Diagnostics landscape analysis: Key issues and a look ahead at 2024

Life Sciences | By LAURA DIANGELO, MPH

Jan. 30, 2024

Diagnostic regulation in the U.S. and E.U. is a constantly evolving topic. Following significant policy proposals in recent years, 2024 is gearing up to be a profoundly impactful year for diagnostics developers and the policymakers who regulate them.

Diagnostic regulation: A quick overview

  • Diagnostics products are those intended to identify, signal or detect a specific health condition, infection or disease, or monitor a person’s health or health status. In vitro diagnostics (IVDs) are regulated as medical products – although the actual regulatory frameworks and related implications vary globally.
  • In the U.S., tests and diagnostics are generally regulated as medical devices by the FDA’s Center for Devices and Radiological Health (CDRH). In some less common cases, a test or diagnostic may be technically classified as a biological product and regulated under the Center for Biologics Evaluation and Research (CBER) (e.g., IVDs used in blood donation screening/processing). This means that the medical device frameworks – including the pre-market pathways and evidentiary requirements, as well as post-market quality system frameworks and reporting requirements – are applied to the vast majority of all (CDRH-regulated) IVD products.
  • In the E.U., diagnostics and medical devices are regulated separately, under different Regulations. There are different pathways, authorities and frameworks for diagnostics and devices, and diagnostics are considered a separate regulatory category of product with their own regulatory systems. The European regulatory system for IVDs has been undergoing an overhaul for the past six-plus years, transitioning from the IVD Directive (IVDD) to the new IVD Regulation (IVDR); however, progress has been slow.
  • 2023 was a significant year in diagnostics policy and regulation, with profound implications for the path forward in 2024. There has been regulatory upheaval on both sides of the Atlantic, with a new IVD-related proposal from the FDA and outstanding implementation challenges with the E.U.’s new regulatory system for diagnostics. There are also continued questions about regulatory capacity and what the field will look like going forward, with implications for drug developers who rely on diagnostic products.

The diagnostics landscape in the U.S.: A sea change for lab tests, the implications for drug developers and outstanding questions about endpoints

