Proposed Shifts in Oversight of Lab-Developed Tests

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The FDA proposed to begin regulating LDTs as medical devices over the next 5 years. This has important implications for market dynamics and clinical care.

Insights on History of LDT Regulatory Oversight

Laboratory developed tests (LDTs) are in vitro diagnostic products (IVDs) that are intended for clinical use and are designed, developed, and used within a  single laboratory. These are often used to collect, prepare, and examine specimens in order to inform diagnosis, determine and monitor treatment, or monitor progression of a disease. The facilities in which LDTs are designed and used are regulated by the Centers for Medicare & Medicaid Services (CMS) under the Clinical Laboratory Improvement Amendments (CLIA). As the complexity and numbers of LDTs on the market has expanded in recent years, LDT oversight and the need to comply with Food & Drug Administration (FDA) regulations has remained a topic of interest.

The FDA has consistently maintained that LDTs are a type of IVDs and are therefore subject to FDA oversight and regulations. Historically, the agency has utilized “enforcement discretion” and has not required LDTs to comply with medical device regulatory requirements such as premarket review, adverse event reporting, and quality assessments.

On September 29, the FDA published a proposed rule that seeks to amend current regulations to make explicit that all IVDs are medical devices under the Federal Food, Drug, and Cosmetic Act (FD&C Act), including when the manufacturer of the IVD is a laboratory (i.e., a LDT). Medical device regulation has followed a three-class, risk-based classification system since 1976, when amendments to the FD&C Act took effect. This proposed rule would place LDTs within this classification system and under the subsequent regulatory requirements. The FDA is also proposing a framework under which it intends to provide greater oversight of LDTs through a phaseout of its current enforcement discretion.

Market Dynamics and Increased Evidence Standards

LDTs make up the vast majority of testing in the diagnostic market (Figure 1). In some disease areas, specific LDTs have become a standard of care for clinical decision making (e.g., OncotypeDx, which predicts the likelihood of breast cancer recurrence after surgery and the likely benefit from chemotherapy).  Some LDT manufacturers are seeking to establish their recognized clinical value to patients, providers, and payers while providing access to their testing through their CLIA clinical laboratories.

Figure 1. Diagnostic Market: LDTs vs. FDA Cleared or Approved Companion Diagnostics
Figure 1. Diagnostic Market: LDTs vs. FDA Cleared or Approved Companion Diagnostics

Source: CMS CLFS 23CLABQ4 File, FDA List of Cleared or Approved Companion Diagnostic Devices (In Vitro and Imaging Tools)

Over the past decade of increasing LDT availability, there has been a range of longstanding and strongly held perspectives across professional societies, nonprofit research organizations, clinical laboratory trade groups, patients, providers, and academic laboratory centers regarding whether regulation beyond CLIA is needed; whether Congress or the FDA has the authority to establish broader regulatory oversight; and whether and what types of LDTs should fall within an updated regulatory framework.

Regardless of the final framework, the evidentiary bar continues to be raised for demonstrating clinical utility for LDTs, with assay developers needing to consider the level and type of studies required for clinical effectiveness.

 Clinical Implications of Safety/Efficacy vs. Utility

LDTs are developed to assist in patient care, especially for medical conditions where a commercially available test does not exist or the tests do not meet advances in science (e.g., rare genetic condition, infectious disease outbreak). Manufacturer may have limited commercial resources or incentives to develop a test that will go through the FDA review process, which may be viewed by manufacturers as too slow to keep up with emerging science. An LDT can also be an early version of a diagnostic test that may ultimately be submitted for FDA approval.

Laboratories that develop and validate tests under CLIA report efficiencies in the speed of testing, reduced costs, and improved efficiency of lab processes.

The growing number of LDTs across multiple disease areas poses a challenge for regulators and policymakers, as both the regulatory review processes and continued oversight from CLIA are different than those of the FDA. For tests reviewed by the FDA, the regulatory process starts premarket to confirm safety and effectiveness, while CLIA analyzes the validity of laboratories that develop LDTs and clinical validation is performed by laboratories themselves. If an LDT is questioned as unreliable, that may not be challenged until the next CLIA review of the laboratory.

Further, third-party commercial and government payers require demonstration of analytic and clinical validity and often clinical utility prior to coverage.

It is important for LDTs to carry similar requirements as FDA-approved/cleared tests, especially given that tests may be for results which may determine treatment, and to ensure efficacy and patient safety.

Overall Input and Gap Analysis

CMS oversight of LDT facilities through CLIA was originally designed in 1988 to provide product oversight without introducing undue burden on single laboratory facilities. More recently, the growing number and complexity of LDTs on the market, along with the emergence of occasional bad actors, has created an appetite for additional oversight in order to protect public health. While potential for Congressional action via the Verifying Accurate Leading-edge IVCT Development Act had garnered traction, likelihood of statutory change has narrowed. In absence of congressional action, the FDA’s proposed rule signals the agency’s interest in the matter.

The FDA will face numerous challenges while implementing this shift in oversight for the multitude of LDTs on the market. It will be advantageous for stakeholders to collaborate with the agency to support the suggested 5 year phase-in process and ensure that the established LDT ecosystem remains a clinically actionable and trusted diagnostic framework.

Avalere experts in regulatory strategy and market access can help you navigate these evolving dynamics for LDTs, including  potential regulatory changes, and the broader impact of these policies on patients, payers and access. To learn more about how we can help your organization prepare and respond to the changes, connect with us or email

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