How the FDA’s new LDT regulation could affect drug development

Life Sciences | By LAURA DIANGELO, MPH

May. 06, 2024

The FDA recently finalized a regulation that would transform how it regulates a subset of in vitro diagnostics that it historically did not regulate, known as Laboratory Developed Tests (LDTs). But while the greatest impact of the rule will be on the laboratories and companies which make LDTs, FDA’s rule is also likely to affect some clinical studies of new drugs and biologics.

A quick background on IVDs and LDTs used in clinical trials

  • In vitro diagnostics (IVDs) – or tests conducted on samples such as blood or tissue – are often an important component of clinical trials for new drugs and biologics. They can be used for myriad purposes over the course of a research study, including: (a) guiding selection of a participant population, such as through identification of biomarkers that meet specific eligibility criteria; (b) monitoring patient progress; (c) as part of the standard of care for the condition of interest; (d) assessing patient health markers (e.g., establishing or monitoring markers like blood counts; excluding active pregnancy to ensure participant safety throughout the research program); (e) assessing biomarkers or other measures that guide the management of participants during a study; and/or (f) assessing various primary and secondary trial outcome measures.
  • In the U.S., IVDs are regulated as medical devices, meaning that the FDA’s legal framework for medical device product regulation is applied to these products. IVDs are defined in regulation as “reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions, including a determination on the state of health, in order to cure, mitigate, treat, or prevent disease or its sequelae,” which use “specimens taken from the human body.”
  • In the U.S., a subset of IVDs are referred to as Laboratory Developed Tests (LDTs). Traditionally, this subset are those tests developed and used within a single high-complexity laboratory, as defined and credentialed by the Centers for Medicare and Medicaid Services (CMS) under the Clinical Laboratory Improvement Amendments (CLIA) regulations. LDTs, traditionally considered low-volume and low-risk, have been primarily regulated by CMS – not the FDA.
  • However, the FDA has long maintained that LDTs – like IVDs – are actually medical devices subject to its regulatory authority, but for which it has practiced “enforcement discretion.” In practical terms, this means that while FDA believes it could regulate these devices, it has chosen not to. As a result, LDTs – whether used in clinical practice or in clinical trials – have become a fully separate segment of the IVD market and not subject to the same regulations as FDA-evaluated IVDs. [See a full AgencyIQ explainer of the history of this policy issue here.]

