December 1, 2023
Jonathan R. Genzen, MD, PhD
Chief Medical Officer and Senior Director of Governmental Affairs, ARUP Laboratories

I want to personally thank everyone for joining us for our Wednesday November 29, 2023, webinar “What the FDA’s Proposed Rule to Regulate Lab-Developed Tests Means for Hospitals and Health Systems.” The recording is now posted on YouTube and can be viewed using the link above. As we received many more questions and comments, both before and during the broadcast, than we could possibly address in one hour, we wanted to share additional thoughts on the submitted questions and comments here. These will be organized by general topic, and I will try to not repeat answers to questions addressed in the presentation itself. You’re welcome to share this information with anyone who may be interested in laboratory-developed tests (LDTs).

Test Modifications

We received many questions regarding test modifications and the impact of the proposed rule on this aspect of testing. Under Clinical Laboratory Improvement Amendments (CLIA) regulation, many clinical laboratories make routine minor modifications to FDA-cleared/approved tests to address specimen types, body fluids, collection containers, and storage/stability, as a few common examples. We’ve previously published on the regulatory impact of test modifications in 2020 and 2023, for additional references. The FDA has not specifically stated in the proposed rule whether it would consider reference-interval changes to be modifications, although validating reference intervals appropriate for one’s patient population is a common and recommended practice in CLIA settings. My personal belief is that the FDA has not anticipated the significant financial and administrative burden that reviewing all test modifications would place on both the clinical laboratory community and FDA staff itself, nor has it considered the negligible benefit that such reviews would likely provide. For this reason, we’ve suggested that test modifications are best maintained under CLIA regulation, which ensures that they are performed under the guidance of a qualified CLIA laboratory director.

One comment stated that many test modifications are performed because manufacturers limit the breadth of validation studies (e.g., source types and stability durations/conditions) that are submitted to the FDA and therefore included in FDA-cleared/approved package inserts. Thus, the burden of test modifications is shifted to the clinical laboratory in this context. If in vitro diagnostic (IVD) manufacturers validated more specimen types, tube types, and stability durations, then many of these validation requirements would not fall on the end user. However, the proposed rule does not address this concept specifically, nor does it address the increased cost to IVD manufacturers to perform such studies if the FDA requested them.

Another comment noted the burden that would be created by the proposed rule on multianalyte testing, particularly in the specialty of clinical toxicology. The drugs tested in multianalyte “panels” may shift over time, based on clinical needs of the institution and/or new drugs of abuse circulating in the community. The proposed rule does not assess the logistical challenges, the delays in testing that the proposed rule would create, and the financial implications of these types of new assays and/or panel modifications. Personally, I believe the negative impact on testing from the proposed rule in this context would be significant.

Lastly, we had several comments specifically regarding pediatrics and the use of LDTs and modified FDA-cleared/approved assays in pediatric populations, particularly as IVD manufacturers rarely include pediatric patients in their own validation studies. This could fit the “change-in-intended-use” concept discussed in the presentation, potentially making pediatric modifications de novo submissions subject to even higher submission fees than 510(k)s, at least under the framework in the current proposed rule.

Inability to Comply With Proposed Regulations

We received several questions and comments regarding what a clinical laboratory should do if it does not have the personnel resources or finances to comply with new regulations if they are finalized. One comment more specifically asked what the repercussions would be for CLIA directors if they clinically needed to continue essential testing in this context. This is a fundamental concern that many clinical laboratory directors and laboratory professionals may have in the context of the proposed rule. Compliance with FDA regulations is a legal requirement of device manufacturers, and noncompliance with FDA requirements can have monetary, civil, and/or criminal penalties if it is pursued by the FDA. The seriousness of this potential implication is a key reason why regulatory frameworks for LDTs must be appropriate for the setting in which they are applied. This will help to avoid circumstances in which acting in the best interest of patient care may have contradictory legal or financial impacts to those providing essential services. If the rule is finalized, we recommend that people seek their own legal or compliance guidance about penalties or consequences regarding potential noncompliance with FDA rules. I would anticipate, however, that most laboratories that could not comply with any finalized FDA regulations would discontinue test offerings and test modifications and send out testing to other facilities, which would delay patient care and increase overall cost of testing. As we noted in our own public comment letter, this would have a widespread negative impact on patient care.

Cost of Proposed Regulations

We received many questions regarding the cost to comply with the proposed requirements. While in the presentation, we outlined current medical device user fees, these would be renegotiated prior to implementation of the proposed rule according to the timeline advanced by the FDA. Given the increase in user fees over time, it is likely that these user-fee costs would be even higher for LDTs/IVDs than they are today for IVDs. 

