On Wednesday, June 15, the Senate Committee on Health, Education, Labor and Pensions advanced its version of the must-pass Food and Drug Administration (FDA) user fee reauthorization bill. Previously, I had reviewed several key similarities and differences between the Senate and House bills, with a focus on their impact on reforms to the prescription drug approval process.
In this article, I delve deeper into an important aspect of the Senate bill which is not yet present in the House’s version: the Verifying Accurate Leading-edge IVCT Development (VALID) Act, which would provide FDA with greater authority to regulate diagnostic tests. I provide a brief explanation of these tests and FDA’s previous efforts to regulate them, before analyzing core provisions of the VALID Act and how it would change the existing legal landscape. Finally, I briefly look ahead to issues that may arise as a result of these changes, including FDA’s relationship with the Centers for Medicare and Medicaid Services (CMS).
FDA’s Existing Regulatory System for Diagnostic Tests
At present, FDA primarily uses its enforcement discretion in deciding whether and how to regulate laboratory-developed tests (LDTs), defined as those that are “designed, manufactured, and used within a single laboratory.” FDA’s statutory authority to regulate “devices” includes items that are “intended for use in the diagnosis of disease,” but since the 1970s FDA has largely exercised its enforcement discretion and declined to regulate LDTs on the same terms as it regulates diagnostics that are not LDTs. The initial reasons for this decision related to the character of LDTs at the time. As FDA notes, “LDTs at the time tended to rely on the manual techniques used by laboratory personnel” and “were typically used and interpreted directly by physicians and pathologists working within a single institution that was responsible for the patient.” A medical facility conducting a complete blood count for internal reporting to a patient’s physician, for instance, was not the agency’s highest priority for regulation.
But since the 1970s, the LDT landscape has changed, likely at least in part because companies know that they can largely avoid FDA regulation by organizing their testing structure as an LDT. LDTs are often “independent of the healthcare delivery entity” and are marketed nationally by large corporations. Companies marketing genetic testing services to identify patients’ risks for serious diseases (such as cancer or prenatal conditions) may operate as LDTs, meaning that they have the ability to operate without significant FDA oversight. Patients may make life-altering decisions on the basis of these tests, and there is no process for reporting adverse events that may result.
To be clear, although FDA does not regulate these tests, that does not mean they are unregulated. The laboratories performing these tests will typically be regulated by CMS, through its statutory authority under the Clinical Laboratory Improvement Amendments (CLIA). Through CLIA’s regulation of the laboratories performing the testing, those laboratories will be required to produce evidence of the analytical validity of the tests involved (their ability to identify and analyze the relevant biomarkers or other biological targets). But there are many differences between CLIA review and the type of review FDA applies to other types of technologies. CLIA review often takes place after a lab has begun testing, whereas FDA review is typically premarket. CLIA review is also narrower, focusing only on certain elements of analytical validity; FDA review not only goes broader into the analytical validity question but also investigates questions of clinical validity and intended use, which CLIA does not address.
FDA has expressed concern about potential safety and efficacy issues involving LDTs and has previously engaged in a range of efforts to increase its regulation of this class. Likely most notable was an effort by the Obama Administration in 2014 to develop a risk-based framework for regulating LDTs, similar to FDA’s existing practices for regulating medical devices more generally. FDA did not finalize this framework, however. There was little action on the subject through most of the Trump Administration, until the COVID-19 pandemic, when Health and Human Services (HHS) Secretary Alex Azar overrode objections from FDA Commissioner Stephen Hahn and sought to strip FDA of its authority to regulate LDTs more generally, including for COVID-19. FDA officials expressed concern about the impacts of this policy change, noting that this approach “allowed the use of several LDTs [for COVID-19] that ultimately proved to have performance problems or to be poorly validated.” HHS Secretary Xavier Becerra later withdrew that policy.
Efforts intensified to identify legislative solutions to this issue soon after the Obama Administration declined to finalize its regulatory framework. In early 2017, prior to the last round of user fee reauthorizations, a bipartisan team released the Diagnostic Accuracy and Innovation Act (DAIA). DAIA was ultimately not incorporated into the 2017 user fee reauthorizations. The first version of the VALID Act (which built on DAIA) was released (in draft form) in December 2018, and it has evolved since then.
Key Elements Of The VALID Act
Fundamentally, the VALID Act would create a risk-based framework for regulating LDTs that resembles the existing approach FDA takes toward other medical devices. The legislation defines “high-risk” LDTs as those for which an “undetected inaccurate result . . . has the substantial likelihood to result in serious or irreversible harm or death to a patient or patients” or “is reasonably likely to result in the absence, significant delay, or discontinuation of life-supporting or life-sustaining medical treatment,” and “sufficient mitigating measures” to detect and prevent these risks are not available. These tests would be required to undergo premarket review.
