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HHS Move Upends FDA Role in Laboratory-Developed Test Regulation

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NEW YORK – In a surprise move, the US Department of Health and Human Services said on Wednesday that it had determined the Food and Drug Administration would not require premarket review of laboratory-developed tests without notice-and-comment rulemaking.

The announcement, which took many in the lab industry aback, appeared to resolve for now the role of the FDA in regulating LDTs, an issue that has hung over the laboratory business for almost three decades.

By establishing that FDA will not do premarket review of LDTs through guidance documents and other informal means, HHS has limited the agency's ability to regulate such tests. While the HHS statement does not preclude FDA from regulating LDTs through notice-and-comment rulemaking, this is a much more time-consuming and expensive process than the guidances and other means FDA has used to regulate LDTs in the past. Some observers suggested the agency won't take such a route, given the investment in time and effort required.

The HHS move appeared to be inspired by the SARS-CoV-2 pandemic, with the department noting that its recission of FDA guidances and other informal issuances concerning premarket review of LDTs was "part of HHS's ongoing department-wide review of regulatory flexibilities enacted since the start of COVID-19."

With regard to SARS-CoV-2 testing, the decision removes the requirement that CLIA labs take SARS-CoV-2 LDTs through FDA's Emergency Use Authorization process, though HHS notes that labs "with an active EUA to use an LDT to detect the virus causing COVID-19 or its antibodies are unaffected by this announcement."

FDA's requirement that SARS-CoV-2 LDTs need to receive EUAs generated controversy during the beginning of the outbreak in the US, with many arguing that this requirement was holding up the deployment of testing for the virus. This problem was made more acute by the fact that the first, and for a time only, SARS-CoV-2 test with EUA — a PCR assay from the US Centers for Disease Control and Prevention — was not working properly, likely due to contaminated components.

With HHS's announcement on Thursday, CLIA labs can now offer LDTs for SARS-CoV-2 without having to take them through the EUA process. The practical impact of this ruling may be limited, however, as FDA already allows labs to use validated SARS-CoV-2 LDTs on patient samples as soon as they are validated internally if they have notified the FDA and file an EUA application within 15 days, meaning that CLIA facilities have been able to offer such tests before actually receiving EUA.

For the broader LDT landscape, the HHS announcement could be significant. The FDA has long argued that it has authority under the Federal Food, Drug, and Cosmetic Act to regulate LDTs, but it has largely practiced "enforcement discretion" over these tests, leaving the Centers for Medicare and Medicaid Services to oversee labs under CLIA (the Clinical Laboratory Improvement Amendments). The HHS recission means that if FDA wishes to require premarket review of LDTs, it must do so through the notice-and-comment rulemaking route, which, as noted above, would require a lengthy and expensive process.

The upshot, then, would seem to be that FDA will not be doing premarket review of LDTs. This is welcome news for many in the lab industry who have long contended with the threat of FDA regulation of LDTs even if the agency largely adopted a hands-off approach to the matter.

The American Association for Clinical Chemistry, for instance, signaled its approval of the announcement in a statement issued Thursday noting that it "welcomes a decision from the Department of Health and Human Services that the Food and Drug Administration does not have authority to regulate laboratory developed tests (LDTs) without formal notice-and-comment rulemaking."

Other parts of the testing ecosystem were less enthusiastic. In a statement issued Thursday, Scott Whitaker, president and CEO of industry organization AdvaMed – which represents the device and diagnostics industry including a number of in vitro diagnostics firms whose tests will still be subject to FDA regulation – called for the Trump administration "to ensure all diagnostic test developers, of both IVDs and LDTs, are subject to the same standard of test validation during the pandemic and beyond to protect patients and public health."

"It's a sweeping statement about policy from HHS about LDT regulation, and I don't think anybody foresaw it," said Jeffrey Gibbs, a director at law firm Hyman, Phelps and McNamara who specialized in FDA law.

He said he believed it solidified the case against FDA's ability to require premarket review through informal issuances like guidances even if a future administration were to reverse the HHS decision.

"It doesn't preclude a new administration from saying we believe the prior statement by HHS was correct and [FDA] can work by guidance document," Gibbs said. "But it's going to make it harder… particularly since so many of us, me included, said that [FDA] had to go through rulemaking. Well, now HHS agrees. So, you take a strong legal argument and you pile on top of it what HHS said here, and it is going to make it much harder for FDA to ever do anything [on LDTs] without going through rulemaking."

A number of questions remain, however.

For instance, the HHS recission addresses premarket review but doesn't say anything about post-market review. What does that mean for FDA's ability to regulate LDTs after they have gone to market?

Gibbs said he believed that "if there is no premarket review then there wouldn't be post-market review. I don't see how FDA could say, this product is exempt from a 510(k) but we're going to require that you submit medical device reports."

"I think it is saying that these products don't have to go to FDA before they get on the market, and implicit would be that once they are on the market, FDA has no ability to regulate them, either," he said.

FDA directed inquiries on the matter to HHS, which did not reply by press time.

There is also the question of what tests FDA will consider LDTs. Historically, the agency has defined an LDT as a test that was developed, validated, and performed within a single laboratory, though it has also practiced enforcement discretion for tests that did not strictly fit that definition — tests that, for instance, involved some technology transfer between labs.

"If you have companies that are providing technology to labs, assisting them, is it still an LDT?" Gibbs asked.

"There are likely tests performed by clinical laboratories that don't fit the narrow LDT definition, either because there is in-licensing of technology or collaboration between multiple partners, and if FDA is inclined to continue to be active here, they could seek to regulate them as in vitro diagnostic devices," said Gail Javitt, who is, like Gibbs, a director at Hyman, Phelps and McNamara.

Direct-to-consumer testing is another area whose status is left unclear by the HHS announcement.

"Reading the HHS statement literally, it would seem to say that if it is a laboratory-developed test, then it isn't going to be regulated, but FDA said it never thought of direct-to-consumer as traditional laboratory-developed tests, so is there some opening for FDA still on the DTC world?" said Gibbs.

"At the same time, I think we have to be mindful of the context. FDA is utterly overwhelmed with the number of EUA submissions it has been getting both from IVD manufacturers and from labs for COVID-19 tests," Javitt said. "Is this a time when FDA is going to be thinking of ways to extend its authority when it has just been told to knock it back?"

Gibbs said that given the HHS recission and the challenges involved in the notice-and-comment rulemaking process, the likeliest route for FDA to gain oversight of LDTs would be through legislation.

There is legislation in Congress that would bring LDTs under the agency's authority. In March, a bipartisan-backed bill called the Verifying Accurate, Leading-edge IVCT Development (VALID) Act was introduced in the Senate and House of Representatives. The VALID Act would create a new risk-based oversight framework for so-called in vitro clinical tests, a category comprising lab-developed tests and test kits, and bring them all under FDA's aegis.

In his Thursday statement, AdvaMed's Whitakers expressed support for the bill, noting that the organization would continue to work with its sponsors "so that all diagnostic tests are subject to the same modernized, risk-based, scientifically rigorous, and efficient regulations in order to ensure quality and patient safety."

Also on Thursday, US Rep. Frank Pallone, Jr. (D-New Jersey), chair of the Energy and Commerce Committee, released a statement calling for a briefing from HHS Secretary Alex Azar to explain the department's action and noting that he did "not believe that now is the time to reduce oversight of COVID-19 tests."

A committee spokesperson said Pallone did not have any comment on how the HHS action might impact the LDT regulatory environment beyond COVID-19 testing or influence the committee's decisions around proceeding with the VALID Act.