Diagnostic regulatory reform: A (very compressed) background

• In Vitro Diagnostics (IVDs) are regulated as medical devices in the U.S. The FDA’s medical device framework was established under the  Medical Device Amendments of 1976, which define a medical device as “any instrument, machine, contrivance, implant, in vitro reagent that’s intended to treat, cure, prevent, mitigate, diagnose disease in man.” IVDs  are defined as “reagents, instruments, and systems intended for use in diagnosis of disease or other conditions, including a determination of the state of health, in order to cure, mitigate, treat, or prevent disease or its sequelae” that collect, prepare or examine specimens from the human body.
• In establishing the medical device regulatory framework, FDA decided upon a system of “enforcement discretion” for a subset of IVDs known as laboratory developed tests, or LDTs. At the time, 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. Since the establishment of the device regulations, the FDA has maintained that LDTs are technically and medical devices, but that it would not require their regulation as such, not requiring LDTs to be reviewed by the FDA before being offered for use or subject to post-market surveillance or quality systems.
• The CLIA confounder: The  Clinical Laboratory Improvement Amendments (CLIA) establish different oversight responsibilities over laboratories, laboratory systems and tests themselves between FDA, the Centers for Medicare and Medicaid Services (CMS) and the Centers for Disease Control and Prevention (CDC). Under CLIA, CMS is tasked with overseeing – and credentialing – clinical laboratories. CMS’ regulations outline processes and standards by which laboratories may apply for Certificates from CMS based on the level of complexity they can handle. Laboratories that are certified as high-complexity CLIA labs are held to the highest standard, including quality assurance procedures and personnel qualification requirements. High complexity CLIA laboratories are also the sites in which LDTs are intended to be developed and run. In addition, laboratorian clinical and professional societies – including the College of American Pathologists (CAP) – play a role in credentialing and overseeing certain laboratories. However, the CLIA framework is targeted at oversight of the laboratories, not their tests. (See an explainer from CMS on the difference between its role and the FDA’s  here).
• In the last decade, FDA has been reconsidering its stance on LDT enforcement discretion. As clinical laboratories and diagnostic science have grown more advanced, the FDA has questioned whether this enforcement discretion continues to be appropriate. In 2014, the agency issued  draft guidance that would have established a framework for the regulatory oversight of LDTs, but this guidance was never finalized given significant concern from laboratories and industry about the FDA’s legal authority in this space. In 2017, the agency followed this up with  a Discussion Paper on LDT policymaking, noting that the agency “would not issue final guidance” on LDTs in order to allow for “further public discussion” and to allow time for Congress to “develop a legislative solution.” The 2017 paper again asserted the FDA’s position that LDTs fall within the FDA’s authority as IVDs (and therefore medical devices within the current system) and proposed a risk-based framework for building out oversight over LDTs in a phased-in approach that focuses on the higher-risk products.
• Legislative efforts on diagnostics reform: DAIA to VALID to FDASLA. The first iteration of the legislative proposal to overhaul the diagnostics regulatory system was issued  as a discussion draft in 2017, and called the Diagnostic Accuracy and Innovation Act (DAIA). In 2018, the first version of the Verifying Leading Edge IVCT [In Vitro Clinical Test] Development (VALID) Act was introduced but was re-introduced in  March 2020 (under the 116^th Congress) and again in June 2021. Under that legislative proposal, Congress would create a new category of FDA-regulated products that encompass both IVDs and LDTs, called IVCTs. The bill would have directed the FDA to establish IVCT-specific regulatory frameworks, including specific pathways to market and oversight mechanisms.
• While the VALID Act gained momentum at the end of 2022, it was not enacted in the FDA reform legislation. The proposal saw some significant movement under  the Senate’s proposed reauthorization package for the FDA’s user fee programs, which typically serve as a vehicle for FDA-related statutory fixes and policy riders. However, the Senate’s FDA Safety and Landmark Advancements (FDASLA) Act was not enacted – instead, Congress opted for  a “skinny” reauthorization that did not include the bulk of the policy riders that were under consideration in either the House or the Senate. Those riders largely found their way into the end-of-year omnibus, in a title now known as the  FDA Omnibus Reform Act, or FDORA. However, the VALID Act was left out of the final legislation.
• However, FDA leadership has not given up on trying to pass the VALID Act. Over the last few months, FDA leaders including Commissioner Robert Califf, CDRH Director Jeff Shuren, FDA Deputy Commissioner for Policy in the Office of Legislation and International Affairs Andi Fristedt, and CDRH Associate Director for Scientific and Regulatory Programs Elizabeth Hillebrenner have all publicly discussed the path forward for diagnostics reform in the U.S. – and, in particular, their preference for a legislative solution. However, they have continued to say that without a statutory change, they’ll move forward with an administrative regulatory reform route. [see AgencyIQ’s analysis “Diagnostics Update: FDA leadership takes the “what’s next” on tour after VALID” here.]