How the FDA regulates investigational IVDs

  • Some clinical trials assessing an investigational drug also involve an investigational diagnostic. A new drug (or a new use of an already approved drug) is typically considered the “investigational product” within a clinical trial and is subject to Investigational New Drug (IND) requirements. However, a research program on an investigational drug can also include an investigational IVD, as when an investigational oncology product’s use in a clinical trial is guided in part by a biomarker being tracked via an IVD, which is itself also under development and being studied. According to the FDA’s regulatory definitions, an investigational device is one “that is the object of an investigation.” Under those regulations, if an IVD is used as part of “a clinical investigation or research involving one or more subjects to determine the safety or effectiveness of a device,” then it’s an investigational IVD.
  • According to the FDA, IVDs used in a clinical trial can fall within the definition of an investigational device when two factors are met: “When an investigational IVD is used to guide the therapeutic management of subjects in a therapeutic product trial, and trial results provide information on the safety and effectiveness of the investigational IVD in addition to the safety and effectiveness of the investigational therapeutic product.” In these instances, investigational device regulations apply to that drug trial.
  • The primary regulatory framework governing investigational IVDs are the Investigational Device Exemption (IDE) regulations, which stratify products by risk level. Significant risk (SR) devices are those that present “a potential for serious risk to the health, safety, or welfare of a subject.” In the realm of IVDs, this may include “devices that are substantially important in diagnosing, curing, mitigating or treating disease or in preventing impairment to human health.” Developers of SR devices must submit an IDE application to the FDA. Nonsignificant risk (NSR) devices are those which do not pose a significant risk to humans and, as a result, do not need to seek IDE approval. Risk determination requests are submitted to FDA’s Center for Devices and Radiological Health (CDRH) through their Q-submission program.
  • For both significant and non-significant risk devices, there are additional regulatory requirements for investigational devices/IVDs, found at 21 CFR 812. These include labeling, informed consent, monitoring protocols, records and reports, and adherence to some regulated prohibitions (e.g., commercialization, promotion, test marketing, and prolongation of the study). Devices under an approved IDE are also subject to certain limitations on their distribution (i.e., they may only be distributed to qualified investigators). For all investigational devices, the informed consent regulations are a core component of oversight from institutional review boards (IRBs), the entities that review and monitor studies to ensure protection of human participants. In practice, many individual institutional review boards (IRBs) also develop their own guidelines for the use of diagnostics, including investigational IVDs, in the clinical trial setting.
  • An important caveat: Many IVD products are considered exempt from IDE regulations. Under 21 CFR 812, this includes tests which: 1) are noninvasive, 2) do not involve an invasive or risky sampling procedure, 3) do not “introduce energy into a subject,” and 4) are not used as a diagnostic without confirmation from a “medically established diagnostic product or procedure.”
  • However, even products that are IDE exempt are subject to a subset of requirements. Although these products are not subject to most of the regulations under 21 CFR 812 (except 812.119, related to investigator disqualification), they have their own requirements which include labeling that specifies whether a particular test product is for “Research Use Only” (RUO) or “Investigational Use Only” (IUO). RUO typically refers to IVD products used in laboratory phases of studies; IUO IVDs are those used in the product testing phase of development.
  • Another important caveat: Not all IVDs used in a drug trial are considered investigational IVDs. As detailed above, there are a variety of uses for tests and IVDs in clinical research programs. Therefore, just because a specific test is used during a clinical trial does not mean that it will be considered an investigational IVD. Some tests and assays are generally outside of the scope of investigational IVD considerations. For example, tests that are routinely used in the care of the condition of interest, tests that are employed for a purpose that aligns with an FDA-authorized indication, and certain safety monitoring tests would not be considered investigational.
  • The FDA has provided guidance intended to assist developers and IRBs in determining whether an IVD is investigational within the context of a specific clinical trial. As that guidance explains, an investigational IVD can be a novel IVD (i.e., non-FDA authorized product), an IVD that is legally marketed for a different intended use than it’s used for in a trial, or a marketed IVD that has been “significantly modified” for use in the trial. The agency also points to a specific IVD use case which is increasingly seen in research programs for new drugs: “to detect and measure biomarkers and other individual characteristics of disease or other conditions with the goal of better directing patient treatment,” in particular to “select or classify subjects, assign subjects to therapeutic product arms or doses, or monitor responses to treatment.” Such investigational IVDs may be SR, NSR, or IDE exempt.
  • What about LDTs? Due to the longstanding enforcement discretion applied to these products, investigational regulations have not previously applied. However, that is about to change.
  • The changing landscape for LDTs: Over the past decade, the FDA has become aware that its enforcement discretion policy for LDTs is being applied to products far beyond its originally intended scope. The agency has noted that this policy unintentionally created two pathways for IVDs: one through the device regulations (as an authorized IVD) and one for large, national complex laboratory networks to run proprietary tests without regulatory approval or clearance from the FDA. Citing both the higher volumes and evolving complexity of LDTs, the FDA has taken several actions to try to implement more rigorous regulatory oversight. However, previous efforts to implement these policy changes stalled out (e.g., its 2014 draft guidance was withdrawn and followed up with a 2017 discussion paper), as have Congressional effort s to amend the underlying statute to clarify LDTs’ legal framework.

The FDA’s recent change to diagnostics regulations, and its impact on LDTs and clinical trials

  • Now, the FDA has finalized a rule to formally bring LDTs under the device regulations and phase out its enforcement discretion approach. The mechanism by which the agency will make this change – effective May 6, 2024 – is simple. The FDA has added a single phrase to its existing regulatory definition of an IVD: “including when the manufacturer of the IVD is a laboratory.” However, the implementation of this change is far more complex, with the agency implementing this change in stages. For the investigational device exemption (IDE) regulations, enforcement will begin in the second stage of the five-stage process, or May 2026. [See AgencyIQ’s full analysis on the LDT final rule here.]
  • For diagnostics previously considered to be LDTs, the IDE regulations will be enforced in two years, starting in 2026. This means that drug programs that are currently using – or planning to use – LDTs in their clinical trials and development programs “may require the submission of an IDE application separate from the investigational new drug application (IND).” Additionally, the rest of the requirements in the IDE regulations will begin to apply. The agency goes on to refer drug study sponsors back to its 2017 draft guidance on investigational IVDs (discussed above), as well as a separate guidance on the streamlined process for oncology product sponsors.