  • In the U.S., one of the major headlines for diagnostic regulation is the proposed rule for laboratory developed tests (LDTs). The proposed rule, released by the FDA in late 2023, followed several years of policy discussions that sought to address the issue of whether a certain subset of IVDs known as LDTs could be regulated as medical devices, or if they were outside of the scope of the FDA’s purview. Historically, LDTs were considered to be “home brewed” tests – that is, they were made and intended for use in a single clinical laboratory, and therefore were used in a small volume of patients.
  • Traditionally, the FDA has employed a system of “enforcement discretion,” in which it opts not to enforce certain regulatory requirements, for LDTs. While this policy has been in place since the establishment of the modern medical device regulatory frameworks (i.e., since 1976), over the last decade the FDA has been increasingly vocal about its concerns with this approach. The agency cites questions about the quality and performance of these tests, as well as concerns that some firms are using the enforcement discretion beyond its intended scope, operating like device manufacturers and offering the tests more broadly than was understood under the laboratory framework by leveraging the clinical laboratory regulations to bypass FDA review. While the FDA tried to establish increased oversight of LDTs via guidance in 2014, that policy was later withdrawn. Congress then proposed an entirely new legal framework for IVDs, which would de-couple them from the medical device system and introduce IVD-specific pathways and oversight mechanisms. That effort stalled at the end of 2023 and has yet to find a new Republican co-sponsor in the Senate following the retirement of Senator Richard Burr (R-NC).
  • In a nutshell: The FDA’s proposed rule would treat all IVDs as medical devices. It would update the underlying regulatory definition of IVDs to clarify that they are medical devices “including when the manufacturer of these products is a laboratory.” This would effectively eliminate the current distinction between LDTs and IVDs – which is based on who develops them – and treat all LDTs as IVDs and, therefore, as medical devices. The proposal offers a staged implementation, in which the enforcement discretion currently applied to LDTs would be phased out in five steps over several years, starting with the requirements for device reporting and reports of correction and removal, and ending with pre-market submission requirements. It includes some limited exemptions in which the enforcement discretion would be maintained for certain tests used by law enforcement, for public health surveillance and in certain transplantation contexts. It also offers a continuation of enforcement discretion for what the agency is calling “1976-Type LDTs,” which are those that would fall under the original intent of the enforcement discretion. However, the actual definition of a 1976-Type LDT remains unclear.
  • The FDA intends to publish the final rule in April. The agency has indicated its intent to move quickly on the LDT rule, declining to extend the comment period despite multiple requests and, in its most recent Unified Agenda, listing an intended publication date of April 2024 for the final version of the rule.
  • What does this mean for the established diagnostics industry? That depends. Firms with clinical laboratory business units or LDT offerings will need to bring those activities into compliance with the medical device regulations. For those without clinical laboratory business units or LDTs, it will largely be business as usual, since the proposed rule does not alter any of the regulatory systems for IVDs, only codifying an expanded scope for the current policies. That said, there could be concerns about regulatory capacity, particularly as the CDRH Office of In Vitro Diagnostics (OHT7) has just gotten back to normal following the significant disruptions seen during the pandemic. Those disruptions caused delays in both MDUFA file reviews and the Office’s abilibty to accept pre-submissions for more novel IVDs. The longer-term impacts of these delays still remain to be seen. Additionally, industry and regulators are still awaiting an Emergency Use Authorization (EUA) transition, in which all of the products granted EUA during the pandemic will need to be converted to a full market access decision – which involves the re-submission of the product under (generally) a 510(k) and then FDA review and clearance – or pulled off the market. That yet-to-be-announced transition will also affect OHT7s capacity; adding another wave of new pre-market submissions via the LDT rule could, again, have trickle-down implications for the diagnostics industry. It’s worth noting that AdvaMed CEO Scott Whittaker has downplayed these concerns, telling POLITICO: “I don’t share the concern. If they thought they didn’t have the capacity, they probably wouldn’t have put out a rule to help regulate it.”