At the recent FDLI conference, regulators and industry discussed diagnostic reform

• The topline: Something has to change. Throughout the two-day conference, and especially during the “Diagnostics and Regulatory Reform” session, FDLI conference panelists all stressed the need for a change to the way that diagnostic products are regulated in the U.S. The diagnostics-specific session, notably, included panelists Mark Hendrickson (Leavitt Partners), Elizabeth Hillebrenner (CDRH, FDA), Ryan Hohman (Friends of Cancer Research) and Rumi Young (Becton Dickinson (BD), and was moderated by Latham & Watkins’ Elizabeth Richards. As Richards put it: “the advancements in diagnostics over the years and, in particular, the proliferation of LDTs and more complex diagnostics, has really led to FDA pretty loudly vocalizing, and industry loudly vocalizing, the position that the enforcement discretion policy for LDTs should be altered.”
• Panelists highlighted the bevy of concerns that different sectors have with the existing structure of enforcement discretion for LDTs. Hohman (FOCR) acknowledged that “for the most part, LDTs are an effective part of helping doctors and patients come to the decision about treatment options.” However, he went on to cite the “large amount of variability” between tests, which can create inequities and different treatment protocols, with “some patients get[ting] an extremely different diagnosis and type of treatment,” raising concerns about both patient safety and clinical utility.
• The pandemic, according to Hillebrenner, was an eye-opening experience for the agency. “That experience [with Covid] really opened our eyes, and made us realize that our concerns with LDTs weren’t only valid, but that the problem was actually bigger than we thought it was,” said Hillebrenner. She cited examples of FDA asking for validation from clinical laboratories for their Covid tests that turned out to be decidedly lacking. This was one of the most significant engagement opportunities that the FDA has ever conducted with the clinical laboratory industry, and it served to heighten the FDA’s concern about the lack of regulation and oversight.
• The regulatory pathways for medical devices have always been a source of frustration for diagnostic developers. During the discussion at FDLI, panelists asserted many of the same talking points that regulators have recently been touting in support of reforms focused on digital health products; namely, the device pathways are no longer fit-for-purpose for modern technologies. “Our device framework is 50 years old, [developers] have to do gymnastics,” said Hillebrenner, citing earlier remarks from Young that working within the confines of the 510(k) system could be like “regulatory gymnastics” for developers. “We’d rather have a modern framework… that’s tailored specifically to tests” especially as “the device framework right now covers such a huge scope of medical products” said Hillebrenner — and was notably, as CDRH Director Jeff Shuren noted in his remarks at the conference, originally designed for hardware products, not digital health or IVDs.
• The CLIA concern and shifts over time: One of the main arguments against legislative diagnostic reforms was a concern about redundancy, and specifically overlap with CLIA. As Hillebrenner put it: “some folks have said that CLIA already covers this, and that is not true.” The gaps in CLIA’s oversight are exacerbating as technology advances, she asserted; “CLIA does not address clinical validity at all” as tests become more specialized, or as new sample types are added to existing tests without appropriate validation. Further, diagnostics are increasingly incorporating software components, and CLIA does not include a cybersecurity component focused on the tests themselves; Hillebrenner cited a recent cybersecurity vulnerability in an Illumina next generation sequencing (NGS) instrument, and raised concerns that “lots of NGS instruments” are being marketed as research use only (RUO) and bypassing FDA review, but could potentially represent a significant cybersecurity vulnerability in the U.S., especially given the sensitive information that diagnostics deal with.
• The value-add of a VALID-based approach. The panel at FDLI was in support of the VALID Act and its proposed system, noting that the concerns raised in the last-minute negotiations for the omnibus may have been overblown. The panel spent much of its time discussing the benefits of the proposed system. Under the proposed framework in the VALID Act, developers would have a new option called “technology certification” wherein they would submit a representative test to the FDA for review and, if certified, would be able to develop additional products under that certification. That process would be “an efficient way for us to ensure that the tests work without looking at each one individually,” said Hillebrenner, allowing the FDA to have confidence in the validity of moderate-risk tests while focusing its resources on oversight