will be a costly and time-consuming process. They also predict that they will similarly lose access to the specialized tests that other hospitals will develop or modify in coming years unless those tests, too, receive the agency's go-ahead.

Meghan Delaney, chief of pathology and lab medicine at Children's National Hospital in Washington, D.C., said that children's hospitals use LDTs to aid the diagnosis and treatment of diseases that develop during different stages of infancy or childhood and different types of cancers that occur in children compared with adults. Even the tests that are used in both children and adults will have different reference ranges for different ages, and many commercial tests for infectious diseases are designed only for adults or patients who are at least in their teens.

Alexander Judkins, chief of pathology at Children's Hospital Los Angeles, said that his facility offers more than 500 different tests, of which more than 80 percent are LDTs. He said that commercial diagnostics companies seldom develop tests for pediatric indications because it is a small market, and it can be difficult to find enough patients for studies to meet regulatory requirements. As a result, the FDA's final rule on LDTs will have direct effects on the test menus that are used in children's hospitals to aid diagnosis and treatment decisions.

"It's right in the heart of what we do and how we're able to provide testing and support for the care of children every day," Judkins said.

In December, a group of chiefs of pathology at children's hospitals throughout the country wrote in a letter to FDA Commissioner Robert Califf that their facilities care for almost half of the children who are admitted to hospitals, providing tertiary and subspecialty care for those with the most serious illnesses and complex chronic conditions. LDTs are critical to the care of children of each stage of development from newborns through young adults, they added and urged the FDA to continue general enforcement discretion for all pediatric-related LDTs.

The FDA declined an interview for this article but said in a written response that the regulations are designed to offer assurances that the IVDs offered as LDTs are safe and effective and increase patient confidence in tests regardless of where they are made. It also said that the new enforcement discretion policies are intended to reduce the costs of compliance and the risks that patients could lose access to essential tests in comparison with the proposed rule issued last fall.

"We believe several of the enforcement discretion policies adopted in the final phaseout policy will help to address the concerns raised regarding the availability of IVDs for rare genetic conditions, other pediatric-specific conditions, and infectious diseases," the agency said.

Specialized testing relies on LDTs

While pathologists agreed that the FDA's final rule on LDTs would allow the continued development of tests for use within their healthcare systems without FDA premarket reviews, the rule was ambiguous about whether they will still be allowed to provide their existing testing menus to other hospitals under the enforcement discretion policy for tests that were offered prior to the final rule's publication.

In response to questions about how those policies intersect, FDA officials said in a statement that the agency intends to exercise enforcement discretion regarding the premarket review requirements and most quality systems requirements for an in vitro diagnostic test that had been offered as an LDT prior to May 6 by a CLIA-certified lab if that lab meets the regulatory requirements to perform high-complexity testing. To stay within that enforcement discretion policy, the lab cannot modify that LDT to change the indications for use, alter the operating principles, include significantly different technologies, or adversely affect the performance or safety specifications.

Sean Murphy, chief of pathology and laboratory medicine at Seattle Children's Hospital, estimated that his hospital has more than 200 LDTs. Many of those are clinical chemistry or hematology tests that are modifications of FDA-authorized tests that are run on adults but use different reference ranges.

"The FDA rule might drive some manufacturers to do a better job with complete reference range studies through the entire age span, but that's not the case right now," he said.

As he understands it, Murphy said, the FDA's enforcement discretion policies allow reference lab testing using existing LDTs but do not allow improvement to tests if they are offered to outside patients. Genetic testing could fail to keep pace with advances in research into the causes of disorders if each LDT needs to go through an FDA review process prior to its use in outside patients, he said.

"We continue to learn new things about metabolic disorders, and we hopefully continue to find and treat things that maybe were rare or unexplained," he said. "And if we develop lab-developed tests for those disorders in the future or we refine or make our tests better, they will all require this very burdensome FDA approval pathway," Murphy said.

Elizabeth Weinzierl, chief of pathology and laboratory medicine at Children's Healthcare of Atlanta, said that her hospital's LDT menu includes its flow cytometry-based tests to aid the diagnosis of childhood leukemia and lymphoma, MALDI-TOF assays to identify infectious microorganisms from culture, and NGS-based tumor sequencing panels to aid the diagnosis and treatment of cancers. The hospital also sends out samples to academic medical centers, other children's hospitals, and commercial labs that have developed LDTs for specialized coagulation tests, germline genetic testing, and biochemical assays.

"I worry a little bit about our send-outs and our ability to be able to provide testing consistently throughout the next few years as the rule becomes implemented," she said.

Jennifer Black, pathology chair at Children's Hospital Colorado, said her lab is one of only two in the country that offers certain mitochondrial tests. Some of those tests are offered in very low volume. For example, her lab runs about five tests per year for pyruvate dehydrogenase complex deficiency.

That mitochondrial disorder presents soon after birth with buildup of lactic acid that results in nausea, vomiting, severe breathing problems, and abnormal heartbeat and is often associated with neurological problems and delayed development. Other mitochondrial and biochemical genetic testing volumes offered by the hospital can range from single-digit numbers of patients to hundreds per year, and she noted that those tests typically lose money for the hospital.

Black said that Children's Hospital Colorado also has typically updated its solid tumor genetic panel about once every six months to incorporate genes that have been recently connected with a disorder, and she is concerned that the hospital will need to secure a new FDA approval with every update since the final rule was published. If securing a new approval takes two years, that test will be out of step with recent advances as soon as it becomes available.