What does this mean for drug product sponsors and their clinical development programs?

  • That’s a question that the FDA tries to address in its new rule. In its final rule, the agency acknowledges that some stakeholders responded to the proposed version of the rule with questions about its impact on investigational use requirements. Specifically, questions homed in on what the impact would be for laboratories that “validate reagents for use in a clinical trial” when the reagent itself is labeled RUO (as defined above); or when the test being used in a clinical trial is validated by a laboratory “for a specific purpose for use in a clinical trial” like “inclusion/exclusion determination, or safety assessments of enrolled subjects;” or, of course, when a study sponsor is planning to use an LDT.
  • IVD, IND, IDE, OMG: While sponsors of drug trials may not have expected this, the FDA would argue that this should not come as a surprise. These regulations are already in place and are currently being enforced for IVDs. Therefore, “As FDA has explained, sponsors should already be aware that all investigational IVDs used in therapeutic product trials are subject to IDE requirements” that require additional regulatory compliance, including (as applicable) an IDE application and the other IDE requirements under 21 CFR 812 (e.g., labeling, informed consent, records and retention). Even if a sponsor was not expecting it, this does mean that studies being conducted under an IND may also need an IDE, and that they’ll be subject to the other regulations under 21 CFR 812. Informed consent regulations are implicated here as well and are part of the stage 2 phaseout of enforcement discretion.
  • What about RUO, IUO and Contract Research Organizations (CROs)? Again, the FDA refers study sponsors back to the existing expectations for using investigational devices in drug product research programs – expectations that have been in place and enforced for IVDs. So although the idea of considering LDTs (or, as the agency is now calling them, IVDs currently offered as LDTs) as investigational devices in the context of regulatory compliance in clinical trials may be new, the idea is well established. Now, however, new entities will need to comply with the regulations in a way that’s new to them, despite the fact that nothing is truly new.

What the FDA’s LDT rule could mean for drug development:

