Skip to content

Stat Plus – Congress has a chance to close the FDA’s Theranos loophole

Stat Plus – Congress has a chance to close the FDA’s Theranos loophole

WASHINGTON – Theranos, and the company’s notoriously inaccurate blood tests, could potentially have been stopped earlier if Congress had acted to fix a regulatory loophole.

Lawmakers are weighing now whether it’s better late than never.

Key decisionmakers in Congress are closer than they’ve been in years to revamping the way the government regulates some of the diagnostic tests that patients use to make crucial decisions about their health care.

Right now, tests developed in clinical labs, like those at academic medical centers and hospitals, don’t undergo the same scrutiny as tests developed by big, commercial test companies. The distinction was created in 1976, when tests created in labs were far less complex and had lower stakes for patients than today’s technology.

“Ultimately, the big question is: You have two groups that are designing tests. Do you want them to be held to the same standards?” said James Boiani, an attorney at Epstein Becker Green who advises device companies, diagnostics companies, and trade associations about regulatory issues.

The separate categories allowed Theranos to develop its business model to exploit the looser oversight, which meant the company didn’t have to prove its tests actually worked before giving them to patients.

The bill that lawmakers are negotiating over now, called the VALID Act, would create a new category of Food and Drug Administration oversight for tests that could have serious consequences for patients, no matter where they were developed.

“In a world with VALID, Theranos would have had to go through the FDA process and show that their blood test was actually performing as intended,” said one industry lobbyist who backs the legislation.

Negotiators from two key House and Senate committees shared a new draft of the bill with lobbyists Monday night, according to five sources familiar with the discussions. The revision includes an exclusion for tests developed by some academic medical centers, as long as the test is integrated into a patient’s medical care, ordered by a physician, is conducted in the same physical location as the laboratory, and serves a clinical purpose that would not be met by any approved tests.

Theranos is a notable example of the worst-case scenario of outright fraud and regulatory failure, and is by no means indicative of how most clinical labs develop their own tests, Association of American Medical Colleges Senior Director for Science Policy Heather Pierce said.

“It’s such an outlier, and it doesn’t seem to be a good descriptor of what’s happening in the [lab-developed test] space,” Pierce said.

Talks are still fluid and it’s unclear whether the legislation will advance. Even if negotiations in Congress stall now, however, FDA Commissioner Robert Califf has signaled that the agency is willing to take the issue into its own hands and could release more regulations under the laws that already exist.

“A legislative solution offers the opportunity to create a modern framework specifically tailored to in vitro clinical tests,” an FDA spokesperson told STAT, adding that the agency “is very concerned about problematic [laboratory-developed tests] currently used in the U.S. that might not provide patients with accurate and reliable results.”

If the VALID act passes, the FDA wouldn’t regulate every single clinical test, but only tests considered “high risk” to patients, where the risk to patients of an inaccurate result could cause serious or irreversible harm.

One example would be a test for breast cancer that could lead a patient to have a mastectomy, Boiani said. Another would be a genetic test that could determine which cancer treatment patients receive, said Jeff Allen, the president and CEO of Friends of Cancer Research.

“The concern here for a high-risk test is that if the test is inaccurate in some way, that there could be serious or irreversible harm or death to patient, not necessarily because of the blood draw itself, or the cheek swab that will be a problem, but because a cascade of interventions will take place as a result of the test,” Washington University in St. Louis law professor Rachel Sachs said.

The transition between having tests developed in labs regulated by the FDA instead of by the Centers for Medicare & Medicaid Services would be significant.

CMS is more focused on lab operations, or making sure tests are run correctly and that procedures are safe, and less so on whether a specific test is actually precise and accurate. CMS’s evaluations also generally happen after tests are already in use, while if the FDA were in charge, tests would have to be evaluated before being used on patients, per an analysis Sachs wrote in Health Affairs.

And even if the FDA somehow clears faulty tests under the new framework, there would be mandatory reporting of adverse events that could help issues get flagged sooner and trigger recalls, former Pew Charitable Trusts health care products project director Liz Richardson wrote.

Pierce, the AAMC senior director, said she recognized that some bad actors have used the concept of making a laboratory-developed test to avoid federal regulation, and that’s problematic. But she argues academic medical centers should be treated differently than those actors.

Pierce said that tests developed in academic institutions should be accurate, but they are also used with context provided by physicians, in-house lab technicians, and pathologists. Fewer tests could be developed if medical centers have to hire attorneys and experts to deal with more intense oversight.

“There will be decisions as to what gets developed and what doesn’t get developed … as a result of the resources available to that institution or that department or that lab to take them through the regulatory process,” Pierce said.

Some existing tests are likely to be grandfathered in under current policy, and the bill would apply to new tests in the future.

There is a pervasive sense among industry lobbyists that if VALID is not passed by the end of the year, the chance to move it through Congress could be lost entirely.

That concern is fueled by fears that new Republican leaders, including the future Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.), are hesitant to give the FDA new authorities or introduce new regulatory hurdles, according to six people familiar with the discussions. Some of the people also described complaints among House Republicans that there had not been a hearing on the bill in that chamber.

Further, Sen. Richard Burr (R-N.C.), who has led the charge on the legislation in recent years, is  retiring at the end of the year, so advocates of the reforms would have to find a new proponent and start from scratch.

“We are in a scenario where one of the champions of the current bill is retiring. And so we’re hopeful that he’ll be able to work with co-sponsors and colleagues on both sides of the Hill and on both sides of the aisle in order to actually get this across the finish line,” said Allen, of FOCR.

The FDA does have authority to issue rulemaking to regulate tests, but it would likely be slowed down by litigation, Boiani said. Former FDA Commissioners Scott Gottlieb and Mark McClellan wrote in a recent op-ed that a regulatory-only approach would be “ill-fitted” and “far less efficient” than creating a new law, a sentiment echoed by two industry lobbyists who said FDA regulation alone could actually be less flexible for academic labs looking for exceptions.

The American Clinical Laboratory Association, too, said it would much prefer a legislative fix than one made solely through rulemaking, though the association hasn’t explicitly endorsed any approach.

“If there is to be a change in oversight to laboratory developed tests, it should not take place under current law, because that is the medical device framework, and diagnostics are not medical devices,” ACLA President Susan Van Meter said.

Regardless of Congress’ progess, the issue will be one that the FDA will have to grapple with in the coming months — either implementing a significant new law expanding the agency’s enforcement authority, or figuring out how to work around existing law to create a new bureaucratic infrastructure.

“The world has changed. And FDA is attempting to or is faced with the challenge of using old statutes to regulate newer problems,” Sachs said.