The Cost of Regulating LDTs

Jeffrey N. Gibbs is a director at the law firm of Hyman, Phelps & McNamara and specializes in FDA-related matters.

For many years, the Food and Drug Administration (FDA) has taken the position that while it has the authority to regulate laboratory-developed tests (LDTs) as devices, the agency would exercise its enforcement discretion and not do so. More recently, FDA has taken a series of steps that backtrack from that approach, and indicated that it intends to regulate at least some LDTs as devices. Whether FDA has the legal authority to regulate LDTs or whether the agency can do so without going through notice-and-comment rulemaking will be hotly debated. The issue of whether FDA regulation is necessary or beneficial will also trigger sharply differing views. What is not debatable is that the regulation of LDTs as devices under the existing device regulatory regime, should it occur, would have a significant effect on the laboratories offering the tests that are regulated as devices, and will increase the regulatory costs for assays.

Congress has given FDA the authority to comprehensively regulate medical devices. The imposition of these regulatory requirements upon LDTs will have a profound impact on those tests. The following outlines some of the key elements of FDA’s medical device regulatory scheme, and explores the effects of the application of those requirements to LDTs.

Registration and Listing

Device manufacturers need to register with FDA. The registration requirement is fairly trivial in itself. However, a company that is registered is subject to FDA inspection and the imposition of other regulatory requirements. The laboratory’s failure to register would render the LDT “misbranded.” FDA can take enforcement action against misbranded devices and their manufacturers.

Devices must also be listed with FDA. While filling out this form is a minor exercise, the failure to submit the form renders the device misbranded. Thus, laboratories offering LDTs that are subject to device regulation would need both to register their establishment and list their LDTs.

FDA Marketing Authorization – 510(k)s

More important, devices must be cleared or approved by FDA before they may be sold. This requirement will pose a major hurdle for LDTs.

There are two routes by which new devices enter the market. The first is the 510(k) premarket notification process. This is the primary mechanism by which new devices, including in vitro diagnostics (IVDs), undergo FDA review.

In order to obtain 510(k) clearance, the applicant must demonstrate “substantial equivalence” to a “predicate device.” A predicate device is a device that was on the market before May 28, 1976, or is the subject of a 510(k) clearance. As for the first option, there will be no pre-May 28, 1976 devices to cite for the LDTs that FDA wants to regulate. And as for the second, for novel LDTs, it may be a challenge to find an IVD that has been cleared that can serve as a predicate device.

A predicate device does not have to be identical to the new device. The products may differ technologically as long as the device seeking 510(k) clearance does not introduce new questions of safety or effectiveness. However, the predicate device must have either the same or a similar intended use. FDA does have considerable flexibility in deciding whether a previously cleared device can serve as a predicate device. Thus, there does not always need to be a high degree of overlap between the new proposed intended use and the predicate device.

One difficulty that companies often do encounter, though, is learning at an early stage whether their assay is eligible for 510(k) review. Even when companies go to FDA through the “pre-IDE” process, they may not get an answer to the question of whether a 510(k) will be acceptable. Thus, companies may embark on the FDA process without knowing whether they will be able to submit a 510(k), or will need to go through the more rigorous premarket approval (PMA) process instead.

The 510(k) submissions will need to be supported by sufficient data. Providing sufficient data will require generating both analytical data and clinical data. Laboratories will need to generate the data in a manner that satisfies FDA’s requirements. A company should not assume that the data that they generated to validate the assay will be deemed sufficient by FDA. Studies that are accepted for publication in peer-reviewed journals and relied upon by experts in the field will not necessarily satisfy FDA’s regulatory expectations. Thus, a laboratory whose LDT is subject to the need for FDA clearance may need to conduct new studies, beyond its initial clinical validation studies. These studies can be costly and time consuming. Also, the validation work that was sufficient to comply with the Clinical Laboratory Improvement Amendments (CLIA) may not be sufficient for FDA, so that new analytical validation research may need to be conducted. Thus, laboratories that must submit 510(k)s may find they will need to perform significant additional testing in order to obtain 510(k) clearance.

They will also need to wait. FDA has 90 days to review a 510(k) from submission. Laboratories submitting 510(k)s for LDTs should expect at least one set of questions. FDA has up to 90 days to review the response to those questions.

If and when 510(k) clearance is obtained, the 510(k) holders will need to be careful about modifying the test or its labeling. An FDA regulation requires that companies submit a 510(k) and obtain clearance before they significantly modify the intended use of the device, or if they modify the device in a manner that could significant affect its safety or effectiveness (21 C.F.R. 807.81). The failure to obtain a new 510(k) clearance will result in the device being deemed violative, even though it was already 510(k) cleared.

LDTs are often characterized by ongoing innovations and improvements. Companies may want to modify an algorithm or add a new marker or make some other type of change. These modifications will need to be assessed in advance to determine whether a new submission is needed. FDA has developed a guideline for evaluating proposed changes. While helpful, this guideline does not provide clear-cut answers. Laboratories will often need to apply ambiguous requirements to their specific circumstances. Making the decision more difficult, the guideline was not drafted with laboratories in mind. In many instances, a new 510(k) will be needed. This requirement for pre-clearance of modifications will significantly decrease the ability of laboratories to change their LDTs over time.

