Top questions on FDA’s proposed LDT rule: Carve outs, capacity and quality systems

Life Sciences | By LAURA DIANGELO, MPH

Oct. 30, 2023

A month after the FDA published its proposed rule to enforce regulatory requirements on laboratory developed tests (LDTs), AgencyIQ has some outstanding questions. In particular – potential issues with applying the policy to practice, the role of different stakeholders and the new proposed definitions.

FDA’s new proposed rule on the regulation of laboratory developed tests

  • An incredibly quick background: Laboratory developed tests (LDTs) are considered a subset of in vitro diagnostics (IVDs). IVDs are regulated as medical devices in the U.S., but since the 1970s, the FDA has expressed “enforcement discretion” (i.e., not enforced its regulatory requirements) for LDTs. This has allowed them instead to be developed and run primarily under oversight from other agencies – including the Centers for Disease Control and Prevention (CDC) and Center for Medicare and Medicaid Services (CMS) – under a policy known as the Clinical Laboratory Improvement Amendments (CLIA). However, CLIA sets standards for laboratory quality and performance, not the quality of tests, and in recent years the FDA has cited increased concerns that LDTs have exceeded the originally intended scope of the enforcement discretion. Over the last decade, the agency sought to build out new policies to enforce regulatory requirements over LDTs, eventually deferring to Congress to act. However, the related legislative proposal did not make it through last year, prompting the FDA to take its own action.
  • The proposed rule was issued at the end of September: After a fairly quick turnaround and a speedy administrative review, the FDA published a proposed rule on LDT policy. [See AgencyIQ’s full analysis of the proposed rule here.]
  • The proposed rule in a nutshell: The FDA is proposing to amend the underlying definition of an IVD in regulation (21 CFR 809) to clarify that an IVD includes a product for which the “manufacturer” is a laboratory. This would codify the FDA’s longstanding position that LDTs are, in fact, medical devices and therefore subject to the regulatory requirements under the FDA’s device framework. The agency further proposed a five “stage” phaseout of its current enforcement discretion, which would walk in the medical device regulatory requirements – from adverse events reporting to pre-market review – over four years. The proposed rule includes some limited exemptions in which it would maintain the current enforcement discretion policy for a subset of LDTs and also solicited comment on potential other areas to consider maintaining enforcement discretion. The FDA also requested comment on the potential to let other entities or agencies validate tests.
  • The phaseout policy includes five stages, which are: 1) Year one: Medical Device Reporting (MDR), reports of correction and removal; 2) Year two: Registration and listing, labeling, and investigational use requirements; 3) Year three: Quality System regulations (QSR), although certain products would remain exempted from some parts of the QSR; 4) Year three and a half: Pre-market review for high-risk products; and 5) Year four: Pre-market review for all applicable products.

The first question: “1976-Type LDTs” and “grandfathering”

  • The exemptions to the proposed rule: The agency is proposing to retain the enforcement discretion as it currently exists, effectively maintaining the status quo, for a specific set of LDTs. These include LDTs used in law enforcement (forensics), HLA tests for transplantation in histocompatibility labs, tests for public health surveillance, and what the agency is calling “1976-Type LDTs.”
  • What are “1976-Type LDTs?” This term appears to refer to the types of tests that the FDA originally considered when the enforcement discretion was put in place – manual (i.e., not automated) tests conducted in single high-complexity CLIA labs by specialized personnel using legally marketed components. Under the proposed rule, these tests would be able to continue operating under the current status quo. However, the agency maintains that even these LDTs (IVDs) are medical devices and that they are operating under an enforcement discretion.
  • This category of LDTs seems challenging to oversee. The FDA states that these tests involve the use of manual techniques (i.e., not automated) that are performed only by “laboratory personnel with specialized experience,” are comprised only of “components legally marketed for clinical use,” and that they are designed, “manufacture[d]” and used within a single, high-complexity CLIA laboratory. However, this definition presents many questions. If these definitions are maintained and implemented, the “use of components legally marketed” that are then “manufacture[d]” into another product would technically be considered medical device remanufacturing, which implicates the quality system regulations. Further, it’s not entirely clear what the term “components legally marketed for clinical use” actually means and what “components” and activities to amend them would fall under this enforcement discretion.
  • Many of the same operational oversight challenges that occur with remanufacturing are likely to occur here as well, with the labs themselves determining whether what they’re doing is “manufacturing” 1976-Type LDTs. Anecdotally, it’s not clear that there is an operational understanding of where, exactly, that line is. Thus, it’s not clear what the labs would be doing or how (or if) they’d be reporting their activities. In addition, there is often a disconnect amongst stakeholders about the line between remanufacturing and servicing, which would conceptually be repeated for “1976-Type LDTs.” This could perpetuate some of the current challenges with LDTs, in which labs may be under the impression they are working within enforcement discretion but potentially running afoul of the FDA’s interpretation.
  • The agency is putting some use-case-specific limitation on this, although lack of clarity continues to be an issue here as well. “These tests might include, for example, immunohistochemistry tests that involve no automated preparation of interpretation, but would not include, for example, lateral flow tests, as they do not generally rely on laboratory personnel expertise,” a statement with which the laboratory industry would likely disagree. What the FDA would determine to qualify as a 1976-Type LDT will likely need to be further defined. In addition, it’s not entirely clear what mechanism, if any, would exist for identifying whether a lab got it right or exceeded the bounds of the intended enforcement discretion.
  • The proposed LDT rule includes several requests for comment about other products that could be considered to remain under enforcement discretion. In other words, categories of “IVDs offered as LDTs” that could also potentially see the enforcement discretion maintained (either in whole or in part). This includes: “grandfathered” tests and tests from Academic Medical Centers (AMCs).
  • It is unclear which tests the agency would consider for “grandfathering,” as it has stated that even low-risk products are the target of this proposed rule. As the proposed rule acknowledges, “In 2017, FDA indicated support for less oversight of other categories of tests, such as low-risk tests (class I devices), tests currently on the market, and tests for rare diseases.” However, the currently available information now shows “that there is a high variability in the performance of IVDs offered as LDTs that are currently on the market, including in circumstances where the test technology is relatively simple and well-understood, where the tests are for rare diseases, and where the tests are low risk.” This indicates that the vast majority of products that are currently marketed as LDTs would need to comply with the phased-in regulatory oversight per the risk-based system outlined above.

