As the bipartisan VALID Act moves closer to a vote, the laboratory industry confronts how potential regulation could impact the future of laboratory-developed tests (LDTs).
By Ann H. Carlson
How laboratory-developed tests (LDTs) are regulated in the United States could change dramatically if the Verifying Accurate Leading-edge IVCT Development (VALID) Act is passed during the current session of Congress.
The bipartisan bill would implement a risk-based review system for all diagnostic tests, including LDTs, under the U.S. Food and Drug Administration (FDA). Currently, LDTs are regulated through the Centers for Medicare & Medicaid Services (CMS) under the Clinical Laboratory Improvement Amendments of 1988 (CLIA), while commercialized tests fall under the FDA’s purview.
The debate over whether LDTs should be regulated by the FDA in the same way as diagnostics developed for commercial use has been a hot topic in the industry for decades. The conversation has taken on more urgency recently, however, as Congress seemed poised to include the VALID Act as part of the Medical Device User Fee Amendments (MDUFA), which are up for renewal this September.
“The feedback that we’re getting is there’s a lot of push to get the VALID Act through,” says Mark S. Birenbaum, PhD, executive director of the National Independent Laboratory Association, a trade association for community, regional, and health system clinical laboratories. “On its own, the chances of passage are probably not all that great. You put it on MDUFA, which is a must-pass bill, then it’s chances of coming into effect are much more improved.”
Those who oppose the VALID Act, including the American Association for Clinical Chemistry1, argue that FDA oversight of LDTs—and the potentially onerous expenses and requirements that come with it—would be crushing to smaller research and regional laboratories, stifle innovation in diagnostics development, and ultimately deny patients access to tests for rare conditions that don’t have a big enough market to attract commercial partners.
Proponents of FDA oversight for LDTs, including the Pew Charitable Trusts2 and the Advanced Medical Technology Association (AdvaMed)3, contend that standardization would modernize outdated regulatory practices, reduce the incidence of false results, and increase patient safety.
Both sides, however, express concern that the FDA does not currently have the resources to effectively manage these new responsibilities, which promise a sea change in how diagnostics are regulated. At the time of this writing (May 26, 2022), provisions under the VALID Act, if enacted, would go into effect on Oct. 1, 2027, giving the laboratory industry and the FDA a five-year window to prepare4.
The Case for CLIA
Wayne W. Grody, MD, PhD, professor in the departments of pathology and laboratory medicine, pediatrics, and human genetics at the UCLA School of Medicine, knows firsthand the value of laboratory-developed tests, particularly when it comes to testing for rare diseases.
“LDTs are a necessary and important part of laboratory medicine,” Grody says. “In many cases, there is no substitute for them.”
Grody serves as founding director of the Diagnostic Molecular Pathology Laboratory at the UCLA Medical Center, which offers DNA-based tests for the diagnosis of a variety of genetic, infectious, and neoplastic diseases.
“There are thousands of genetic diseases, many of them incredibly rare,” he says. “Many of the tests that we do for genetic diseases, there is no market for those commercially. So, we have to develop those.”
In many cases, these LDTs become a patient’s best option to test for a rare condition and for their physicians to make appropriate treatment decisions. “If you have a disease that’s not real common, your choices are limited because companies don’t want to put a lot of money into it,” Birenbaum notes. “They could spend $100 million dollars just developing a test, but if it’s only a $10 million market, they’re not going to do it. With an LDT, you’re much more likely to find somebody who can provide or develop a test quickly to check for what you have and to monitor your progress if you’re on a treatment.”
The costs of these tests are often lower for patients as well because developers do not need to offset the expense of costly FDA clinical trials.
“LDTs potentially offer precise information to clinicians to guide patient care when either existing FDA-approved testing is not as effective or when there is no viable FDA-approved testing available that has comparable benefits to LDTs,” says Eamon Tiffany, MT(ASCP), BSN, senior operations manager for COLA, an independent, nonprofit accreditor of more than 7,000 medical laboratories.
Although laboratory-developed tests are not required to go through the FDA clinical trial process like commercial in vitro diagnostics do, they are still regulated through CLIA.
“These tests have been developed in highly qualified labs that already answer to the existing regulatory bodies under CLIA,” Grody says. “They oversee everything that goes on in a clinical laboratory, and we consider that really part of the practice of medicine. The laboratory directors are board-certified and know how to do this.”
In fact, there is already some overlap with FDA regulations for IVDs. “Currently, LDTs fall under the category of high-complexity testing and are subject to the same CLIA regulations as FDA-approved testing in terms of personnel requirements, proficiency testing, and quality control practices,” Tiffany says.
