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FDA, HHS Guidance on COVID-19 LDTs Draws Mixed Reactions from Industry Stakeholders


NEW YORK – Recent guidance from the US Food and Drug Administration regarding the oversight of laboratory-developed tests has caused mixed reactions from industry stakeholders, including laboratorians, test manufacturers, and professional organizations.

Last week, the FDA announced that the US Department of Health and Human Services had withdrawn a policy restricting the FDA's ability to review laboratory-developed tests for SARS-CoV-2. In effect, it reverses the policy, originally established in August 2020, that directed the agency not to enforce premarket review requirements for LDTs without notice-and-comment rulemaking.

As a result of the 2020 policy, test developers were able to distribute their validated tests as LDTs without objection from the FDA as long as the agency was notified.

In October 2020, the FDA also decided not to review Emergency Use Authorizations for LDTs but was directed by HHS to remove that policy after concerns from labs over reimbursement and liability.

LDT regulation has long been an issue in the diagnostic industry, with confusion surrounding who is in charge — the FDA or the US Centers for Medicare and Medicaid Services — of monitoring and reviewing such tests before they reach the market, and last week's decision is unlikely to be the last word on the matter.

The lab industry has said that LDTs are regulated under the Clinical Laboratory Improvement Amendments, which is executed by CMS. The FDA, however, has said that the regulation of LDTs has always fallen within its purview, as well.

Two competing bills are floating around Congress that take opposite sides of the argument whether the FDA should have oversight of LDTs. In May, Sen. Rand Paul, R-Kentucky, reintroduced the Verified Innovative Testing in American Laboratories, or VITAL, Act of 2021, that would block the FDA from regulating LDTs.

A month later, though, the Verifying Accurate, Leading-edge ICVT Development, or VALID, Act of 2021 was reintroduced in the US House of Representatives and Senate to solidify the FDA's authority to regulate LDTs and create a new regulatory framework for the tests.

Part of the FDA's reasoning for reviewing and approving new tests, an agency official said, is to make sure the tests are "accurate and reliable." The official noted that the FDA has not enforced premarket review on LDTs unless there are safety concerns, and during the COVID-19 pandemic, a lab has been able to use its LDT while the agency reviews its application for Emergency Use Authorization.

He added that the agency has generally not enforced its premarket review authority unless there is an issue with a test on the market and that the guidance continues the FDA's "longstanding approach" on LDTs. It's a "restoration of FDA's way of doing business," the official said.

However, that gave little assurance to laboratory organizations and laboratorians who worry that the review process will put undue burden on labs trying to make their tests available to patients.

Tom Sparkman, senior VP of government affairs and policy at the American Clinical Laboratory Association, said that the shifting of the requirements puts test developers at a disadvantage, since they can't be sure what the standards are or if they'll be changed without public comment.

He said there's "concern[s] when we see sudden shifts" in LDT policy, and that the "un-transparent gyrations" from the FDA make it difficult for labs to predict how tests they've developed will reach the market and patients.

The new guidance, Sparkman said, will impact laboratories' abilities to bring forward LDTs and will impede the development of innovative tests.

Sparkman also noted that the FDA's relaxing of regulatory standards in February 2020 allowed labs to significantly increase testing capacity during the height of the pandemic by bypassing the more rigorous FDA approval process.

Jonathan Myles, chair of the College of American Pathologists' Council on Government and Professional Affairs, similarly echoed worries about the FDA's recent guidance and said in an email that the organization is "concerned with dramatic policy changes that require pathologists and clinical laboratories to alter operations which further exacerbates personnel shortages that clinical laboratories are currently experiencing."

As the rules are implemented, Myles said he sees potential for "increased testing challenges, since patients often seek traditional testing to confirm results from point-of-care and at-home testing."

And Mark Birenbaum, administrator of the National Independent Laboratory Association, said that there's a concern that FDA oversight will "slow down the introduction of new tests," particularly in an emergency.

The traditional FDA process is "expensive and onerous," especially for labs with fewer resources, he said, adding it causes confusion for labs that aren't familiar with the FDA process, since it's more involved than the usual CLIA pathway, he said.

However, Birenbaum noted that the original policy restricting the FDA's oversight caused problems for laboratories that needed EUAs to get reimbursement from payors for their COVID-19 tests, The new revised policy, which allows labs to receive EUAs, could help ensure that labs get reimbursed for such tests.

Ultimately, Birenbaum said that the withdrawal of HHS' guidance doesn't resolve any of the issues facing labs and is simply a return "to where we were."

Others questioned whether the FDA's guidance foreshadows its LDT plans for the future, including Kelly Wroblewski, the director of infectious disease at the Association of Public Health Laboratories, who said that this "has always been our understanding of how FDA intends to operate in a public health emergency," and that it could signal how the FDA will regulate broader LDTs after the pandemic ends.