of high-risk tests, which would still be subject to pre-market review. Under technology certification, “we would basically give labs a driver’s license to make as many tests as they want in that one space for a particular technology based on our review of their overarching procedures,” including validation processes and quality systems. This approach, notably, has broad support from industry, with Young (BD) stating that it would be “a very powerful tool for industry” that would allow more rapid introductions of “new test to already certified technology.” Notably, CDRH Director Shuren also touted the technology certification process during his remarks, albeit for software as a medical device (SaMD) or other digital health products under a proposal that he’s calling VAP.
• The panelists argued that those that did not support VALID may not have understood it. During the discussion, many panelists acknowledged the challenges faced at the end of 2022 in getting VALID in the final omnibus legislation. Their key takeaway, interestingly, was that opposition was “based on some misunderstandings,” as Hillebrenner put it, “we have to do a better job of education” because “some stakeholders didn’t understand what was in VALID.” The main barrier to understanding the legislation, according to Hillebrenner, was the bill text’s length: “It’s so long I think it’s hard for people to read it and understand what it all means.” In general, AgencyIQ would agree that a significant portion of the opposition from some in the clinical laboratory industry did appear to be a lack of experience with the concept of regulation by the FDA, which was certainly a lesson-learned during the Covid-19 pandemic experience. However, AgencyIQ would also note that there were also concerns from the nascent advanced biotherapies community.
• For an illustrative example, see this letter from AABB on an earlier version of VALID that said: “Once blood, blood components, human cells and tissues are released as a component or part of an IVCT, the test would likely be captured by the new statutory framework. Therefore, LDTs and other tests that satisfy the definition of IVCTs performed by AABB members, such as [immunohematology reference laboratories] IRLs, may be covered by the new regulatory requirements governing IVCTs. IVCTs would not be considered biological products.” AgencyIQ would note that these conflicting definitions could lead to challenges for advanced biotherapies, including novel cell and gene therapies that do leverage “human cells and tissues.” Specifically for the gene therapy industry, there is an advancing science of small batch gene therapies in which manufacturing platforms may actually be medical devices – an interesting issue that would likely implicate an IVCT framework, if such a system existed in the U.S., and may necessitate additional collaboration with CBER going forward.
• A point on the global perspective: “I think we are in an era of regulatory reform… A lot of countries are taking a second look at their regulatory pathways,” said Young (BD). As AgencyIQ has discussed (at length) the transition to the IVD Regulations (IVDR) in the E.U. are facing a series of significant challenges, with the transition timelines extended to give both regulators and developers adapt and continue building out processes. As Young discussed, a key issue with the transition to the IVDR was that the new system both updated risk classifications of the tests (putting more products under regulatory authority) and there was a lack of grandfathering for authorized tests, which “created a mad rush” to get tests registered. The design of the proposed system under VALID would not face these same challenges, Young argued, as there is “transition for existing tests” and “grandfathering for LDTs,” therefore a transition to a new regulatory system in the U.S. “doesn’t create that mad rush and… backlog” that is currently being seen under the IVDR transition. Hillebrenner also noted that the VALID Act’s proposed technology certification program, as described above, is not a component under IVDR and is a key to the increased efficiencies she anticipates under a VALID-based program.
• The intersection with the treatment frameworks. As the panel noted, FDA has worked to adapt its frameworks for innovative therapies, or the products whose use is informed by diagnostic outcomes. As Hohman put it, “the sophistication of the treatments is astounding” and “the level of innovation we’re seeing right now in the therapy side of things is incredible” and the FDA “has done an incredible job of keeping up with the regulation of those therapies.” On the diagnostics side, however, “the diagnostics that are trying to keep up with these therapies are not being regulated in the same way,” he argued. In effect: The FDA’s ability to adapt to innovation continues to advance for drugs and medicines, but is stymied for diagnostics by the constraints of the device framework; “It’s not innovation if it doesn’t work,” summed up Richards.