How will the FDA implement a risk-based phase-in of regulatory requirements for products that are currently not within the risk classification system?

  • Doesn’t the phase-in policy rest on the medical device classification system? Yes, per the proposed rule, the phase-in system relies on the risk-based classification of the LDTs. The rule would establish a system in which “premarket review requirements for high-risk IVDs” would be required in advance of such requirements for “moderate risk and low risk IVDs,” effectively ending the enforcement discretion for high-risk LDTs first.
  • However, that approach may run into some hurdles in practice. The design of the U.S. medical device pathways relies on regulatory precedent, with all never-before-authorized medical devices technically considered to be high-risk devices. Thus, all non-authorized LDTs would currently be high-risk devices, which would technically mean that all LDTs under the current iteration of the enforcement discretion are “high risk” products for the purposes of the phase-in policy. Presumably, the intent of the proposed rule is that all products that would require a Pre-Market Application (PMA) will see the enforcement discretion terminated first, while all products that would require a 510(k) would be in the next phase. However, because those frameworks have historically not applied to these products, it will likely be confusing to effectively backfill risk categorizations.
  • A quick case study from Covid-19 policy: This situation may partially resemble the issues that have occurred over the last year as the FDA has pushed for Covid-19 test developers to seek full market access decisions [See AgencyIQ’s discussion of these issues here.]. In short: the 510(k) pathway needs to be opened for certain products. While regulators have asked developers of Covid-19 tests with emergency use authorizations (EUAs) to submit full marketing authorization requests as soon as possible, these tests are novel but moderate risk. Thus, under the current regulatory device framework, one product must go first undergo a De Novo request; only after the De Novo is granted can 510(k) pre-market notifications even be submitted. Under the proposed phase-in policy from the LDT rule, the agency appears to assume that all would-be-Class II LDTs would have a De Novo (or established regulatory precedent) by Year 4, and therefore have access to the 510(k) pathway.

What about the Quality System Regulations (QSR) to the Quality Management System Regulations (QMSR) transition?

  • Quick intro: QSR, QMSR. As AgencyIQ has previously discussed, the FDA is working to harmonize the medical device quality system regulations (QSR, or “820”) with the international standard of ISO 13485 – a system that the FDA has termed the Quality Management System Regulations (QMSR). A final rule to implement the QMSR is still under development, but leadership has indicated that it’s a top priority.
  • Considering the timeline, the LDT proposed rule would phase in enforcement of the QMSR, not the QSR. The phase-in policy would allow three years for labs to come into compliance with the quality regulations for medical devices. If the agency intends for the LDT policy’s final phase to begin “not before” FY2028 (i.e., October 1, 2027) in order to align with the next iteration of the device user fee program, the QS compliance requirement for LDTs could theoretically be in place by FY2027. The LDT rule acknowledges that the agency “intends to finalize amendments to the QS regulation expeditiously, such that the amended QS requirements would be in effect before the proposed beginning of stage 3.” This means that the agency expects QMSR to be up and running “before the proposed beginning” of the phase-out of enforcement discretion pertaining to quality regulations.
  • The QMSR proposed rule itself included a one-year transition timeline, meaning that the QMSR would be in effect one year after the final version of the rule is published. However, industry has raised significant concerns with that approach, seeking a 2- or 3-year transition period instead. This transition would also produce a considerable amount of work for the FDA, including training staff on the new inspections system and identifying and revising all other regulations and guidance documents that refer to 21 CFR 820.
  • This means that, if both rules are finalized as proposed, laboratories could be gearing up to comply with quality system regulations that are actively changing. The suite of medical device guidance documents, including those on IVDs, leverage 21 CFR 820 as a foundational authority, and they would all need to be updated and revised while the LDT framework as proposed is being phased-in (including, for example, the remanufacturing policies cited above). This could present an exceptionally tight squeeze both for laboratories and the FDA.

