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Diagnostics Revamp Inches Forward in Senate’s FDA User Fee Plan

May 27, 2022, 9:30 AM

A Senate proposal to overhaul the way the FDA regulates diagnostics is raising questions over whether the agency has the resources it needs to undertake such a project.

The inclusion of the VALID Act (H.R. 4128) in the Senate’s must-pass draft user fee package marks a critical step in realizing changes nearly a decade in the making over how much oversight the Food and Drug Administration should exert over diagnostic tests, particularly those created in a single laboratory.

But the bill leaves a lot of text in brackets, indicating there are still major sections that have been proposed but are still up in the air as to how lawmakers will sort that out, including how to fund it.

“We don’t actually know what the final language is going to be. And ultimately, where that bracket language ends up, will really determine how workable, how feasible, how much of a benefit, the new framework is for public health,” Liz Richardson, director of the health care products project at The Pew Charitable Trusts, said.

“There are no appropriations provided for in the language, and user fees would not kick in until the FDA had done some kind of policy work, guidance, development, that sort of thing,” she said.

The proposal is part of a reauthorization package that governs the fees the drug and device industries pay the FDA in exchange for certain agency performance goals. The Senate health committee plans to introduce and mark up a final version of the legislation in the coming weeks.

The House Energy and Commerce Committee on May 18 approved its own version of the user fee package that didn’t include the VALID Act proposal.

Much Is Up in the Air

At its core, the VALID Act language would create a new category of medical products called in vitro clinical tests and then calibrate the FDA’s oversight to the risk level of the test.

This would happen regardless of whether the diagnostic came from a medical device company or from a private laboratory. The proposal seeks to settle a longstanding debate about the agency’s authority over laboratory-developed tests.

Making changes to the proposal may be difficult as it goes through Congress, though, given the complexities of the diagnostic regulatory scheme.

“The whole system is very complicated. And while it is a lengthy bill, it’s a bill that is also very much dependent on other sections,” Jeff Allen, president of Friends of Cancer Research, said.

Even adjusting a definition may have ramifications on triggering actions, such as whether the device warrants an FDA review. “It’s a very interconnected approach here. It doesn’t mean that it’s wrong or anything like that. It just makes it difficult to debate one single point without having other downstream ramifications if a change is made through this,” he said.

Kalah Auchincloss, executive vice president of regulatory compliance and general counsel for Greenleaf Health, said that if enacted, the FDA will need time to sort out how to implement the changes and “most importantly,” it will need adequate resources to do so.

“All of this extra post-market work that the agency would be taking on is not funded by user fees, and there are no appropriations,” Richardson said. User fees would be limited to premarket review of diagnostic tests and would be capped at 30%, she said.

“All the other things that we want to see changed are very important, but FDA cannot accomplish any of it in the way that Congress envisioned without adequate resources,” Richardson added.

Auchincloss, who served as deputy chief of staff during FDA Commissioner Robert M. Califf’s first tour leading the agency, noted that the FDA is still implementing the Compounding Quality Act almost a decade after its enactment. That 2013 law allows compounders to create a new outsourcing facility to compound drug products in large quantities—without obtaining a prescription for individual patients—for sale to health-care practitioners and hospitals.

Transition Period

The FDA has always regulated diagnostics from the device industry and historically has only exercised enforcement discretion over laboratory-developed tests because laboratories must meet the standards of the Clinical Laboratory Improvement Amendments, which are administered by the Centers for Medicare & Medicaid Services.

A transition period between now and October 2027, which is the effective date of the VALID Act as currently written, could be useful to help ease into this new regime, Auchincloss said. “It’s a big undertaking, and important for public health.”

Lawmakers will likely have to continue to sort out which legacy tests will be exempt from FDA oversight if the legislation were to take effect.

The American Clinical Laboratory Association said it supported strong language to keep existing laboratory-developed tests outside of the FDA’s regulation but expressed concern about a clause that would allow the FDA to step in if the agency felt the test wasn’t producing results that are accurate and useful.

It wants more specific grounds for the FDA to look into a test that’s already deemed exempt.

“ACLA believes it is appropriate to provide FDA with authority to request information about a grandfathered test when it has scientific concerns that indicate a risk of patient harm,” the group said in a letter.

“However to ensure predictable application of this authority, VALID 2022 must (1) enumerate specific, clear grounds for FDA to initiate a process to examine a grandfathered test, and (2) provide appropriate due process.”

But Richardson said that lawmakers need to retain language, which is currently in brackets, to clarify that the legacy tests are able to be held to the applicable standard for validity. “Grandfathered tests should be analytically and clinically valid for their intended use, just like any test.”

Auchincloss said the “The grandfather provisions also seem to encompass quite a large number of tests, which could be problematic.”

Lingering Issues

The Senate bill marks the latest version of an effort dating back to 2014, when the FDA proposed exerting new authority on LDTs, arguing the increasing complexity of tests warranted new oversight that’s on par with in vitro diagnostics—which the FDA already regulates.

But the laboratory industry initially pushed back against what it saw as double regulation as it also has to follow standards under the Clinical Laboratory Improvement Amendments.

“VALID is a much needed step in the right direction to providing FDA clear authority to regulate LDTs. The current version I’ve reviewed is improved over previous versions that I’ve seen, but there are still some modifications that could be made to strike the balance between protecting patients and encouraging innovation,” Auchincloss said.

The latest Senate version includes a new moderate risk level, Richardson said. “But we think the definition still needs some refinement in order to avoid overlaps with the high-risk definition as well as gaps.”

Auchincloss said she’d like to see more clarity around proposals to streamline review of lower risk devices as well as refining what point making changes to diagnostics would trigger the need for review by the FDA.

The VALID act as introduced by Rep. Diana DeGette (D-Colo.) established a new review pathway that allows companies to certify the technology for lower-risk tests and then make some small changes without having to go back to the agency every time they tinker with the test.

The Senate user fee draft proposes more changes in brackets such as allowing a fixed combination of technologies to be eligible for certification instead of just one, Richardson said.

But she expressed concern that there’s no requirement in the Senate version to renew the technology certification order. “That was an important check,” Richardson said. “It allowed the agency to get another look under the hood.”

Both Auchincloss and Allen expressed optimism that some version of diagnostics reform will make into the final user fee package.

The timing is still there to be able to resolve any lingering issues, and the commitment is there from the FDA, the Department of Health and Human Services, leadership in the Senate, and the House sponsors, Allen said.

“We’re seeing a clear commitment, the beginnings of an alignment on the key issues that need to be dealt with here. There is an open door for this to move forward,” he said.

To contact the reporter on this story: Jeannie Baumann in Washington at jbaumann@bloombergindustry.com

To contact the editors responsible for this story: Karl Hardy at khardy@bloomberglaw.com; Alexis Kramer at akramer@bloomberglaw.com