  • Are there implications for drug or therapeutic developers? Yes – particularly those with companion diagnostics (CDx) in development. Per FDA definitions, CDx are “a medical device, often an in vitro diagnostic (IVD), which provides information that is essential for the safe and effective use of a corresponding drug or biological product.” Unlike combination products, CDx are authorized separately from their related drug/biologic product. The therapeutic is approved with labeling that “stipulates concomitant use of an IVD companion diagnostic when the use of the IVD is essential to the safe and effective use of the therapeutic product,” as explained in the FDA’s 2014 guidance on CDx. However, CDx development is extremely challenging, and the FDA’s 2014 guidance offers the flexibility for the therapeutic product to be approved in advance of CDx readiness under certain circumstances. In these scenarios, the FDA may apply a post-market commitment (PMC) to the approval that directs the sponsor to continue to develop their CDx. However, as it does allow the drug to be launched without the corresponding CDx, LDTs have been filling the gap. This is particularly pronounced in oncology, where the FDA launched a pilot program in 2023 that would allow some drug products to be approved with labeling that refers to the performance specifications for LDTs, rather than an actual CDx. If the LDT rule eliminates this option, what happens to the drugs currently on the market that are relying on LDTs, and what developers who were anticipating the use of this flexibility should do going forward, remains to be seen.
  • Outside of the LDT proposed rule, another key trend in IVD regulation relates to a lesson learned from the pandemic – benefitting public health by shifting tests to lower-acuity settings. The pandemic created an unprecedented opportunity in which the general public became familiar with – and trained on – at-home test use. This includes both tests intended to be used entirely at home, like Covid-19 screening antigen tests, but also direct-to-consumer (DTC) tests in which at-home sample collection is then paired with a laboratory-based test. Advancing at-home medical device development has been a key talking point for CDRH Director JEFF SHUREN and a strategic priority for CDRH, which in 2023 issued a request for comment on regulatory issues related to at-home device regulation and development. The FDA is still determining what the regulatory framework for more at-home tests looks like outside of a pandemic context, including how to frame the risks and benefits of these products with an eye towards public health. However, the agency is actively working on these issues – as evidenced by the first authorization for an at-home sample collection kit for non-HIV sexually transmitted infections (STIs) in November 2023.
  • A key issue for at-home tests and diagnostics in general: the data gap. The way that health care data are captured, collected and transmitted in the U.S. tends to limit the amount of data available on IVDs. The laboratory-based settings in which diagnostics have traditionally been used (including both clinical laboratories and public health laboratories) have generally remained separate from the broader healthcare system in terms of health information technology structures. This means that the type of data captured in an electronic health record (EHR) for a specific diagnostic will be limited, and usually reflect just the results of a test ordered. Further, diagnostics are migrating away from laboratory settings and towards point-of-care (POC) and home settings, where opportunities to capture test data are also limited. The diagnostic data gap has significant implications for real-world assessment of test performance and the use of real-world data (RWD) for other regulatory purposes. CDRH recently stood up its Diagnostics Data Program (DDP) to address these issues and recognized a longstanding workstream on laboratory coding known as SHIELD as a collaborative community. That said, the diagnostics data gap is a well-established problem without a clear solution that is changing as the context of testing changes.
  • Another area of interest: The role of Pre-Determined Change Control Plans (PCCPs). At the end of 2023, the FDA gained new legislative authority to allow medical devices to be authorized with PCCPs, or pre-specified plans for anticipated changes to a device over time. While the primary intended use of these plans is typically in Artificial Intelligence (AI) or Machine Learning (AI/ML) applications, the FDA has also indicated interest in using PCCPs for tests and diagnostic products, allowing these technologies certain flexibilities post-authorization. A new guidance on PCCPs for medical devices more broadly (i.e., not solely in the AI/ML context) is on CDRH’s guidance agenda for FY2024.
  • There are also ongoing questions about endpoints for certain novel tests and diagnostic products. In particular, regulators (and industry) have been grappling with how to assess performance of screening tests, which have a slightly different indication than a diagnostic test – a screening test can signal the presence of a specific condition or marker while a diagnostic test would confirm it. This is especially pronounced in tests that are intended to screen for multiple conditions. At a recent advisory committee meeting on multi-cancer detection (MCD) tests, regulators and the panel of advisors debated the complexities of establishing a framework for the performance of these products, especially as the question of clinical utility is not within the FDA’s regulatory purview for medical devices. Advisors at that meeting had trouble reaching a consensus on next steps, even as industry actively seeks guidance from the agency to support their development programs.
  • It’s also worth noting: The FDA’s longtime diagnostics chief, TIM STENZEL, reportedly retired from the agency at the end of 2023. This means that CDRH is on the hunt for a new Director of OHT7, an office that likely has an extremely busy year ahead.