  • What kinds of tests will really be affected by this? For the most part, this change will impact tests that are described by the FDA as follows: “Early on in therapeutic product development programs, a test may be developed or contracted by the therapeutic product sponsor solely for the purpose of testing in the therapeutic product trial (i.e., the sponsor does not intend to market the test for clinical use). Such a test is often referred to as a clinical trial assay (CTA).” There are certain situations in which the FDA specifically recommends the use of CTAs in drug trials, such as in the development of “targeted therapies in low-frequency molecular subsets of a disease” (i.e., assessing drugs for a condition that could have multiple underlying causes like genetic mutations or expressions).
  • Despite their prevalence in clinical trials, CTAs don’t actually have a formal regulatory definition. Instead, CTAs are a kind of investigational IVD, one that is developed solely for the purpose of the trial. Examples would include serological tests used to capture immune response in vaccine trials (a test not conducted once vaccines are approved) or assays intended to measure drug levels during clinical development (in most cases, these levels will not be measured in patients using the drug post-market). If during a trial the CTA is determined to be essential for the safe and effective use of the drug, however, that test would then need to undergo its own authorization for use with the drug post-market. In that case, it would be considered a companion diagnostic (CDx), or a type of IVD that is reviewed by the FDA to inform safe use of its corresponding therapeutic.
  • The FDA’s stance is that the LDT rule won’t meaningfully disrupt clinical trials. “Given this time period [i.e., the two years before the IDE regulations apply] to prepare, FDA does not anticipate that compliance with IDE requirements will meaningfully delay drug or IVD development activities,” it wrote. Similarly, the agency again notes here that what is being implemented is simply the standard practice for diagnostics in research trials, which generally do not need IDE applications.
  • In addition, most investigational IVDs are exempt from the IDE regulations. The agency makes this case in its final LDT rule, noting that IVDs meeting the requirements outlined above – non-invasive, not presenting risk, not introducing energy, and not being used independently for diagnosis – are exempt from most IDE requirements. Most laboratory-developed CTAs should fall under this rubric.
  • However, an increasing number of investigational IVDs will fall under the IDE regulations. This is evidenced in the FDA’s 2017 draft guidance on investigational IVDs in drug trials, where the agency acknowledges that “with the continued growth of personalized medicine, an increasing number of clinical investigations of therapeutic products […] are using investigational IVDs to guide the management of subjects in such investigations [emphasis added].” In these contexts “the use of an investigational IVD in a therapeutic product trial may pose a significant risk to subjects,” and these products would be considered SR devices subject to the IDE regulations. In effect, advances in targeted therapies and precision medicine mean that more and more research programs should technically be subject to the IDE regulations.
  • The biggest impact to trials may be on research programs that are already underway. In cases where a clinical development pathway has previously relied upon the use of CTAs (or other types of investigational IVDs) that have been classified as LDTs, the FDA appears to expect that these LDTs will be brought into full compliance with the IDE regulations within two years. This stands to impact a large swath of ongoing clinical development programs, including those for novel drug products currently in multi-year trial programs, and those for approved drugs that are currently being evaluated for additional uses. In the latter case, LDTs used in these trials may have been part of the clinical development of that drug for an extended duration of time, possibly dating back to trials conducted while seeking its original approval. Notably, “grandfathering” provisions in the FDA’s LDT final rule do not apply to its IDE regulations, meaning that all LDTs currently in use in research programs as CTAs/investigational IVDs will be subject to the IDE regulations over the next two years.
  • Despite FDA’s perspective that this regulation change will have minimal impact on clinical trials, the true impact for trials – and their sponsors – remains to be seen. This is an area in which additional guidance from FDA is likely needed. Even though the new regulatory changes that are coming over the next few years are intended to simply bring the standards for LDTs in line with those already in place for regulated IVDs, this will ultimately implicate the IDE regulations in places where they historically may not have been considered or applied. In turn, study sponsors, researchers, laboratories and IRBs may not be well-versed in what, exactly, is expected of them.
  • This raises additional questions for administrative capacity for the FDA. With significant unanswered questions comes the need for new policymaking from FDA, in particular guidance. As the agency itself acknowledges in the final rule, the 2017 guidance on investigational IVDs in drug trials is still in draft format and has not been finalized.
  • A review of comments received on the draft version of this guidance gives some clues as to why that is. For example, the Association of Molecular Pathology (AMP), a clinical laboratory stakeholder that has pushed back hard against the LDT rule, submitted comments raising concerns that the 2017 guidance could implicate LDTs in the IDE regulations. At the time, AMP said this inclusion was not appropriate, adding that clinical laboratory/LDT stakeholders involved in clinical trials will have difficulties complying with the device regulations in these contexts. The diagnostics firm Illumina also highlighted in its comments that the 2017 draft guidance seemed to implicate both IVDs and LDTs. That draft guidance, in the context of the new LDT rule, may eventually receive updates to help clarify next steps, particularly related to the IDE regulations.
  • FDA commits to issuing guidance in the final rule, but it’s an ambitious amount of policymaking in a relatively short time. In addition to implementing its regulatory oversight in a new segment, receiving and processing all associating documentation, initiating and completing a related effort to change its risk-based approach to diagnostic regulation overall, this is an extremely heavy lift for CDRH’s diagnostics office. The direct impact for drug clinical trials – and their sponsors – will remain to be seen, especially as the FDA must set priorities across the full scope of products impacted by the final rule.
  • The agency’s position is that this might be a change, but it shouldn’t be a big one. Per the rule, the new regulatory changes that are coming over the next few years are intended to simply bring the processes and standards for LDTs (“IVDs currently offered as LDTs”) in line with what study sponsors using investigational IVDs are already doing. That said, it could still be a big change in practice, and implicates the IDE regulations in places where they historically may not have been considered or applied. In reality, study sponsors, researchers, laboratories and IRBs may not be well versed in what, exactly, that should look like.

To contact the author of this item, please email Laura DiAngelo ( [email protected]).
To contact the editors of this item, please email Alexander Gaffney ( [email protected]) / Kari Oakes ( [email protected]).

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