The American Association for Clinical Chemistry also is less concerned with the specific guidance and more concerned about "the precedent it may set for FDA involvement in LDT policy moving forward," Stephen Master, president of the AACC, said via email.

"In other words, members are concerned that if the FDA chooses to claim authority over coronavirus LDTs, then it may also use this guidance as a means of claiming broader authority over non-coronavirus LDTs as well," he continued.

He noted that there are questions surrounding why the FDA continues to use guidance to set its LDT policy, rather than going through the normal rulemaking process, which includes a public comment period.

James Versalovic, pathologist-in-chief at Texas Children's Hospital, said that the existence of CLIA standards already ensures laboratory-developed tests are highly accurate before they reach patients. "The reality is we need the FDA … to monitor efficacy and safety of diagnostics, medications, and vaccines," he said. "But we have to ask ourselves — do we have a system that ensures high quality diagnostic testing? And the simple answer is yes," he said, referring to CLIA.

"With additional regulatory hurdles on LDTs … many hospitals won't be able to develop tests," he said. "We'd be entirely dependent on big industry … to supply tests, and frankly, we will lose the innovative capacity that's provided by so many hospitals and healthcare systems on the front lines."

Dwayne Breining, executive director at Northwell Health Labs, sees it differently, however, and said that the guidance will likely not have a significant impact on his lab, as any of its tests would meet the FDA standards and be able to pass the review process.

The lack of FDA review was a "barn door" that "let a lot of tests through … that are overall just much less accurate than would normally be let through," and the new guidance will "tighten up that process," he said. He expects the change to affect more "fringe developers" of laboratory tests, including "entities [that] got into the testing market … who don't normally either do diagnostic testing or manufacture diagnostic test[s]."

The new guidance, he said, doesn't hamper traditional lab testing, since professional labs are "already running good tests," but rather is "weeding out these less accurate tests."

"A little bit of regulation … is good, as long as it doesn't hamper the good labs getting the testing up and running that they need to get to meet any sort of clinical need," he said.

EUA refocus

Another aspect of the FDA's guidance document relates to the agency's priorities regarding EUA submissions. The FDA said that its focus when reviewing EUA submissions will largely be on at-home and point-of-care tests that can scale up rapidly, although it will also consider molecular lab-based tests that can increase manufacturing capacity.

That change could lead to a backlog in reviews of tests that don't meet the FDA's prioritization requirements, something that would have more of an impact on tests from clinical labs.

Mary Steele Williams, the executive director of the Association for Molecular Pathology, said via email that "it is very worrisome that FDA intends to review only those EUAs it has determined to be high priority tests, which by its own definition will likely exclude many [LDTs] performed at clinical laboratories in academic medical centers and community hospitals/medical centers."

She added that "the COVID-19 pandemic has revealed that there are many benefits to diagnostic test results being available in hours rather than days," and that the organization is concerned that "as the number of cases plateau or begin to increase, the country is poised to repeat the same mistakes made at the outset of the pandemic — with FDA policies preventing sufficient capacity of crucial diagnostic tests from clinical laboratories that are located where patients receive care and can meet the need for rapid results."

However, manufacturers of rapid tests, such as LumiraDx, welcome news of the FDA's change in focus.

Pooja Pathak, LumiraDx's chief product officer, said that it's encouraging that the new guidance "recognizes point-of-care tests as a potential means to significantly increase testing capacity and accessibility to accurate and reliable tests."

Indeed, overall, test manufacturers saw last week's news as a positive. In a statement, Scott Whitaker, president and CEO of the Advanced Medical Technology Association, supported the new guidance, saying that the organization has "long supported the idea that all diagnostic test developers — whether they make in vitro or laboratory-developed tests — should be subject to the same FDA standards and processes."

Kyle Mikson, an analyst with Canaccord Genuity who covers the diagnostic industry, said that companies with rapid platforms are better positioned in the market in light of the guidance, and noted that some companies may shift away from COVID-19 testing if their tests don't meet the FDA's new priorities, particularly those that have launched antibody tests — which have seen a much less significant demand than other tests.

Rapid platforms are the "next stage" of testing, and the move could lead larger companies, such as Roche, Becton Dickinson, Hologic, or Abbott, to acquire smaller firms with rapid tests, Mikson said. In addition, companies with tests that are based more in hospitals may need rapid tests to compete in the market, he said.

Mikson also said that there are huge risks for any company or lab that releases a test without approval, since there's a fear that one day the FDA may request further data. He added that he thinks a lot of companies are doing more rigorous validation than is required, just in case the regulations change again.