The diagnostics landscape in the E.U.: Following a regulatory overhaul, industry and policymakers struggle with implementation

  • Quick background: IVDD to IVDR. The E.U. regulatory system for IVDs has been undergoing a significant transition in recent years. Since 1998, the IVD Directive (IVDD; Directive 98/79/EC) served as the regulatory framework for IVDs in the E.U. However, in 2017, the European Commission replaced the IVDD with Regulation (EC) 2017/746 – also known as the In Vitro Diagnostics Regulation (IVDR). The IVDR was intended to replace the IVDD in its entirety, establishing new processes for market access and post-market surveillance.
  • Up front: A new delay. The original date of application (DoA) of the IVDR was set for May 2022, following a five-year transition period. In 2021, the Commission proposed an amendment to the IVDR to convert the compliance deadline to a “progressive rollout” of compliance dates, based on device risk class. Class A (lowest risk) devices needed to be IVDR-ready on the original date (May 26, 2022), but class D had until May 2025, class C until May 2026, and class B and sterile class A until May 2027. In-house tests (similar to LDTs in the U.S., referring to tests manufactured and used in a single lab) had until May 26, 2024.
  • In January 2024, the Commission proposed a second extension to the IVDR transition. Mirroring a 2023 extension to the E.U.’s new Medical Device Regulation (MDR), the new IVDR amendment would allow certain IVDs (in particular, those with existing certificates or declaration of conformity under the IVDD) to stay on the market without a new IVDR certificate. The proposal comes after multiple stakeholders, including industry, cited major concerns about the IVDR implementation and its impact on new and already-marketed IVDs.
  • This is an extremely recent development, and an emerging area. The proposal will be discussed at the Council of the EU Working Party on Pharmaceuticals and Medical Devices, taking place January 30. Due to the exceptional circumstances related to the imminent risk of shortages of critical IVDs and potential to impact public health, the Commission is urging the amending regulation “enter into force as a matter of urgency,” invoking an exception to the eight-week period of review for national Parliaments as described in the Treaty on European Union (Recital 17 of the proposed regulation). This means that the Commission is looking to address an extension with expediency.
  • The specifics of this extension: For IVDs with valid certificates as of May 26, 2022 that have not been withdrawn by the Notified Body, the extension would apply directly (i.e., Notified Bodies do not need to update these certificates). For certificates which expired after that date but before the proposal takes effect, the extension would apply if the manufacturer had a signed contract with a Notified Body to conduct conformity assessment at the time of expiry, or where a national competent authority had issued a derogation. For “legacy devices” (those with a certificate or a declaration of conformity under the IVDD before May 26, 2022), the draft regulation would extend timelines for those devices meeting the conditions as follows: 1) For Class D IVDs and those with a valid IVDD certificate, the transition is extended to December 31, 2027; 2) Class C devices: December 31, 2028; and 3) Class B and sterile class A devices: December 31, 2029.
  • However, the extension would also limit certain updates to these IVDs. To qualify, the devices must continue to comply with the IVDD, cannot undergo any significant design or use changes, and cannot present “an unacceptable risk to health or safety.” Additionally, the manufacturer must have an IVDR-compliant quality management system (QMS) in place by May 26, 2025; notably, this does not require a certificate from a Notified Body. Finally, the manufacturer (or its authorized representative) must lodge an application for IVDR conformity assessment for all legacy devices it plans to transition to the IVDR by May 26 of certain years (2025 for class D, 2026 for class C, 2027 for class B and sterile class A). The manufacturer and Notified Body must then sign an agreement within four months (September 26 of the appropriate year based on risk class). Notably, “legacy device” means either a device planning to transition to the IVDR or a device that the manufacturer plans to replace with a new device, and the manufacturer applies for conformity assessment of the new device by the above timeframes.
  • How did we get here? The IVDR represents a significant change for the European IVD industry. The IVDR established a new risk classification scheme for IVDs, outlining four risk classes from Class A (lowest risk) to Class D (highest risk and/or affects public health). It also implemented new regulatory requirements for many types of IVDs that previously had no oversight by Notified Bodies, the entities designated by E.U. countries to provide sign-off on regulated products. Under the IVDD, only a few types of IVDs required Notified Body oversight, while the rest could be self-certified by the manufacturer. The directive used a list-based system. List A and List B outlined what E.U. regulators considered the highest-risk IVD devices; these and devices for patient self-testing required Notified Body oversight. The remaining “general” IVDs were self-certified by manufacturers. According to the Commission, under this system, around 8% of all IVDs required Notified Body oversight. But the IVDR introduced a new risk-based system under which about 80% of all IVDs will require a Notified Body certificate. Within this system, class D encompasses some List A and B tests along with others not previously on those lists, whereas Class A, the lowest risk class, is the only risk class not requiring Notified Body oversight.
  • There have been some challenges with the Notified Body system under the IVDR. Although sponsors were technically permitted to transition to the IVDR in 2017, the first Notified Body wasn’t designated to that legislation until mid-October 2019. According to Article 113 of the IVDR, the first date a Notified Body could apply to be designated was November 26, 2017, six months after the regulation entered into force. However, the Medical Device Coordination Group (MDCG) didn’t publish guidance on the designation process or the designating authorities final assessment form until February 2018 and October 2019, respectively. Currently, a similar number of Notified Bodies have applied for IVDR designation as were designated under IVDD. So while the total number of products requiring Notified Body sign-off has increased significantly (in fact, ten-fold), the number of Notified Bodies appears to be staying the same.
  • There have also been delays in issuing guidance and setting up the new system under the IVDR. There is still significant work to do to stand up the IVDR and put the new system into practice – as seen in the Commission’s most recent joint implementation plan. This is particularly pronounced for novel and class D (highest risk) IVDs. For novel Class D IVDs, Notified Bodies must either rely on common specifications (i.e., device-specific guidance) or consult with specifically designated expert panels (which now fall under the European Medicines Agency (EMA)). Further, Class D IVDs must be tested by E.U. Reference Laboratories (EURLs) against their common specifications, but the first EURLs for Class D IVDs were only designated in December 2023. There are also outstanding questions about what to do about in-house IVDs (i.e., the European equivalent to LDTs) under the IVDR, which were not directly regulated under the IVDD but are subject to many IVDR requirements.
  • The regulatory uncertainty is expected to have access implications: The complexity of the IVDR system has led to concerns that companies will choose not to transition their products to the new framework, or that even those willing to transition may not be able to. According to a 2023 survey by the European Commission, there were just 331 certificates issued to the new IVDR against a total number of IVDD certificates of around 1,550. This is of particular concern considering that, under the IVDR, the number of certificates is expected to increase 8- to 10-fold – with 12,000 to 15,500 certificates expected for all of the class B, C and D certificates. The survey also reported on the refusal of applications by Notified Bodies and manufacturers withdrawing those applications. For the applications that were accepted, the technical documentation review has been difficult – Notified Bodies report that most submissions are “largely incomplete,” almost all at 50% complete or less. No IVDs achieved certification in under one year and 10% took longer than two years.
  • Companion diagnostics (CDx) and cancer trials: In 2023, the MDCG published guidance documents on classifying CDx. However, there are still outstanding concerns that the challenges in standing up the IVDR system could lead to delays in drug approval. In December 2023, the EMA issued an FAQ document on drug development and CDx, although that document left several outstanding questions in practice. This remains a major area of concern for both industry and regulators, with a March 2023 survey from EFPIA finding that the challenges with the IVDR has led to issues with IVDs used in drug trials, and particularly cancer trials.

Featuring previous research and expert analysis by Corey Jaseph.

To contact the author of this item, please email Laura DiAngelo ( [email protected]).
To contact the editor of this item, please email Chelsey McIntyre ( [email protected]).

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