We received one question more specifically asking about the definition of a small business. Currently, the definition of a small business that the FDA uses includes a company that has less than $100 million USD in sales per year. However, as many clinical laboratories are organized within a larger health system and are not independent companies, it is likely that many (if not most) hospital laboratories may not be eligible for the small business discount in FDA user fees.

It should be noted that submission fees are only one portion of compliance costs. These costs include additional personnel and validation activities that may be required to adhere to FDA quality system requirements (QSRs) and submission expectations, which differ from existing QSRs under CLIA. The FDA has also not clarified whether user fees are “per test” or “per panel of tests,” if a panel is what is exclusively clinically offered as an orderable to clinicians.

Innovation

Several questions were also asked about the impact of the proposed rule on future diagnostic innovation. My assessment is that diagnostic innovation in clinical laboratories, hospitals, and academic medical centers would become much more expensive (if not prohibitive), and therefore the proposed rule would have a negative impact on innovation in these settings. One may hypothesize that the FDA might believe that the location of innovation would therefore just shift to IVD manufacturing settings. I would counter that this would only be possible if there was a significant market to justify these activities financially, and as many (if not most) LDTs are low volume and only exist because there is not an existing market to justify their commercial development, the “innovation shift” hypothesis is unlikely to come to fruition. The only way to counter these market forces would be for IVD manufacturers to raise pricing to customer laboratories, which is another reason I believe that the proposed rule would raise overall healthcare costs. A shift in innovation away from academic medical centers would also have a profoundly negative impact on training future generations of laboratory scientists and medical professionals.

One comment expressed concerns about the proposed rule being a new “barrier to market” for innovation in smaller settings. Indeed, from a financial perspective, only laboratories that can afford to comply with new regulations could enter or remain in the market for LDT innovation and offerings. This would impact the extent (and location) of innovation across different settings, and it would provide a financial advantage to large commercial developers versus small clinical and hospital laboratories and other small businesses.

Low-Volume Testing

Several questions also were focused on the potential impact on low-volume testing. There is often not a conventional market to support the development and commercial distribution of such testing by existing IVD manufacturers, and this is exacerbated by current reimbursement pressures on laboratories under the Protecting Access to Medicare Act of 2014 (PAMA). This is a major reason why LDTs are so clinically important in the context of low-volume testing, as LDTs are often the only diagnostic option available for many disorders. If compliance costs with the proposed rule are too high for clinical laboratories, then it is likely that low-volume testing would be among the first types of testing that laboratories would consider discontinuing if the proposed rule was finalized. This would obviously have an adverse impact on patient care, particularly in relation to rare disorders.

Academic Medical Centers

We received several questions regarding the impact of the proposed rule on academic medical centers (AMCs) and whether AMCs should be exempted from a final rule. We discussed AMCs at length in our public comment letter, so I will limit additional perspective here. However, I do believe that AMCs and community hospitals would be significantly adversely impacted by the proposed rule if finalized, and it is therefore critically important for the FDA to consider ways to negate this impact prior to advancing any proposed rules. Some ideas that have circulated among those interested in maintaining innovation and LDT diagnostic activities at AMCs include exemptions for AMCs from the proposed rule entirely. Other possibilities include exemptions from select requirements (e.g., user fees or manufacturer QSRs). On this last point, AMCs may face additional unique challenges in attempting to comply with FDA QSRs. For example, at many large institutions, the clinical laboratory itself may have little direct control over systemwide supply chain decisions. Therefore, “purchasing controls” may be difficult if not impossible in some settings.

Immunohistochemistry (IHC), Fluorescence In Situ Hybridization (FISH), and Flow Cytometry

We received several questions and comments specifically asking about IHC, FISH, and flow cytometry. As laboratory professionals working in these clinical testing disciplines know, laboratories may use dozens—if not hundreds—of different antibodies, stains, and probes in the assessment of a wide array of different conditions and malignancies. Additionally, subtle protocol modifications may be necessary to ensure that staining and cell labeling quality is optimal prior to test interpretation. Furthermore, this testing is now largely automated, which negates the “pre-1976” concept advanced in the proposed rule in these areas. It would be my strong recommendation that the FDA reevaluate the impact of the proposed rule on clinical testing, with these three areas being significant exemplars of the problems that the proposed rules would create for diagnostic testing and patient care in many clinical laboratory settings.