In some instances, there will not be predicate devices for an LDT. However, if the test is inherently moderate risk, or if “special controls” can be written that will cause the LDT to be moderate risk, then it may still be able to proceed through a 510(k) via the de novo review process. In effect, this process allows devices that are moderate risk to be reviewed as a 510(k), even though no predicate is available. While de novo can be an attractive option for companies with new kinds of tests, they should not assume that de novo will be available. FDA has only cleared about two IVDs each year through the de novo process.

FDA is currently considering significant revisions to the 510(k) process. How these modifications will affect the 510(k) process remains to be seen.

Premarket Authorization – PMAs

Not all LDTs will be able to go through the 510(k)/de novo process. Under current law, the only option for such LDTs may be the PMA process. The PMA is a vastly more complex and costly application. Unlike a 510(k), where the applicant need only demonstrate substantial equivalence, a PMA applicant must also demonstrate the safety and effectiveness of the device, which is a far more demanding standard. The application will need to contain both the clinical and analytical data sufficient to meet that higher threshold.

In addition, the PMA will need to contain manufacturing information. FDA will not approve a PMA unless the company submits data showing that the product will be manufactured in accordance with the Quality System Regulation (QSR) (21 C.F.R. Part 820). FDA will inspect the facility for QSR compliance before approving the application. Given that most laboratories currently focus on achieving CLIA compliance, and not adhering to the QSR regulations, this will not be a trivial task. CLIA and QSR are not the same. Laboratories that pursue the PMA process will need to write a number of new procedures and revamp the way they operate in order to pass muster with an FDA investigator and be approved.

And there’s more. As part of QSR, FDA’s regulations require most devices to be developed in accordance with design controls (21 C.F.R. 820.30). LDTs that are currently on the market or are under development will be unable to meet this requirement. While FDA sometimes will accept retrospective design history files, that is not always the case. Reconstructing the design history in a way that will meet FDA’s needs is not a simple task either.

Before approving the PMA, FDA is likely to convene an advisory panel to review the application. Although the panel’s vote is not binding upon the agency, its recommendation does carry weight. Applicants therefore need to devote substantial resources to preparing for an advisory panel. (FDA can also convene panels for 510(k)s, but rarely does so).

As with a 510(k), once a PMA is approved, the company will have limited flexibility in modifying the device. Some very minor changes can be implemented without prior FDA notification or approval, but they will need to be described in the annual report required of all PMA holders. Many changes, though, will need to be reviewed by FDA before they can be implemented. Some will need to go through a comprehensive review via a PMA supplement. The upshot is that laboratories will find their flexibility curtailed: the ability to change manufacturing process, components, suppliers, materials, and labeling will be curbed significantly.

Postmarket Controls

Once a device is on the market, it continues to be subject to FDA regulation. The failure to comply with these FDA regulatory requirements can result in FDA enforcement action, including the issuance of a warning letter, seizure of devices, civil penalties, an injunction against the laboratory and its employees, or criminal prosecution of the laboratory and its employees. The principal FDA post-market requirements include:

• Compliance with the QSR. The failure to “manufacture” the LDT in accordance with the QSR regulation means that the device is adulterated. FDA inspects device manufacturers for adherence to the QSR requirements.

• Submitting Medical Device Reports (MDRs). FDA’s MDR regulation requires manufacturers to submit reports to the agency within 30 days of learning that one of its device caused or contributed to a death or serious injury, or that the device malfunctioned and that a recurrence of that malfunction would be likely to cause a death or serious injury (21 C.F.R. Part 803). All device companies need to develop procedures to comply with these regulations. The failure to submit a required report, or to submit it in a timely fashion, means the device is misbranded.

• Advertising and promotion. Devices must be marketed in a manner consistent with their cleared or approved labeling. The off-label marketing of a device is prohibited. FDA’s restrictions on off-label marketing may prove particularly problematic for laboratories if FDA deems laboratory reports to be product labeling. Laboratory reports must be tailored to the needs of the individual patient. This individualization can be difficult to reconcile with the FDA regulatory framework, which favors standardization of communications. In any event, laboratories will find their ability to describe and market their test to be significantly constrained if they are subject to FDA regulation as a device manufacturer.

• Notification of Recalls. Under 21 C.F.R. Part 806, device manufacturers must notify FDA of certain types of corrections and removals. This may include notifications to health care providers. Thus, for example, if an LDT device company were to determine that it should send a letter to doctors regarding test results, it may need to notify the FDA as well. All device manufacturers need to develop procedures to comply with Part 806’s requirements.

• FDA inspections. FDA investigators are authorized to inspect device manufacturers for compliance with FDA’s regulations. These investigators have the right to review many documents, including ones related to QSR and MDR compliance. The refusal to allow an inspection is a violation of law. FDA investigators tend to approach inspections with a law enforcement mindset. Inspections may be protracted and require significant resources by the facility to supply documents and information to the investigators.


FDA regulation of devices, including IVDs, is comprehensive and thorough. Laboratories that are subject to FDA regulation will find themselves operating in a far more complex regulatory environment if FDA treats these assays as they do other devices. In some instances, the need to meet FDA requirements may prevent the LDTs from ever entering the market. Changes to assays will be less frequent and will take longer to implement. The ongoing regulatory costs will increase compared to the CLIA model.

Over the upcoming months and years, there will be extensive debate as to whether FDA regulation of some LDTs is lawful or desirable, a process which began late last month when FDA held a two-day public meeting to discuss its proposal to regulate LDTs (see: recaps of Day 1 and Day 2). However, there should be no debate that extending the FDA device regulatory regime to LDTs, in whatever form it ultimately takes, will have some profound regulatory consequences for the laboratories and the assays that they can offer.