Proponents of the VALID Act argue that placing both laboratory-developed tests and commercial IVDs under FDA purview would improve a “fragmented” regulatory landscape and provide more transparency for patients. A notable supporter of the VALID Act is the Pew Charitable Trusts, an independent, nonprofit organization with a focus on public policy.
“The relative lack of oversight and transparency around LDTs does not serve public health,” says Liz Richardson, who was director of Pew’s health care products project at the time of this interview. “LDTs are not held to the same standards for analytical and clinical validity as commercial diagnostics, and labs aren’t required to centrally report adverse events related to an inaccurate result from an LDT. FDA doesn’t know how well these tests are performing, or even how many are in clinical use. But these tests are a big and growing part of the clinical testing market, and their complexity and potential to harm patients keeps increasing. Congress should not allow these tests to remain in a regulatory blind spot. FDA needs a clear picture of what tests are in use and be able to collect information on how they’re performing.”
Birenbaum argues that the FDA premarket approval process is designed for an entirely different purpose than the CLIA regulations for laboratory-developed tests. “The FDA premarket approval process is built for manufacturers with kits and products,” he says. “It is a whole different system, and the purpose is different. A big distinction is that FDA really only checks the product before it goes on the market. CLIA checks the performance in the field for both IVDs and LDTs. The cornerstone for CLIA has always been proficiency testing.”
Grody agrees that the premarket approval process makes sense for commercial testing, but not for LDTs, which, by definition, are only used in a specific, single laboratory. “We’re not developing a commercial kit to sell across state lines,” Grody says. “Those, of course, should be reviewed by the FDA.”
If FDA premarket approval is mandated for laboratory-designed tests, opponents of the VALID Act worry that developers who can’t afford the review process would be forced to drop LDTs or limit their testing offerings—ultimately negatively impacting patient access to care.
“Labs like mine—especially those based in academic institutions—we don’t have the time, the money, or the manpower to go through that kind of FDA review,” Grody says. “We would just hate to see [LDTs] kind of stamped out by the institution of regulatory requirements that none of us could ever hope to meet.”
Another concern is that once an LDT receives premarket approval from the FDA, any modification could be considered a separate test that would then be required to go through the FDA approval process all over again. Currently, the process for modifying LDTs is much less onerous on developers.
“In a way, we can be a little more cutting-edge because we’re more nimble,” Grody says. “We can change our LDT and then quickly revalidate it.”
One area that benefits from this flexibility is cancer research. “The number of biomarkers and cancer genes is increasing by the week,” says Grody. “It’s hard for a commercial kit that’s gone through the full FDA review that could take years. By the time it’s done, it may be a little out of date. So, many of those we also customize within our own lab, based on our expert assessment of their clinical validity and utility.”
Losing that flexibility could delay or discourage testing innovation, Birenbaum notes. “We have a big toxicology lab in NILA that tests street drugs that change all the time,” he says. “Now, for them, the VALID Act would be a disaster. It will not work if they have to go back through FDA every time a new street drug comes up, and they develop an LDT for it. You want to be able to have a nimble laboratory industry that can adjust to that.”
When it comes to how increased regulations could affect laboratory-developed tests, American laboratories are paying close attention to new laws in Europe. “With the In-Vitro Diagnostic Medical Device Regulation (IVDR) created by the European Union going into effect this month, there are some that believe this could have a negative effect on innovation. It is also possible that complying with the new EU regulations could be cost-prohibitive for laboratories seeking to develop LDTs. It will be valuable for regulators in the U.S. to monitor the effects of the IVDR in Europe,” says Tiffany, who is a member of CLP’s editorial advisory board (EAB). “If either the VALID Act or VITAL Act were signed into law, additional regulations will most likely follow, particularly related to the definition and evaluation of LDTs.”
Stateside, not all legislators are for increased regulation of LDTs. The Verified Innovative Testing in American Laboratories (VITAL) Act, introduced by Sen. Rand Paul (R-Ky) in both 2020 and 2021, would maintain laboratory-develop test regulation under CLIA and allow laboratories to follow CLIA policies during public health emergencies. However, the seven-page bill, supported by the Association for Molecular Pathology, has yet to come up in committee.
If the more popular, bipartisan VALID Act is enacted, however, treating LDTs the same as commercial IVDs could inhibit the practice of medicine, in Grody’s view.
“Laboratory medicine is really just another area of the practice of medicine,” Grody says. “The FDA doesn’t tell an internist how to do a physical exam or a surgeon where to put the scalpel. That’s left to practitioner discretion.