Existing Assays

Several questions mentioned the concept of grandfathering (i.e., allowing a test to remain available and exempt from FDA regulations if it was introduced prior to the new rule being finalized). More broadly, questions were asked about what would happen to existing assays if/when the proposed rule was finalized. As noted in the presentation, grandfathering is not part of the proposed rule, and we do not know if it will be included in a final rule. As we note in our public comment letter, grandfathering would likely delay some of the damage that the proposed rule would cause to the clinical laboratory industry, but it would not eliminate that damage from ultimately occurring. Additionally, we have previously expressed concerns regarding the impact of routine test modifications to help keep an assay viable (e.g., when there are supply chain limitations or instrument platform updates) that would require submission of otherwise grandfathered tests.

Analyte-Specific Reagents

We received a comment regarding assays built using analyte-specific reagents (ASRs). As a simplistic explanation, there are circumstances in which an external manufacturer produces a reagent, and a laboratory then purchases the reagent and incorporates that ASR into its own test as an LDT. Under the proposed rule, this would still constitute an LDT that the laboratory would be responsible for submitting to the FDA. This raises a broader issue of “shifts” of regulatory responsibility that may follow a finalized rule. It is safe to assume that clinical laboratories would attempt to minimize the use of ASRs to minimize regulatory compliance costs. However, this would also influence manufacturers to minimize production of ASRs due to lower market demand. Ultimately, this would lead to fewer clinical laboratory testing options available for patients, particularly for low-volume tests that are not financially viable under the proposed rule.

Reference Materials, Calibrators, Quality Control Materials

We also received a question regarding the impact of the proposed rule on reference materials, calibrators, and quality control materials, particularly those produced by laboratories. The preponderance of discussion surrounding the proposed rule has focused on assays, and negligible regulatory conversation has focused on these other important areas, which are equally important for ensuring quality patient testing. I would hope that the FDA receives additional public comments on these issues, and that they are also addressed in any FDA response to public comments if the proposed rule is advanced.

Practice of Medicine

We received several questions related to practice of medicine and test interpretation. We share these concerns and have highlighted the issue of practice of medicine limitations in our own public comment letter and in prior publications. Allowing highly trained, board-certified medical professionals the flexibility to perform laboratory medicine is an essential component of clinical care, and it is our belief that the proposed rule would limit the practice of medicine and application of medical judgment within the laboratory.

Number of LDTs on the Market

We received a question regarding the number of LDTs on the market. I find it particularly perplexing that the agency has advanced a proposed rule—in part based on the premise that it does not know the full number and types of LDTs on the market—and yet since the FDA first announced its intention to regulate LDTs in 2010, HHS has taken no action to direct CMS to simply request that information from existing CLIA laboratories. That information is completely knowable to the federal government if CMS chooses to ask for it under CLIA regulations and in a format that is easy to collate and analyze. HHS could resolve this uncertainty definitively and quickly, and at a negligible cost to the community and with no additional registration costs to clinical laboratories or involvement by the FDA.

Timing of Reviews and Potential Backlogs

Several questions and comments expressed concerns regarding the ability of the FDA to complete future (and existing) regulatory reviews under the proposed rule. I share those concerns as well. The volume of potential submissions may be more than a thousandfold what they are currently receiving, and the FDA was overwhelmed with a much smaller number of emergency use authorization (EUA) submissions during the COVID-19 pandemic.

Alternatives

We received several questions regarding alternatives to the proposed rule, or what regulatory frameworks should look like across clinical laboratory settings. We have previously described different types (and focuses) of clinical laboratories in a prior publication for those who may be less familiar with the clinical laboratory industry. Targeted CLIA modernization efforts would be one avenue to achieve similar goals, but at much lower cost to the community, particularly for simple test modifications that currently work exceedingly well under CLIA. My understanding is that the Clinical Laboratory Improvement Advisory Committee (CLIAC), however, is not empowered to include LDTs in its current CLIA-modernization deliberations, thus precluding this important feedback from consideration and potential advancement via CLIAC to HHS leadership. This is one potential reason why some have advocated strongly for a legislative solution to CLIA modernization.

Personally, based on what has been proposed in the current rule, I don’t believe that an “FDA-only” solution (using the existing device framework and comparable user fees) would be financially viable for most clinical laboratory settings. I do believe, however, that a hybrid solution involving both CLIA and FDA (depending on test risk and compliance cost) is an intriguing concept, but thus far the agency and Congress have been unwilling to develop or advance such a framework in partnership with the clinical laboratory community.

What the FDA’s Proposed Rule to Regulate Lab-Developed Tests Means for Patients, Hospitals, and Health Systems: Informational Resources From ARUP and Industry Partners, Webinar Recording, and Key Dates