Administrative Notice Limits the FDA's Ability to Regulate Laboratory Developed Tests, Including COVID-19 Tests

Wilson Sonsini Goodrich & Rosati

Introduction: Laboratory Developed Tests and Their Regulation

Laboratory developed tests (LDTs) are in vitro diagnostic tests (IVDs) that are designed, developed, manufactured, and performed within a single laboratory. Although the U.S Food and Drug Administration (FDA) has asserted jurisdiction to regulate LDTs, historically, the agency has exercised enforcement discretion when it comes to regulating testing services performed by Clinical Laboratory Improvement Amendments (CLIA) laboratories. Because LDTs analyze human samples, LDTs are regulated by the Centers for Medicare and Medicaid Services (CMS) under CLIA. CLIA laboratories are also regulated under state law.

CLIA regulations are comprehensive and cover: how IVDs are performed; laboratory personnel qualifications; and quality control and testing procedures. The regulation of CLIA laboratories is designed to ensure the analytical validity of an in vitro diagnostic test. Analytical validity refers to the accuracy with which an in vitro diagnostic test can determine the presence or absence of a specific virus, bacteria, protein, or other medical condition.

CLIA regulations do not address the clinical validity and clinical utility of IVDs. Clinical validity refers to how the results of a test are related to the presence, absence, or risk of a specific disease or medical condition. Clinical utility refers to whether an IVD is associated with a medical condition, and is intended to provide information about the diagnosis, treatment, management, or prevention of a disease or medical condition.

The FDA Proposes, Then Backs Off of, Increased Regulation of LDTs

In 2017, the FDA issued a discussion paper on LDTs, as part of the agency's then push to increase regulatory oversight of LDTs. The FDA had planned to issue a final guidance on oversight of LDTs. After receiving significant pushback from testing laboratories, physicians, and Congress, the agency tabled its plans to increase LDT regulation and announced, in a u-turn, that it would not issue the final guidance. COVID-19 would lead the agency to again attempt a regulatory reversal.

The CDC Fails to Develop a COVID-19 Test

As the COVID-19 pandemic ramped up in the U.S. in the first quarter of this year, the Centers for Disease Control and Prevention (CDC) attempted to develop a COVID-19 test. The CDC stumbled.

The Washington Post reported that the CDC's COVID-19 testing kits were delayed due to the "glaring scientific breakdown" when CDC COVID-19 test kits were assembled that "violated sound manufacturing practices" and resulted in testing compound cross contamination. The cross contamination "most likely occurred because chemical mixtures were assembled into the kits within a lab space that was also handling synthetic coronavirus material."

The setback at the CDC—coupled with regulatory impediments that effectively delayed laboratories from developing their own COVID-19 tests (e.g., COVID-19 LDTs)—created a test shortage. To compensate, the FDA initially allowed COVID-19 antibody tests to come to market with reduced regulation.

The FDA Allows Unreviewed COVID-19 Antibody Tests to Be Marketed, Then Changes Course

Around the middle of March, with a lack of available diagnostic tests hampering the ability to contain the COVID-19 pandemic, the FDA took the position that COVID-19 antibody test manufacturers could distribute antibody tests that had not been cleared or approved, provided that the test manufacturers validated their antibody tests, and the antibody tests were not used as standalone diagnostics.

The FDA then changed course and, while still allowing antibody tests to be marketed without going through the traditional regulatory approval/clearance pathway—for LDT COVID-19 antibody tests—the FDA added a requirement for an emergency use authorization (EUA) application submission. Specifically, the FDA allowed validated tests to be marketed 15 days prior to submission of the newly added requirement for submission of an EUA application. The FDA's thinking appeared to be that the requirement for test manufacturer validation before marketing, and the requirement to submit an EUA application, coupled with that idea that the government would then independently validate the antibody test, would winnow out unreliable tests.

For these antibody tests, the government—in this case the National Cancer Institute, or NCI—would determine whether each antibody test for which an EUA application was submitted could be independently validated by the government and an EUA could be issued.

While the NCI's efforts are laudable, a lack of COVID-19-positive samples have hampered the NCI's ability to validate antibody tests, and a large number of tests remain in a backlogged queue awaiting validation.

As CLIA Laboratories Ramped Up Development of COVID-19 LDTs, the FDA Increased Oversight

At the same time, the FDA determined to increase its regulation of COVID-19 LDTs, including tests that look for the presence of viral polynucleotides. In other words, after stepping back from regulating LDTs, the FDA was now moving to increase the level of LDT regulation for COVID-19 tests through the EUA process. For example, in a recent guidance, the FDA notes that high-complexity CLIA laboratories that have validated their COVID-19 LDTs may market these LDTs starting 15 days before submission of an EUA application. The ability to continue to market the COVID-19 LDTs, of course, depends ultimately on the government being able to validate these tests.

Administration Curtails the FDA's Ability to Regulate LDTs

Against this backdrop, the Administration recently issued a notice on Rescission of Guidances and Other Informal Issuances Concerning Premarket Review of Laboratory Developed Tests. This notice is a significant blow to the FDA's ability to regulate all—not just COVID-19—LDTs. First, the notice states that the FDA will not require premarket review of LDTs without following formal notice-and-comment rulemaking. With CLIA-developed LDTs, the FDA has attempted to short circuit the regulatory process, and to regulate LDTs via guidance documents and EUA application submissions, and not through the required formal notice-and-comment rulemaking process required under the Administrative Procedure Act.

Additionally, the notice clarifies that LDT developers may voluntarily seek approval, clearance, or an EUA from the FDA, but are not required to do so. This cuts to the heart of the FDA's ability to regulate LDTs, unless it elects to go through the formal rulemaking process.

The notice cautions that CLIA laboratories that develop and offer LDTs and that do not obtain "FDA premarket review or authorization may do so with the understanding that they would not be eligible for [Public Readiness and Emergency Preparedness Act] PREP Act [liability] coverage." The impact of this is not clear, as PREP Act liability coverage protection is qualified. Finally, the notice clarifies that LDT providers are still subject to CLIA regulation.

Conclusion

The notice is an important clarification for all LDT developers, including CLIA laboratories that develop and offer LDT COVID-19 testing services. 

Written by:

Wilson Sonsini Goodrich & Rosati
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