FDA Declines to Review Certain EUAs, Raising Reimbursement and Liability Issues

Wilson Sonsini Goodrich & Rosati
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Wilson Sonsini Goodrich & Rosati

The Food and Drug Administration (FDA or the Agency) announced on October 7 that it will no longer review Emergency Use Authorizations (EUAs) for laboratory developed tests (LDTs). LDTs are a distinct category of in vitro diagnostic tests (IVDs) that are designed, developed, manufactured, and performed within a single laboratory. Before August 2020, the FDA had exercised enforcement discretion towards LDTs, generally allowing the tests to be marketed without Agency premarket review. However, many LDT developers of COVID-19 diagnostic tests still voluntarily sought and obtained EUAs from the FDA because the authorization provides reimbursement and liability benefits. The FDA's latest announcement calls into question the availability of these benefits for LDTs.

The FDA's decision to decline reviewing EUAs for LDTs stems from an August 2020 determination made by the Department of Health and Human Services (HHS) finding that that the FDA will not require premarket review of LDTs without following formal notice-and-comment rulemaking. Although the HHS notice stated that LDT developers could voluntarily seek approval, clearance, or an EUA from the FDA even though they are not required to do so, the FDA has made clear that option is no longer available.

LDT reimbursement benefits were provided under two laws enacted earlier this year. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) amended the Families First Coronavirus Response Act (FFCRA) to require that insurers cover certain EUA diagnostic tests for COVID-19 without any cost-sharing requirements, prior authorization, or other medical management requirements. This framework that previously provided a reimbursement pathway for manufacturers of select LDTs to receive payment appears no longer available at it was tied to EUAs, which future LDTs are no longer eligible for.

Similarly, the FDA's decision also affects liability protection tied to EUAs under separate legislation. The Public Readiness and Emergency Preparedness (PREP) Act authorizes HHS to provide liability immunity to certain entities against any claim of loss caused by, arising out of, relating to, or resulting from the manufacture, distribution, administration, or use of certain medical countermeasures, except for claims involving "willful misconduct." The medical countermeasures include products authorized under an EUA. But again, as the tie between future LDTs and EUAs has been cut, so has the PREP Act liability protection.

The FDA's decision also impacts clinicians in addition to the LDT developers. LDTs have and continue to be regulated by the Centers for Medicare and Medicaid Services (CMS) under the Clinical Laboratory Improvement Amendments (CLIA); however, that oversight relates to analytical validity and not clinical validity or clinical utility. Therefore, to increase confidence in selecting a COVID-19 LDT, many clinicians would consider whether it had been authorized under the FDA's EUA premarket review program. The FDA's October announcement now limits that metric.

The FDA's sudden announcement has left many LDT developers, clinicians, and stakeholders confused as to how to optimally market and use the tests, particularly for COVID-19. In the meantime, the FDA has stated it will continue to prioritize review of EUA requests for point-of-care tests, home collection tests, at-home tests, tests that reduce reliance on test supplies, and high-throughput, widely distributed tests.

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