Vantage Point – FDA regulation of lab-developed tests could hurt smaller companies

In her address at last month’s Asco meeting, FDA commissioner Margaret Hamburg shone a light on a little-discussed area of medtech by saying that the agency intended to bring laboratory-developed tests (LDTs) under its control. Also known as home-brew tests, these diagnostics are currently sold without first undergoing FDA review, a situation that Ms Hamburg says is putting patients at risk.

And, while it is still early days and details of what exactly the FDA is planning are scant, for the commissioner to make it a central point of a personal address to Asco – itself a highly unusual event – is highly significant. The diagnostics sector should brace itself for what could be a momentous change.

Parallel tracks

The current setup for diagnostics involves two parallel regulatory tracks, Berwyn Clarke, director of biotech consultancy Pandion, tells EP Vantage. “One is the full FDA approved track, under which a commercial diagnostic test has to go through full FDA assessment before it’s implemented, and then in parallel with that there is this LDT scenario.”

For the latter, the Centers for Medicare and Medicaid Services certify facilities under the Clinical Laboratory Improvement Amendments Act (CLIA). These laboratories are then free to develop and sell their own tests, including molecular diagnostics, immunoassays and companion diagnostics, without further oversight. “The FDA has always had optional control over that as well, but in the past they’ve never enforced it, because it was adequately regulated by this other body,” explains Mr Clarke.

The system used to work reasonably well, industry watchers feel. But the trouble with it these days is, to quote Ms Hamburg’s speech, that “LDTs have become more sophisticated and complex”. They have also become more routine, particularly in the form of companion diagnostics.

Boon companions

The increased use of LDTs is partly the FDA’s fault. The path to obtaining a formal FDA approval is a long one, and the nightmare scenario is that the drug is approved but cannot be sold without a test to identify patients who would benefit from it – and the test is years away from approval.

“If you go back to 2007 when the first new colorectal cancer drugs emerged, those drugs were licensed in Europe with the requirement to have a companion diagnostic carried out,” Mr Clarke says. “The European authorities were able to approve an assay to go with those drugs within several months. In the US, the drug was licenced very quickly, but it’s taken four or five years for the regulatory-approved assay in the US to come.

"In the meantime, the LDT area has been able to support it. And that’s a major issue.”

If the FDA does tighten up the regulation of companion diagnostics, it will have to speed up too. And because the path to FDA approval of tests is so lengthy and so expensive, newer players offer their products as LDTs while pursuing full US approval.

“There is a model at the moment where the smaller diagnostics companies actually build their own CLIA reference laboratory as an early part of their business model, so they actually offer the test as a service while they’re getting FDA approval,” says Mr Clarke. These companies could be driven out of business by a change in the regulatory setup.

CLIA as mud

By contrast, those firms that have already obtained formal approval for their tests would stand to gain from a change in the CLIA rules.

John Mills, diagnostic team leader at AstraZeneca, says that the FDA is right to look into extending regulation to LDTs. He points out that, under the current rules, even when a drug is launched with a linked companion diagnostic, doctors do not have to use this test.

“The prescribing clinician can request a diagnostic test but they don’t have to use the one that’s been approved – they can go to somewhere else,” he tells EP Vantagein a face-to-face interview. “It might be one that’s an LDT in a facility, one that’s a lot cheaper.

“When you get to work with some of these assays, you do find that there are false positives, there are false negatives. You want to be clear that the test you are working with actually does identify the right patients. That’s the challenge – how do you regulate that appropriately?”

He points out that currently, reimbursement is key to the adoption of approved tests. If the approved companion diagnostic is not reimbursed, doctors will be under pressure to use cheaper LDTs. If Ms Hamburg does usher in more stringent regulation of home-brew tests, this will perhaps become less of an issue.

As Mr Clarke observes, it is early days, and the FDA’s plans are not yet clear. The agency could radically overhaul the sector over a period of years; it could marginally increase its oversight of the Centers for Medicare and Medicaid Services, thereby upping its regulation of LDTs almost by proxy.

A position somewhere between these extremes is the likeliest outcome. In any case, the climate looks set to favour companies with deep purses. Hopefully it will benefit patients too.

To contact the writer of this story email Elizabeth Cairns in London at elizabethc@epvantage.com or follow @LizEPVantage on Twitter

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