“Low-risk” tests, on the other hand, would be subject to less scrutiny and could qualify for exemptions from premarket review. These tests would include those for which an “undetected inaccurate result . . . would cause only minimal or immediately reversible harm, and would lead to only a remote risk of adverse patient impact.” The low-risk category would also include cases where “sufficient mitigating measures” are available to prevent risks from higher-risk devices. The VALID Act also defines moderate-risk tests using similar metrics.
The VALID Act is lengthy and detailed, but several of its provisions are worth highlighting here. First, not all new LDTs would be subject to premarket review. The Act sets out a series of exemptions from premarket review for which certain types of tests could qualify, including low-risk tests, humanitarian tests (those that are intended for use in a small number of patients per year), custom tests and low-volume tests, tests under a technology certification order (in which FDA would have certified a developer to offer multiple tests), and certain modified versions of tests that have already undergone premarket review. There is some overlap between these categories as defined in the Act. Tests exempted from premarket review are still subject to other requirements of the Act, some of which are noted below, and FDA can revoke the exemption if new information indicates greater potential risks to patients from a particular test.
The Act also envisions that tests “first offered for clinical use before the date of enactment” of the VALID Act that also have particular CLIA certifications and meet other specified requirements will be exempt from many of the law’s requirements. If the legislation becomes law, these tests will not have to undergo premarket review and will be able to avoid certain labeling and test design requirements; however, they will still need to comply with other provisions of the Act. Further, in certain circumstances (such as if a test is being offered “with any false or misleading analytical or clinical claims” or if it is “probable” that the test “will cause serious adverse health consequences”), FDA may clarify that the test must satisfy these other statutory requirements.
The Act also phases in over a period of years. Most of the Act becomes operative on October 1, 2027, but in the first years after the law’s passage, FDA is required to hold certain public meetings and promulgate certain regulations that will form the basis for applications under the Act. FDA is also empowered to take in advance “additional actions … necessary to ensure an orderly transition,” which would become effective after the 2027 date, including establishing mitigating measures like those identified below.
Other provisions of the law are specifically aimed at detecting and mitigating potential adverse events. For instance, one section (587E) permits FDA to “establish and require” mitigating measures for applicable tests. As defined in the statute, these would be requirements “to mitigate the risk of harm ensuing from an undetected inaccurate result or misinterpretation of a result” and might include labeling, advertising, postmarket surveillance, and other requirements. Another section (587L) requires diagnostic labels to provide information for reporting an adverse event, and another (587M) requires developers to “establish and maintain” a system for recording and reporting adverse events to the agency, according to specified timing parameters.
Issues For Future Discussion And Analysis
It is likely that additional issues will remain to be worked out if the VALID Act becomes law. It is possible that some or all of the provisions of the law might be subject to various legal challenges, as was threatened regarding the 2014 guidance efforts, including claims that FDA may lack jurisdiction on different grounds. The law attempts to preempt at least some of these arguments by specifying that “[a]ny in vitro clinical test that is offered, including by making available for clinical use in the United States is deemed to be an act that constitutes introduction into interstate commerce for purposes of enforcing the requirements of this Act.”
Other issues might implicate FDA’s relationship with CMS and CLIA. Various provisions of the VALID Act take pains to emphasize the different functions served by the different agencies. For instance, one section (587K) stresses that although FDA will be assuming the role of ensuring the quality of diagnostic tests under the law, CMS and CLIA will remain as regulators of laboratories themselves, and FDA’s quality requirements “shall avoid duplication of regulations” under CLIA. Another section (587AA) stresses this same point, noting that FDA “shall avoid issuing or enforcing regulations or guidance that are duplicative” of CLIA, and that nothing in the VALID Act “should be construed to modify the authority” under CLIA.
The VALID Act may also likely have implications for the structure of the diagnostic testing industry going forward. At present, developers have a financial incentive to structure their diagnostic testing as LDTs because it allows them to avoid the costs of FDA regulation. If all diagnostic tests, including LDTs, are now on equal regulatory footing, developers may choose to adopt different structural relationships with providers and patients, as financial incentives will be altered.
If the VALID Act becomes law in a version close to its current form, it will significantly change the regulatory environment for diagnostic tests, particularly going forward. Attention now turns to the full Senate’s consideration of the law and whether it might be included in the version of the bill that is reconciled with the House.