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Under LDT Final Rule, Labs May Face Tough Choice Between FDA, New York Regulatory Paths for Tests


NEW YORK – The US Food and Drug Administration's plans to let laboratory-developed tests (LDTs) come to market with approval from New York state authorities could provide a somewhat easier path for labs to bring tests to market compared to traditional FDA reviews, but industry experts question how quickly labs can expect reviews if the state's backlog of applications swells.

The FDA said in its May 6 final rule that it plans to phase in requirements for premarket review of new LDTs over the next four years, and add requirements for quality systems, adverse event reporting, lab registration and test listing, and the investigational use of tests.

However, the agency also intends to exempt many tests from premarket review requirements, including tests that are approved, conditionally approved, or deemed exempt through the New York Department of Health's Clinical Laboratory Evaluation Program (CLEP) as well as tests that were on the market prior to May 6, are used in a single hospital system for unmet needs, or are modified in minor ways from FDA cleared or authorized tests.

Gaining test approval from the New York CLEP has long been mandatory for any laboratory that planned to offer its LDTs in all 50 states. The program has approved or conditionally approved about 11,000 LDTs since it began reviewing them in the early 1990s, and the myriad firms that have received state approvals in the past decade include the likes of Foundation Medicine, Guardant Health, Castle Biosciences, and Grail. The state only requires CLEP approvals for LDTs that are not FDA approved or cleared, though, so new tests that go through FDA premarket reviews will have a path to market in all 50 states.

Industry experts have noted since the final rule's publication that CLEP could provide an attractive alternative to traditional FDA review. In the days following the late-April release of the rule's text, Timothy Stenzel, former director of the FDA Office of In Vitro Diagnostics, said at the Executive War College meeting on diagnostics, clinical laboratory, and pathology management that he expects that the New York CLEP could become swamped with applications for a long time because it could provide a cheaper and easier path to market for test makers.

The New York DOH declined to participate in an interview for this article but provided a statement that it is aware of the FDA's final rule and is evaluating its potential impact on the process that CLEP uses to review LDTs.

Jane Pine Wood, a lawyer for the law firm McDonald Hopkins, said that seeking CLEP approval for an LDT is easier than an FDA review, but it remains a substantial hurdle that is more difficult than seeking CLIA certification or College of American Pathologists (CAP) accreditation. She noted that some labs have in the past opted to offer their LDTs across only most of the country, excluding New York, because of the difficulties in both securing CLEP approvals and in-network coverage from payors in the state.

Michael Ryan, a partner at McDermott Will & Emery, said that gaining approval through CLEP is such a tricky process that his clients have often launched their tests in 49 states while they worked on securing a green light in New York. He noted that the state requires inspections and permits for labs that receive samples from New York patients as well as "FDA-like" test-specific approvals of LDTs.

"New York state does a thorough review of the applications but the level of detail that's required to get through FDA, I think, is much greater," he said.

However, Sheila Walcoff, CEO and founder of regulatory consulting firm Goldbug Strategies, said that CLEP and FDA regulatory pathways systems both require enormous volumes of data to support applications. While CLEP submissions have historically required less analytical and clinical data compared to FDA submissions, she said, the state program has implemented in recent years more labor-intensive reviews that are more closely aligned with the FDA's standards.

New York was already known for its rigorous standards for laboratory evaluations when state officials developed in 2016 a tiered risk-based system for the evaluation and approval of LDTs that were not approved or cleared by the FDA, and LDT makers have noted the program's high standards when they have received facility permits or test approvals. The New York DOH also announced in June 2017 that its Wadsworth Center, which runs CLEP, had secured FDA accreditation as a third-party reviewer for premarket notifications and 510(k) clearances and that its reviewers would go through additional training on FDA processes ahead of accepting device reviews starting that fall.

Walcoff said that the New York program has been bogged down for years with a backlog of applications for test reviews and any labs that submit tests now may be in for a long wait, especially if the program draws an influx of applications in response to the final rule. She said that the state has been taking an increasingly long time to respond to requests by laboratories to modify existing tests or schedule lab inspections.

Pine Wood said that New York may have difficulty finding sufficient numbers of qualified laboratorians in response to a surge of applications from out-of-state labs that had not previously provided testing for New York patients. Those professionals may be in higher demand by CLEP and the FDA for processing applications as well as for labs that are seeking approvals.

How quickly labs can gain CLEP approval or FDA premarket review will be important. For tests that fall outside the enforcement discretion policies, FDA officials will require premarket reviews by November 2027 for high-risk LDTs and May 2028 for moderate-risk and some low-risk LDTs.

Susan Van Meter, president of the American Clinical Laboratory Association, said that most ACLA members have worked for many years with the New York DOH and secured approvals to test patients in the state. While she said CLEP is a robust risk-based program, she also described the FDA's enforcement discretion policies as tenuous and subject to change or removal guidance.

"It's very difficult for laboratories to understand what that regulatory framework and what the requirements are really going to be looking like [in] one year, three years, [or] five years … if there is a lot of gray area and a lack of predictability," she said.

The ACLA and its member company HealthTrackRx have filed a federal lawsuit to challenge the FDA's authority to implement the final rule.

In a statement, the FDA said only that it follows the procedures outlined in regulations for issuing guidance documents and the required procedures will vary by the circumstances.

Ryan expects that labs will still have time to get approval through CLEP if they submit applications soon, although he recommends that they submit a solid data package to minimize questions and delays. By late 2025 or early 2026, the time to approvals could extend as more applications come in. He also noted that submissions to the FDA have been more expensive because, unlike CLEP, the FDA charges user fees that can run into the six figures.

FDA information indicates those user fees range from about $22,000 for a 510(k) to $484,000 for a PMA, although the agency has reduced fees for small businesses.

Nevertheless, Pine Wood said that labs might find that waiting on CLEP approval could be even more costly.

"The FDA route might be more feasible just given the cost of waiting multiple years with a delay," she said.