On September 29, 2023, the FDA issued a proposed rule to impose heavy regulation over Laboratory Developed Tests (LDTs), replacing the Centers for Medicare and Medicaid Services (CMS) under the Clinical Laboratory Improvement Amendments (CLIA) as the regulators of LDTs. While proponents argue that this shift is necessary to ensure safety and efficacy, critics, including many in the medical and scientific community, assert that the proposed rule poses a significant threat to innovation, putting independent laboratories and diagnostic start-ups in jeopardy, and contributing further to the untenable cost of healthcare.
In the ever-evolving healthcare landscape, diagnostic testing plays a pivotal role in early disease detection, personalized medicine, and patient care. According to the CDC, 14 billion lab tests are ordered annually, and at least 70% of medical decisions are determined as a result of a diagnostic test. The evolution of LDTs has historically thrived on rapid development, along with innovation across a broad spectrum of labs, large and small. However, the FDA’s proposed rule on regulating LDTs threatens to stifle the very innovation that has driven progress in healthcare for decades. During the COVID 19 pandemic, hundreds of laboratories swiftly validated COVID test related LDTs through existing regulatory and compliance methods, showcasing the importance of speed during a critical public health crisis.
Nonetheless, a few months after the President declared an end to the COVID 19 Public Health Emergency, the FDA proposed a new and draconian regulatory scheme that industry experts agree will add significant cost and time to deployment of these critical life-saving tools. On what basis? While the FDA claims that patients may be harmed by a lack of their arduous regulation, there is no outcry from the public, no Government Accountability Report, no congressional testimony by professional medical societies clamoring for more regulation. Quite the opposite. Professional medical societies are frequently submitting letters of support and encouragement to the current regulating agencies encouraging the provision of coverage and payment to new, exciting, and clinically valuable LDTs – especially in the area of non-invasive tests to determine if cancers are present, aggressive, driven by hereditary factors, etc.
By comparison, the FDA’s regulatory process to bring a new drug therapy to market is estimated to be in the billions taking 10-15 years. Even with less than 10% of therapies receiving approval, these regulations still occasionally and unfortunately result in medications making it to market that can cause unacceptable harm to patients.
Even though the FDA has claimed jurisdiction to regulate, prior Congresses have been skeptical of the claim. While there are members on both sides of the issue, no consensus has been reached. Instead, there are legislative efforts underway to provide clarity and to block FDA efforts as described in the proposed rule by explicitly legislating the appropriate regulatory regime for LDTs. The effort that has gained the most traction is the Verifying Accurate, Leading-edge IVCT Development (VALID) Act. While this legislation seeks to reduce the burden on laboratories as compared to the rule proposed by the FDA, it would still establish new and duplicative FDA oversight and regulatory requirements on laboratories that develop and use LDTs.
We have come to understand that FDA lobbied vigorously for the passage of VALID during the last Congress, and some suggest that the FDA’s introduction of the proposed rule is designed to revive the legislation and force Congress’s hand on this issue.
As there is no clear-cut reason to add significant additional regulation to LDTs, and the result of such regulation would be higher costs and longer regulatory cycles– it is the patient that ultimately pays the price
As Founder and CEO of Shadowbox, ground-breaking technology that drives efficiency in healthcare workflow, I am a strong advocate of appropriate regulation that balances public good vs. potential for harm. In the case of FDA’s proposed regulatory scheme, we find that the idea will generate more harm than good and that LDTs are already effectively regulated by CMS. Therefore, should Congress act, we encourage language clearly defining CMS as the regulator of LDTs.
If you agree with our position, we encourage you to get involved and contact your Congressperson and Senators to share your amazing innovations and the challenges you see should the FDA succeed in ensnaring LDTs in a new web of unnecessary regulatory oversight.
By Greg Stein
Greg brings diverse experience, a vast network, and over 30 years of leadership to his role at Shadowbox. Most recently, Greg was Vice President of Strategic and Community Affairs and an original investor with Millennium Health, where he helped grow the company to more than 1,500 employees and $1.8BN in enterprise value. Prior to Millennium, Greg served in numerous leadership roles such as CFO of a start-up in the defense and action sports space; EVP of a political economics start-up division in the macroeconomic firm founded by Dr. Arthur Laffer, the world-renowned economist; VP of a start-up in a sell-side investment bank; and CEO of a start-up consortium of defense contractors delivering software to the US Air Force and Navy.
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