FDA Pulls the Plug on EUA Review of Laboratory Developed Tests for COVID-19

On Oct. 9, the U.S. Food and Drug Administration (FDA) dropped a bombshell by announcing that it would no longer review applications for Emergency Use Authorization (EUA) submitted by test makers for laboratory developed tests (LDTs) to diagnose COVID-19. The announcement, which caught the laboratory industry by surprise, came weeks after the Department of Health and Human Services (HHS) announced that the FDA would no longer be able to regulate LDTs by informal decrees but would instead have to go through the customary notice and comment rulemaking process required for new regulations. The Context: FDA Regulation of LDTs The original legislation that created the FDA and current regulatory system of medical drug and device regulation did not specifically provide for oversight of diagnostic laboratory tests. So, the agency has relied on its powers to regulate devices to regulate laboratory tests. That is the reason why LDTs must obtain premarket approval through the 510(k) pathway for medical devices. In addition to challenging the FDA’s authority over LDTs, the laboratory industry has long objected to the agency’s practice of skirting the regulatory process and relying on guidance, website statements and other informal issuances to make regulatory policy. Without clear and codified regulation, it seemed as if the agency was making up the rules as it went along.  HHS Reins in FDA Informal Regulation of LDTs On Aug. 19, HHS raised eyebrows by taking the same position and essentially stripping the agency of its authority to regulate LDTs via informal methods. From now on, the FDA rules over LDTs would have to go through the normal notice and comment rulemaking process required to establish new federal regulations, HHS mandated. One result of the HHS decision, which is part of the Administration’s broader policy to cut government regulation over business, was to enable laboratories to offer LDTs for SARS-CoV-2 without going through the EUA process. “Those with an active EUA to use an LDT to detect the virus causing COVID-19 or its antibodies are unaffected by this announcement,” HHS added. FDA Abdicates EUA Review So far, so good. But on Oct. 7, during its weekly virtual town hall briefings, the FDA turned the tables by announcing that it would longer review COVID EUA submissions for LDTs. Whether deliberately spiteful or not—so, you want us to go through formal rulemaking, then we’ll show you—the agency said that dropping EUAs for LDTs was consistent with the recent HHS announcement and necessary to prioritize its scarce review resources. “We are currently in a different phase of the pandemic with respect to tests,” explained Timothy Stenzel, director of the Office of In Vitro Diagnostics and Radiological Health at FDA’s Center for Devices and Radiological Health, noting that the FDA has authorized more than 250 tests to be run in labs. Stenzel also clarified that the agency would prioritize review of EUA requests for point-of-care tests, home collection tests, at-home tests, tests that reduce reliance on certain types of test supplies and high-throughput, widely distributed tests. The new approach applies not only to new EUA submissions but also to those already submitted for review, although Stenzel offered assurances that the agency had made last-ditch efforts to wrap up review of submissions “close to the finish line” in the interest of fairness. But LDTs that were “further out from potentially being authorized” will progress no further through the pipeline. And no new submissions will be accepted. The Aftershocks The announcement caught the industry off-guard. The American Clinical Laboratories Association (ACLA), which had generally supported the August HHS announcement, criticized the FDA’s decision. In a statement, ACLA president Julie Khani called on the FDA to continue to let labs voluntarily submit EUAs for COVID-19 LDTs, noting that many of the tests that have received EUA are precisely the kinds of “innovative, high-throughput [tests] that have reduced reliance on supplies and been integral to expanding testing capacity” that the new FDA policy is purportedly designed to promote. The FDA decision to stop reviewing LDTs may thwart development of innovative tests. Specifically, it gives test makers three good reasons not to launch new COVID-19 LDTs:

1. Reimbursement Uncertainty

One problem is the new uncertainty the new policy creates over reimbursement. That is because the Family First Coronavirus Act (FFCRA) requires commercial payors to cover medically necessary SARS-CoV-2 testing without cost sharing, but only if they have EUA from the FDA. Consequently, laboratories developing new SARS-CoV-2 LDTs face the prospect of not being reimbursed for their tests.

2. Liability Risks

In addition to reimbursement risk, taking EUA off the table heightens test makers’ liability exposure by stripping away the immunity protections afforded by the Public Readiness and Emergency Preparedness (PREP) Act. Like reimbursement under FFCRA, immunity from claims for use of tests during the public health emergency under PREP applies only to tests with EUA. And because of the urgency of the situation and need to get tests out faster than normal, test makers need these liability protections in case things go wrong. COVID-19 litigation has already become big business for trial lawyers and laboratories that develop inaccurate or faulty LDTs will be sitting ducks.

3. Harm to Competitiveness

While it does not represent full FDA approval, EUA status raises the credibility of a laboratory test product in the eyes of payors, clinicians and even patients. So, taking EUA off the table may make it harder for new LDTs to compete in the market, particularly against tests that have garnered EUA. Takeaway  While deregulation of LDTs has long been an industry goal, the FDA’s new policy of completely bowing out of EUA review of new SARS-CoV-2 tests is a wrong-headed and perhaps even spiteful decision that works against the very goals it is designed to promote.