“We’re not manufacturers,” he adds. “We’re not selling kits across the country. We are practicing medicine. We are well-trained and board-certified in this area, and we should have some latitude in what we do.”
Grody points out that there is even more flexibility on the pharmaceutical side of FDA regulations, which allow for off-label use of prescribed drugs in some cases. “You can prescribe drugs that never went through FDA review that were grandfathered in before there was the FDA,” he notes. “That’s really directly affecting the patient. So, why is that so flexible when our practice of medicine on the lab bench has to be so rigid?”
The Push for Laboratory-Developed Test Reform
Versions of the VALID Act were introduced in 2017, 2018, 2020, and 2021, but it wasn’t until this year that the bill got any traction in Congress.
The clinical laboratory industry came under rare public scrutiny in the wake of the high-profile Theranos collapse and subsequent trial and conviction of founder and CEO Elizabeth Holmes as well as a controversial New York Times article published in January 2022 that focused on inaccurate results in prenatal testing5.
“The story of Theranos is certainly seen as part of the catalyst for increased interest in the regulation of LDTs. The public’s perception and awareness of the need for safe and accurate testing has certainly grown and been thrust into the spotlight by the pandemic. Most recently, the risk of false results for non-invasive, prenatal tests (NIPT), including some of the implications of those false results, has created more momentum to regulate LDTs in Congress,” Tiffany says.
Proponents of the VALID Act point to opportunities to improve accuracy for better patient outcomes. “Patient and public health depends on access to reliable, accurate, and innovative diagnostics,” says Richardson, who provided comments on the VALID Act to the Senate HELP committee on behalf of Pew. “Patients and providers should be able to trust their test results, especially when they are used to inform critical medical decisions. Stronger FDA oversight would help protect patients by holding all tests to the same risk-based standards and by ensuring that the claims made for these tests are truthful and based on sound evidence.”
Ronald A. Blum, PhD, is vice president of marketing for MiraDX, a Los Angeles-based genomics company focused on genetic research and diagnostics to help physicians and patients better treat cancer. He describes the Theranos scandal as an outlier that “tarnished the whole image of the laboratory industry.”
He adds that while “good intentions” to prevent another unusual case of fraud may have contributed to the push for regulatory reform, he believes that standardizing tests under the FDA is not the answer.
“You can end up marginalizing whole groups of patients and eliminating all kinds of different testing that has been very useful—especially when there’s no alternative,” Blum says. “Most of the time, the reason for LDTs is that there is no FDA-cleared test.”
By making the development of laboratory-developed tests more difficult and expensive for laboratories, Blum believes both innovation and healthy competition in the industry will be stifled. “Competition promotes a level of quality,” he says. “It promotes customer service, and it makes it so that everybody feels like they have to be at the top of their game. I think that continues to force all of us to think a little bit more about how we can provide the best service for the patients and the doctors that we serve.”
Although the House of Representatives committee declined to attach the diagnostics regulatory reform bill to its MDUFA draft, the U.S. Senate Committee on Health, Education, Labor, and Pensions (HELP), chaired by VALID Act co-sponsor Senator Richard Burr (R-NC), made the bill a central part of its user fee reauthorization package on May 17, 2022. A period for comments, hearings, and revisions was set to follow.
Representatives Larry Bucshon, MD (R-Ind.), and Diana DeGette (D-Colo.), cosponsors of the VALID Act, released the following statement on May 17:
“We applaud the Senate HELP committee for including our VALID Act as part of their FDA user fee reauthorization package. For more than five years, we have been working in a bipartisan and bicameral fashion to modernize the regulatory framework of diagnostic tests. We look forward to continuing to advance risk-based diagnostic testing reform through Congress that promotes innovation while also ensuring patient safety.”
Ultimately, it will be up to a bicameral committee to resolve any discrepancies between the two drafts before bringing the user fee package to a vote by the September 30 deadline. However, at the time of this writing, a version of the VALID Act (even if it is heavily revised) is expected to remain in the final legislation4.
In the meantime, both proponents and opponents of the bill have taken advantage of the opportunity to suggest revisions to the VALID Act.
“The current version of the VALID Act needs key improvements—such as ensuring FDA has adequate resources to oversee the clinical test market, bolstering the agency’s post-market authorities, limiting the types of tests that are exempted from premarket review, and requiring new tests introduced under an approved technology certification to meet applicable standards—in order to ensure that FDA can effectively regulate diagnostic testing and protect patients,” Richardson says.
