The recent US Food and Drug Administration (FDA) final ruling declaring the world of laboratory-developed tests (LDTs) as medical devices has drawn some serious concern from across the US laboratory industry, who vehemently argue that the decision will set back pediatric care by restricting doctors in the kinds of tests they can run and speed at which they can access them.
The new ruling, which means that screening tests developed by laboratories require some form of FDA approval before they can be put into commercial use, took central focus during an expert panel at the Chicago conference of the Association for Diagnostics and Laboratory Medicine (ADLM).
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The ruling is currently in a ‘phase-out’ period in which the FDA will take a general enforcement discretion approach to LDTs, with plans for the full enforcement of FDA regulations expected by 2028. The decision has been strongly controversial among members of ADLM.
At its annual Chicago meeting, guest panellists at a special session for the ADLM decried the ruling as ‘burdensome’, citing an internal survey that found that many labs do not have the staff or finances to effectively comply with the new FDA ruling once it comes into full force. In addition, the ruling would potentially impact the vital supply of diagnostic tests available for institutions such as children’s hospitals. Conversely, regulatory experts argue that the FDA’s rule brings certainty to a market that has long grown comfortable with a lack of regulation.
Speaking at the ADLM conference on 30 July, Jeff Hollett, senior science policy analyst for the American Medical Association (AMA), said: “LDTs, as they formerly stood, allowed for physicians to practice at the top of their licence, similar to how a physician can prescribe a medication off label if there is evidence for its use. LDTs allow for physicians and laboratory professionals to diagnose and to treat when there is evidence for their use and FDA approval is far too slow for the rapidly evolving rate of diagnostic medicine.”
The story so far
In the wake of the Covid-19 pandemic, the in vitro diagnostic (IVD) market worldwide, but more specifically in the US, went from strength to strength, seeing significant market growth between the onset of the pandemic in 2019 and the start of this year. In that time, research by GlobalData found that the global market size for in vitro diagnostics had ballooned to approximately $60.3bn, propelled by the unparalleled investment seen in the sector alongside a Trump presidential initiative in 2020 that saw the Department for Health and Human Services (HHS) ordering the FDA to stop requesting premarket approval for clinical laboratory tests.
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By GlobalDataThis prompted industry concerns that the rate and frequency at which new and novel tests, not just in the field of virology but across the spectrum of healthcare, were being produced at a rate that could not guarantee consistent, actionable, and reliable results. In response to this, on 29 April 2024, the FDA issued its Final Rule, making clear that IVD products and LDTs qualify as medical devices and as such are subject to pre-market approval.
The decision comes after the much more carefully workshopped but politically troubled Verifying Accurate Leading-edge IVCT Development (VALID) Act was first introduced to Congress in 2020 in a bid to modernise the regulatory framework for IVDs and LDTs. However, the act has repeatedly failed to gain traction in the US Congress leaving the FDA to cover the shortfall.
Paediatric pushback
Whilst the decision made significant waves across the industry, the paediatrics industry has reacted particularly strongly to the Final Rule. One of the key issues revolves around how US insurers will now consider paying for these tests on a patient’s behalf.
Where FDA clearance is required for pre-market approval, it is similarly required for an insurer to pay for the test. As a result, tests that insurers and public insurers such as Medicare and Medicaid would typically have paid for, now may not.
Shortly before the ruling both the American Hospital Association (AHA) and the Children’s Hospital Association wrote to the FDA urging them not to enact the final rule and maintain its discretionary approach.
In its letter to the FDA, the Children’s Hospital Association wrote: “It is important to note that, though children’s hospitals account for only 2% of hospitals in the US, they account for about 45% of all hospital days for children on Medicaid. As a result of the heavy reliance on Medicaid, which often under-reimburses for costs of care, the budgets of children’s hospital laboratories are tight, and the financial resources and staff needed to pursue many complex reviews under the proposed rule will be in addition to resources already used to meet the stringent regulatory and accreditation requirements.
“We know that the for-profit sector has not—and likely will not—step in to make tests for paediatric and orphan diseases as the market is too small to be profitable. Similar to the development of new pharmaceuticals, which are usually developed for adults, children are often left behind in the development of commercial testing, given the small market and highly specialised nature of paediatric diseases. As a result, many needed tests for children, including those with rare, uncommon, and often life-threatening, diseases will no longer be available with significant negative implications for their overall health and wellbeing.”
Of course, there is a business aspect in all of this with paediatric medicine subject to the same market forces as the rest of the US-based healthcare market. A large part of the intent behind the regulation of LDTs was to curb the rate at which larger labs can produce potentially unverified or unreliable tests while expecting to maintain the same levels of growth seen during the Covid-19 pandemic.
At the Chicago ADLM conference, Dennis Dietzen of the Washington University School of Medicine was quick to refute that this should apply to the purpose-built and thin margins of LDTs intended for pediatric use.
Dietzen said: “These tests, by and large, don’t make anybody any money. So, we operate on a shoestring. We do things as efficiently as we possibly can. And if we have to expend more resources, an administrator might come down to the laboratory and say that we can’t support this anymore. And that’s the point at which we would have to stop doing it and refer it out.”
FDA stands strong
Despite the pushback, the FDA may still be unwilling to reverse course on its decision or make concessions for particular sections of the industry.
Speaking with Medical Device Network, Kyle Faget, co-chair of Foley’s medical device and equipment group, detailed why this ruling has been a long time coming and how the FDA is unlikely to change its mind now. Noting that whilst there is still a carveout in the ruling allowing for the use of unapproved LDTs in very limited circumstances, the FDA is looking to keep ahead of the pace at which the LDT market has advanced.
Faget said: “I think what the FDA was really trying to get at is because in the old days, LDTs were tests that were developed in a single hospital system and used in a single hospital system. That’s just not how LDTs in the modern day are functioning. They are being developed by highly sophisticated laboratories and being sold across the US and across the world in many cases for diagnostic purposes.
“So, from the FDA’s perspective that’s a whole different commercial activity than what it was when the FDA was choosing to exercise its enforcement discretion. In other words, the FDA’s position is that they always could have regulated LDTs but have chosen not to because they were low risk.
“I think what we will see in paediatrics, and I could be 100% wrong on this, where you have diagnostics that are going to be used across the United States, I think that so long as the FDA can come to an agreement that the FDA can regulate these kinds of tests, they will. But I think you will still see a lot of enforcement discretion for a lot of the old-school LDTs where it is a single lab being used in a single facility like a single hospital situation.
“The last thing the FDA wants is for there to be a test out on the market for something like Down’s syndrome that is not actually effective and is out in the marketplace. That is exactly the FDA’s concern – that there are diagnostic tests that don’t work correctly or are giving erroneous results.”
