Scott Gottleib, MD, asked the payer on the panel, John Fox, MD, MHA, whether the FDA decision to regulate laboratory-developed tests (LDTs) would have a substantial bearing on payer coverage decisions for those tests, since payers do conduct their own independent assessment on the clinical utility of some of these tests. He asked Dr Fox to clarify whether FDA certification of LDTs is expected to spur adoption of the tests.

“I don't think that is the issue right now,” explained Dr Fox. In his opinion, the primary challenge is absence of evidence indicating that the test result changes physician management of the patient, which in turn changes patient outcome. Providing Pfizer’s crizotinib as a case study, Dr Fox explained that when crizotinib was approved to treat patients with Alk mutation–positive non-small cell lung cancer (NSCLC), Abbott laboratories had a test that was FDA approved that cost about $1500. “Hospital labs were selling the same test for $500 and everyone adopted it. No one required, or very few people required, the Abbot test. At that point we weren’t concerned about analytic validity and clinical utility, because it was a single gene assay,” said Dr Fox.

He clarified that if the need for FDA approval limits manufacturers from marketing LDTs, payers might follow suit. “It doesn't mean we will adopt the test. But we will not reimburse any test that is not FDA approved. It means that is the threshold for coverage,” Dr Fox said.

Responding to Dr Gottlieb’s query that one of the arguments for regulation has been that the commercial adoption of these tests has been slow due to the lack of a regulatory imprint, Dr Fox reiterated the argument that the FDA will simply evaluate the analytical and clinical validity of LDTs, while clinical utility—which payers are most interested in—will not be assessed by the FDA.

And with respect to healthcare policy on LDTs, Mr Okon said that there are concerns with both sides of the situation. “There’s certainly a concern about the lack of regulation [with LDTs] and what that has to do. But there is a lot of concern with over regulation.” Referring to the backlog that the FDA constantly faces and the lack of sufficient resources, Mr Okon added, “At the same time they are saying, we want to basically regulate all of these LDT's. I think it's a really tough issue.”

Towing in the aspect of innovation in healthcare into the discussion. Mr Okon said that over regulation might simply kill innovation. “If you look at this I think there are about 11,000 LDTs and the way the FDA is going down the path, they would basically have to look at half of those.” Evaluation of 5500 LDTs by the FDA might require years of work. “Frankly, I don't think that is the solution. I think the solution has to be more in terms of the self-regulation [by test developers].”

Mr Okon added that expansion of the Clinical Laboratory Improvement Amendment or CLIA is absolutely critical. “I think if CLIA modernized and expanded what they are doing, I think that would be a good start. I think that’s what [Dr Patel] was talking about.”

Explaining that the FDA does not plan to rule on the clinical utility of LDTs, Dr Patel said that CMS does not have the ability to make decisions on the clinical utility of LDTs. “That would take changes within CMS that they have not yet to date gone down for lab testing.”

Justifying the Need for FDA Regulation of LDTs

What would FDA regulation of laboratory-developed tests involve? Panelists discuss some of the most practical and technical problems that could develop, especially for stakeholders.
Published Online: January 19, 2016


Scott Gottleib, MD, asked the payer on the panel, John Fox, MD, MHA, whether the FDA decision to regulate laboratory-developed tests (LDTs) would have a substantial bearing on payer coverage decisions for those tests, since payers do conduct their own independent assessment on the clinical utility of some of these tests. He asked Dr Fox to clarify whether FDA certification of LDTs is expected to spur adoption of the tests.

“I don't think that is the issue right now,” explained Dr Fox. In his opinion, the primary challenge is absence of evidence indicating that the test result changes physician management of the patient, which in turn changes patient outcome. Providing Pfizer’s crizotinib as a case study, Dr Fox explained that when crizotinib was approved to treat patients with Alk mutation–positive non-small cell lung cancer (NSCLC), Abbott laboratories had a test that was FDA approved that cost about $1500. “Hospital labs were selling the same test for $500 and everyone adopted it. No one required, or very few people required, the Abbot test. At that point we weren’t concerned about analytic validity and clinical utility, because it was a single gene assay,” said Dr Fox.

He clarified that if the need for FDA approval limits manufacturers from marketing LDTs, payers might follow suit. “It doesn't mean we will adopt the test. But we will not reimburse any test that is not FDA approved. It means that is the threshold for coverage,” Dr Fox said.

Responding to Dr Gottlieb’s query that one of the arguments for regulation has been that the commercial adoption of these tests has been slow due to the lack of a regulatory imprint, Dr Fox reiterated the argument that the FDA will simply evaluate the analytical and clinical validity of LDTs, while clinical utility—which payers are most interested in—will not be assessed by the FDA.

And with respect to healthcare policy on LDTs, Mr Okon said that there are concerns with both sides of the situation. “There’s certainly a concern about the lack of regulation [with LDTs] and what that has to do. But there is a lot of concern with over regulation.” Referring to the backlog that the FDA constantly faces and the lack of sufficient resources, Mr Okon added, “At the same time they are saying, we want to basically regulate all of these LDT's. I think it's a really tough issue.”

Towing in the aspect of innovation in healthcare into the discussion. Mr Okon said that over regulation might simply kill innovation. “If you look at this I think there are about 11,000 LDTs and the way the FDA is going down the path, they would basically have to look at half of those.” Evaluation of 5500 LDTs by the FDA might require years of work. “Frankly, I don't think that is the solution. I think the solution has to be more in terms of the self-regulation [by test developers].”

Mr Okon added that expansion of the Clinical Laboratory Improvement Amendment or CLIA is absolutely critical. “I think if CLIA modernized and expanded what they are doing, I think that would be a good start. I think that’s what [Dr Patel] was talking about.”

Explaining that the FDA does not plan to rule on the clinical utility of LDTs, Dr Patel said that CMS does not have the ability to make decisions on the clinical utility of LDTs. “That would take changes within CMS that they have not yet to date gone down for lab testing.”
View More From This Discussion
Episode 1 Introduction
Episode 2 What Are LDTs and How Are They Regulated?
Episode 3 Payer and Consumer Response to FDA Regulation of LDTs
Episode 4 Justifying the Need for FDA Regulation of LDTs
Episode 5 LDTs and the Political Wheelhouse
Episode 6 Can Academic Innovation in LDTs Be Halted?
Episode 7 What Are the Constructs of Value-Based Care?
Episode 8 Implications of Bundled Payments in Oncology
Episode 9 Bundled Payments in Oncology: What Do Payers Think?
Episode 10 Drug Prices and Patient Burden in Oncology
Episode 11 Oral Parity Laws and Patient Cost Sharing
Episode 12 Can Indication-Based Pricing Be a Reality?
Episode 13 Performance-Based Contracting in Oncology
Episode 14 The Path to Site Neutrality
Episode 15 Disparity in Site of Care Costs and Patient Burden
Episode 16 Are Patients Aware of Site of Care Differentials?
Episode 17 Closing Statements
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