Grody shares concerns about the FDA’s limited resources. “One reason I’m not enthused about the FDA suddenly having oversight over all these LDTs is that I don’t think they have either the manpower or the in-house expertise to do it,” he says. “I’m frankly amazed that they’ve been pushing for this for so long, given how overworked they already are with what they have to do. Unless they hire a lot of new people with experience, at least in my area of genomic testing, I don’t see how they can claim to be better arbiters of what the quality is than we lab directors.”
As developments in diagnostics continue to evolve, some industry experts believe that new regulations could be warranted. “Additional regulation would be beneficial to address concerns related to reporting of any adverse outcomes due to LDTs and development of accepted parameters for establishing clinical validity of testing,” Tiffany says. “The assignment of levels of risk associated with LDTs could streamline the process by focusing more resources to the evaluation of tests that have potentially higher impact to patient care. The lower risk tests, those tests that may require less interpretation from testing personnel, should still require evaluation, but with fewer requirements imposed by the evaluating agency in comparison to the higher risk tests.”
Birenbaum, who provided comments on the VALID Act to the Senate HELP committee on behalf of NILA6, suggests that it might be more beneficial for the industry to close current loopholes, such as FDA-approved CLIA waivers that exempt certain tests from oversight. For example, adding regular proficiency testing provisions for these types of tests could improve results and patient care.
“It’s more important to me to improve the regulations that we have than to add new regulations,” he says.
He adds that navigating the newer, more complex developments in diagnostics that are coming out of the research field will require a careful touch to make sure that they are properly regulated without stifling innovation.
“There’s an issue out there that needs to be addressed, but it’s not necessarily addressed by the VALID Act, the VITAL Act, CLIA, or the FDA,” Birenbaum says. “It’s a function of new technology. With all the new genetic tests and some of the very complex algorithms that go with them, it’s very hard to understand how to evaluate those tests and how to determine their analytical and clinical validity.
“We’re in the early stages of development of all this science. It’s hard to not just understand the science and the predictive value of these tests but also how to regulate it,” he continues.
With the advances in machine learning and artificial intelligence, Blum anticipates a near future where patient treatment can become extremely personalized. Restricting development of laboratory-developed tests, he says, would delay that possibility.
“Perception is really important,” says Blum, who is a CLP EAB member. “As an industry, we need to focus more on educating the public on the value of laboratory testing—and particularly how important LDTs are in everything that we do.”
Ann H. Carlson is a regular contributor to CLP.
- “AACC Calls on Congress to Halt Legislation That Would Hinder Patient Access to Essential Medical Tests.” AACC press release. May 23, 2022. www.prnewswire.com/news-releases/aacc-calls-on-congress-to-halt-legislation-that-would-hinder-patient-access-to-essential-medical-tests-301553108.html
- “Stakeholders Across Political Spectrum Call for Legislation to Strengthen Diagnostic Test Oversight.” Richardson, Liz. Pew Charitable Trusts. May 12, 2022. www.pewtrusts.org/en/research-and-analysis/articles/2022/05/12/stakeholders-across-political-spectrum-call-for-legislation-to-strengthen-diagnostic-test-oversight
- “AdvaMed: VALID Act an ‘Important Step Toward the Long-Overdue Modernization’ of Law Governing Diagnostic Tests.” AdvaMed. June 24, 2021. www.advamed.org/industry-updates/news/advamed-valid-act-an-important-step-toward-the-long-overdue-modernization-of-law-governing-diagnostic-tests/
- “The VALID Act: Senate Action Brings FDA Regulation of LDTs Closer to Fruition.” Bolani, James A. and Robertson, Megan. The National Law Review. May 20, 2022. www.natlawreview.com/article/valid-act-senate-action-brings-fda-regulation-ldts-closer-to-fruition
- When They Warn of Rare Disorders, These Prenatal Tests Are Usually Wrong. Kliff, Sarah and Bhatia, Aatish. The New York Times. Jan. 1, 2022. www.nytimes.com/2022/01/01/upshot/pregnancy-birth-genetic-testing.html
- Letter to U.S. Senate Committee on Health, Education, Labor & Pensions. Birenbaum, Mark S. NILA. May 21, 2022. www.nila-usa.org/images/nila/2022/FDASLANILACommentsFINAL.pdf
- “Senate HELP Committee Unveils Draft FDA User Fee Reauthorization Legislation, with Major Reforms to In Vitro Diagnostics, Cosmetics and Dietary Supplements.” Akin Gump. May 20, 2022. www.akingump.com/en/news-insights/senate-help-committee-unveils-draft-fda-user-fee-reauthorization-legislation-with-major-reforms-to-in-vitro-diagnostics-cosmetics-and-dietary-supplements.html?utm_source=Mondaq&utm_medium=syndication&utm_campaign=