FDA officials said the regulations in the final rule are intended to address both the changes in risk related to LDTs over decades and flaws that the agency has identified among some laboratories and tests. The FDA has exercised enforcement discretion since the implementation of the Medical Device Amendments of 1976, which established risk classifications for medical devices and requirements for the safety of those devices. However, unlike the typical LDTs of the 1970s that employed manual techniques and were used in small volumes within a single institution, the agency said, LDTs today increasingly rely on high-tech or complex instrumentation and software and are often run in high volumes for large and diverse populations.

"By phasing out the general enforcement discretion approach for LDTs, FDA is correcting the imbalance in oversight between non-laboratory and laboratory IVD manufacturers — an imbalance that harms American patients," the FDA said.

Jennifer Fralick, VP of anatomic pathology and clinical laboratories at Stanford Health Care, said that the specialty labs at Stanford work closely with oncologists, transplant surgeons, and other specialists to develop novel tests to improve care for patients. Her colleague, Nathan Taylor, technical specialist for Stanford's test development program, added that the program specializes in developing novel tests, and the final rule is going to increase the regulatory burden for the system's existing menu and make the development of new LDTs more challenging because it will limit the return on investment in innovative tests.

Stanford Health offers, for example, a genetic test that is used to identify in newborns the causes of errors in metabolism, and almost half the patient samples for that test come from affiliated hospitals throughout California. Under the final rule, Taylor expects that Stanford Health will be able to continue offering those tests, but that could change if the lab makes changes that the agency deems significant.

"If we had the option to move the tests to a different instrument or system that had better performance characteristics, we may choose not to do that because we would be therefore subjecting ourselves to requiring premarket approval to continue to offer that for everyone else outside of Stanford," he said.

FDA officials said that an LDT may continue to fall within its enforcement discretion policy for tests that were marketed prior to May 6 even after the lab replaces a reagent or instrument, which may be consistent with the agency's allowance for minor changes if it doesn't involve changes in the indications or operating principles, significant changes in the technologies in the test, or adverse changes in the performance or safety specifications of the test.

Delaney said that it is difficult to tell from the final rule whether a test that is developed at her hospital would no longer be subject to enforcement discretion if another hospital or company secured FDA approval for a test for the same indication.

"We are purchasing equipment and planning years in advance for what tests we need to replace as our equipment ages," she said.

The FDA said that an LDT addresses an unmet need only if there is no available FDA-authorized alternative for the condition, patient, or patient's needs. If the agency authorizes a test that meets the patient's needs, any LDTs for the same purpose would no longer fall under the enforcement discretion policy.

According to CHLA's Judkins, the hospital's cancer treatment center is a leader in the assessment of measurable residual disease (MRD) in pediatric leukemia patients, and clinicians use the results to decide when to stop treatment and assess a patient's risk of relapse. Under his reading of the final rule, CHLA could only provide that assay within its own health system under the orders of practitioners on staff or with credentials and privileges at the facility.

"CHLA made significant investments starting in 2015 into building capacity to do genomic and genetic testing for pediatric patients here at CHLA and beyond," Judkins said. He noted that the hospital serves patients across Los Angeles and California.

He has heard estimates that premarket review would cost at least $500,000 per LDT, a price that would render CHLA unable to afford to develop and update its tests. He noted that about 70 percent of the hospital's patients are Medicaid beneficiaries and that Medicaid reimburses at about 79 percent of the cost of providing care. CHLA often provides those tests without reimbursement since the hospital serves children without regard for their caregivers' ability to pay for the services.

"Suddenly, those kids don't get access to one of the only pediatric next-gen sequencing panels designed just for kids' cancer," he said.

The full impact of the final rule is unknown, Children's Healthcare of Atlanta's Weinzierl said. Not only could many new and modified tests be unavailable but the tests that go through the expensive process of premarket review could also cost more once they hit the market. Labs could also face pressure to divert resources to bring more tests in-house, although that may not always make sense due to factors such as low patient volumes.

Pathologists predict high compliance costs

Many pathology directors also said that they expect a costly and labor-intensive process of compliance with the agency's requirements that all LDT manufacturers meet device listing, labeling, and adverse event reporting requirements.

Murphy anticipates a mountain of work at Seattle Children's Hospital to meet the requirements under the final rule, and he is bracing for the need to hire on a tight budget additional staff with regulatory expertise. He also doubts that the rules will increase safety in his hospital, where his lab already implements controls, calibrators, and quality assurance steps into its LDT development process, as well as requirements from CLIA and the College of American Pathologists to identify its LDTs and who takes responsibility for validating them.

Murphy said he understands that the FDA wants to increase safety in response to predatory labs, but he said that those bad actors are not working within academic medical centers, and he doubts that regulating pediatric hospitals will solve technological problems with tests.

Delaney, of Children's National, said that some hospitals might find it easier to prune their testing menus rather than endure the costs of compliance for each test.

"Over time, we might see lower access for diagnostics for kids," she said.

Taylor, at Stanford, said that registering about 600 LDTs and providing the label information, including performance characteristics, will require heavy lifting including gathering data and ensuring it is ready for publication to the public.

CHLA's Judkins said that the facility registration, test identification, and adverse event reporting requirements will not be an insurmountable challenge since most of the data are already used for CLIA certification, but he expects it still will be a huge burden over the next three years. He noted that the serious test-related adverse events that occur in hospitals are rarely related to a poor test design and almost always are related to mistakes such as mislabeled samples or mishandled specimens.

While Judkins said that he supports the goals of improving the safety and efficacy of tests, he expects that compliance with the final rule will require great effort by hospitals and lead to only minor improvements with test quality.

"This puts a very disproportionate burden on us as we try and provide the best care that we can for our patient populations," he said.