What’s next? Let’s talk legislative support and timelines

• The VALID Act: A consensus candidate? “VALID isn’t perfect, and I don’t know that everybody loves every aspect of VALID, but in my view and in a lot of people’s view, that’s compromise, and… you’re not always gonna get everything you want,” said Hendrickson. That said, the panel raised a series of concerns about the legislative appetite for the bill, and what’s next.
• VALID has been re-introduced in the new Congress, but has not seen any movement as of yet – and faces an uphill battle. The House version of the bill (H.R. 2369) was introduced in March 2023, and notably has three co-sponsors: longtime supporters Reps. Bucshon (R-IN) and DeGette (D-CO) and a brand new third co-sponsor, Rep. Kean (R-NJ). The Senate, however, “is a lot more unpredictable” said Hendrickson at FDLI, especially given some key departures – including the retirement of VALID co-sponsor and champion Richard Burr – and “majority minority fluctuations” that have impacted the make-up of key committees. In particular, “it’s a lot less clear who the Republican champion is” for the bill, said Hendricks, even as longtime VALID co-sponsor Senator Bennett (D-CO) “is trying to find that Republican champion” to work with him on the bill. Further, last Congress the Senate Committee on Health, Education, Labor and Pensions (HELP), which has jurisdiction over the VALID Act, was Senator Murray (D-WA), who ran “a very functional Senate HELP Committee” with deep understanding of these issues, said Hohman. However, he went on to note that VALID and diagnostics reform is “not an issue” of focus for the new Senate HELP Chair, Senator Sanders (I-VT), and the staffing on that Committee has “totally reset.”
• Can industry expect a hearing? So far, it appears that the House sponsors are considering a hearing in the fall of 2023, after the August recess. “I think we really do need that hearing,” said Young. AgencyIQ would note that there are two must-do pieces of legislation coming up at the end of 2023, the animal drug user fee reauthorization and the reauthorization of the Pandemic and All-Hazards Preparedness Act (PAHPA). Both could potentially serve as a legislative vehicle for the VALID Act, but it would need a hearing to “air a lot of the grievances” that were barriers to the bill going through in 2022, said Hendrickson. However, the path forward is certainly not guaranteed: “Will the bill actually go to the floor and be, you know, passed along to the Senate? I’m not positive about that. I think the gamesmanship and the political climate we’re in, I think broadly speaking, makes a lot of consensus difficult.”
• The legislative solution is still a “preferred approach” for FDA, said Hillebrenner, but they’ll move ahead either way. As AgencyIQ has previously discussed, FDA leadership has hinted at administrative action within the device frameworks. “We would rather see a modern framework, because we think that’s better for all of us, but we can’t stand by,” said Hillebrenner. This would need to involve formal rulemaking, and “like I have said and like my colleagues have said, we are moving forward administratively at this time.” What that framework would look like remains to be seen, but as AgencyIQ has previously discussed it would likely align with previously-proposed actions (most specifically, this 2017 Discussion Paper on LDT policy) that would end the LDT enforcement through notice-and-comment rulemaking, although the FDA would be unable to implement new, IVD-specific pathways absent a statutory change. While it appears that the FDA is working on the proposal, notice-and-comment rulemaking is a decidedly lengthy procedure; “I can’t speak to the timing. I mean, this is a huge public health issue in the agency’s opinion, though, so yeah, moving as fast as we can,” said Hillebrenner. AgencyIQ would note that, as Shuren said at FDLI, it’s “springtime in Washington” and a new Unified Agenda, the federal publication that lists the anticipated rulemaking activities from all the Departments and agencies, could provide additional details on whether the FDA has an expected timeline for such a proposal.

To contact the author of this item, please email Laura DiAngelo.
To contact the editor of this item, please email Alexander Gaffney

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