FDA’s capacity and a third-party system?

  • The phased-in approach would be a huge lift for the Center for Devices and Radiologic Health (CDRH). While the LDT proposed rule does note that only 50% of LDTs are estimated to require pre-market review, implementation of the rule and enforcement of regulatory requirements over a wide swath of products would be a serious capacity challenge. The proposed rule also estimates an increase in funding from user fees (registration, pre-market, annual fees for PMAs) associated with the additional work, which would not fully offset the additional workload at the agency.
  • The proposed LDT rule floats an interesting solution: Third Party review. Per the proposed rule, “FDA also anticipates that laboratories may seek to utilize FDA’s Third Party review program” for LDTs that would require a 510(k) pre-market notification. This anticipated interest is not only from laboratories with submissions, but also “potential new Third Party review organizations.” While the FDA’s Third Party review program has seen some challenges in recent years, there’s also some precedent here – during the pandemic, CDRH outsourced some EUA reviews to a firm (NDA Partners) helmed by the former director of CDRH’s Office of In Vitro Diagnostics (OHT7, formerly OIVD), Alberto Gutierrez.
  • One particular organization type of interest: CLIA accreditation organizations. The final rule states that the agency “is aware of certain CLIA accreditation organizations that may be interested in potentially becoming Third Party reviewers under FDA’s program, and to the extent laboratories are already familiar with these organizations, laboratories may be inclined to use the Third Party review program.” In effect, the agency floats the idea that the accreditation organizations that already work with labs on CLIA requirements would also be able to serve as Third Party reviewers for FDA pre-market requirements.
  • One prominent CLIA accreditation organization has flagged some concerns about the proposed rule. The College of American Pathologists (CAP), a CLIA accreditation organization (see a full list from CMS here), currently plays a pivotal role in laboratory regulation. At CAP’s annual meeting in October 2023, however, the newly-elected CAP President Donald Karcher did not indicate that CAP was necessarily in place to serve as a Third Party reviewer, instead expressing concern about the limited 60-day comment period and stating that CAP had significant questions for FDA about the rule – including the complexities with automated/manual tests as noted above. CAP has already submitted a request that the FDA extend the comment period.

What’s next: Comment deadlines, a push for legislative action, and FDA’s other interesting diagnostic ideas

  • The comment period runs through December 4, although numerous organizations have already requested an extension (including CAP, the American Red Cross, American Society for Microbiology, American College of Medical Genetics and Genomics, and Coalition for Innovative Laboratory Testing, amongst others). The proposed rule already has almost 1,000 comments posted, although many appear to be form letter comments following this template from the Alliance for Natural Health USA.
  • The proposed rule has raised red flags in Congress. CDRH officials stated throughout 2023 that they would prefer a legislative solution for amending the framework for diagnostics. A regulatory path forward was used as an option in lieu of Congressional action. After limited movement on Capitol Hill this year on this issue, the proposed rule appears to have generated some interest from lawmakers. In particular, Senate HELP Committee ranking member Bill Cassidy (R-La.) is reported by POLITICO as saying that the FDA’s proposed rule “unilaterally” expands the agency’s authority, and called for “Congress to assert itself and clarify FDA’s authority in the regulation of diagnostic tests.” Medical device trade association AdvaMed also called again for a legislative solution: “We continue to urge Congress to adopt a modernized regulatory framework for diagnostics so that patients across the country have access to the best possible diagnostic tests.” However, whether Congress will take action in this area, and therefore render this proposal obsolete, depends on a variety of factors, including Congress’ ongoing to-do list of conflicting priorities.
  • A trial run: The Covid-19 EUA transition. As noted above, industry and the FDA are still working through the transition of Covid-19 IVD EUAs to full market authorizations. That transition could potentially serve as a trial run to the phased-in system under the proposed LDT rule in which a high volume of products would have a time-limited window to submit regulatory applications to the FDA. This will present questions about how and when a De Novo authorization would effectively open the 510(k) pathway for similar products, what challenges a first-time submitter would present both for their application and the FDA’s review staff, and how CLIA policies intersect (and potentially overlap) with the FDA’s oversight. However, as AgencyIQ has discussed, there is still no set timeline for that transition to be effectuated.
  • The system as proposed could have compounding implications across the life sciences industry, including for drug development. For example, the proposed rule does not specifically mention companion diagnostics (CDx), which are an FDA-recognized use of LDTs under the current system – any regulatory changes to which could have additional implications for clinical trial assay (CTA) policy. [See AgencyIQ’s full discussion on this issue here.] The proposed rule may have a sweeping impact and is therefore seeing intensive scrutiny from Congress, laboratories, the device industry and life sciences more broadly.
  • On October 31, the FDA will host a webinar to provide information on the proposed rule. During the 1-hour session, the FDA will provide an overview, describe the proposed phaseout, and host a Q&A session based on questions submitted prior to the webinar (live questions will not be taken).

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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