Trifecta of forces at work that will affect the clinical laboratory and pathology industries have been described as a ‘perfect storm’ requiring lab and practice managers to be well informed
Digital pathology, artificial intelligence (AI) in healthcare, and the perfect storm of changing federal regulations, took centerstage at the 29th Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management in New Orleans this week, where more than 1,000 clinical laboratory and pathology leaders convened over three days.
This was the largest number of people ever onsite for what has become the world’s largest event focused exclusively on lab management topics and solutions. Perhaps the highlight of the week was the federal Food and Drug Administration’s (FDA’s) announcement of its final rule on Laboratory Developed Tests (LDTs). Overall, the conference featured more than 120 speakers, many of them national thought leaders on the topic of clinical lab and pathology management. More than 65% of the audience onsite were executive level lab managers.
“The level of interest in the annual Executive War College is testimony to the ongoing need for dynamic, engaging, and highly relevant conference events,” said Robert Michel (above), Editor-in-Chief of Dark Daily and its sister publication The Dark Report, and founder of the Executive War College. “These in-person gatherings present great opportunities for clinical laboratory and pathology managers and leaders to network and speak with people they otherwise might not meet.” (Photo copyright: Dark Intelligence Group.)
Demonstrating Clinical Value
For those who missed the action onsite, the following is a synopsis of the highlights this week.
Lâle White, Executive Chair and CEO of XiFin, spoke about the future of clinical laboratory testing and the factors reshaping the industry. There are multiple dynamics impacting healthcare economics and outcomes—namely rising costs, decreasing reimbursements, and the move to a more consumer-focused healthcare. But it is up to labs, she said, to ensure their services are not simply viewed as a commodity.
“Laboratory diagnostics have the potential to change the economics of healthcare by really gaining efficiencies,” she noted. “And it’s up to labs to demonstrate clinical value by helping physicians manage two key diagnostic decision points—what tests to order, and what to do with the results.”
But even as labs find ways to increase the value offered to clinicians, there are other disruptive factors in play. Consumer-oriented tech companies such as Google, Apple, and Amazon are democratizing access to patient data in unforeseen ways, and Medicare Advantage plans are changing the way claims are processed and paid.
Clinical labs are fundamental components of the public health infrastructure. So, the CDC plans on focusing on delivering high-quality laboratory science, supported by reliable diagnostics and informatics for disease outbreaks and exposures, and engaging with public and private sector partners.
The history of MolDX and Z-Codes were the topics discussed by Gabriel Bien-Willner, MD, PhD, Chief Medical Officer for healthcare claims and transaction processing company Palmetto GBA. Molecular testing is highly complex, and the lack of well-defined billing codes and standardization makes it difficult to know if a given test is reasonable and necessary.
Z-Codes were established to clarify what molecular testing was performed—and why—prompting payers to require both Z-Codes and Current Procedural Terminology (CPT) codes when processing molecular test claims. Medicare’s MolDX program further streamlines the claims process by utilizing expertise in the molecular diagnostics space to help payers develop coverage policies and reimbursement for these tests.
FDA Final Rule on LDT Regulation
Timothy Stenzel, MD, PhD, CEO of Grey Haven Consulting and former director of the FDA’s Office of In Vitro Diagnostics reviewed the latest updates from the FDA’s Final Rule on LDT (laboratory developed test) regulation. Prior to the FDA releasing its final rule, some experts suggested that the new regulations could result in up to 90% of labs discontinuing their LDT programs, impacting innovation, and patient care.
However, the final rule on LDTs is very different from the original proposed rule which created controversy. The final rule actually lowers the regulatory burden to the point that some labs may not have to submit their LDTs at all. The FDA is reviewing dozens of multi-cancer detection assays, some of which have launched clinically as LDTs. The agency is likely to approve those that accurately detect cancers for which there is no formal screening program.
Stenzel explained the FDA’s plan to down-classify most in vitro diagnostic tests, changing them from Class III to Class II, and exempting more than 1,000 assays from FDA review. He also discussed the highlights of the Quality Management System Regulation (QMSR). Launched in January, the QMSR bought FDA requirements in line with ISO 13485, making compliance easier for medical device manufacturers and test developers working internationally.
Looming Perfect Storm of Regulatory Changes
To close out Day 1, Michel took to the stage again with a warning to clinical laboratories about the looming “Perfect Storm” trifecta—the final FDA ruling on LDTs, Z-Code requirements for genetic testing, and updates to CLIA ’92 that could result in patient data being considered a specimen.
Laboratory leaders must think strategically if their labs are to survive the fallout, because the financial stress felt by labs in recent years will only be exacerbated by macroeconomic trends such as:
Staff shortages,
Rising costs,
Decreasing and delayed reimbursements, and
Tightening supply chains.
Lab administrators looking for ways to remain profitable and prosperous should look beyond the transactional Clinical Lab 1.0 fee-for-service model and adopt Clinical Lab 2.0, which embraces HEDIS (Healthcare Effectiveness Data and Information Set) scores and STAR ratings to offer more value to Medicare Advantage and other payers.
Wednesday’s General Session agenda was packed with information about the rise of artificial intelligence, big data, and precision medicine in healthcare. Taking centerstage on the program’s final day was Michael Simpson, President and CEO of Clinisys. Simpson gave a global perspective on healthcare data as the new driver of innovation in diagnostics and patient care.
Tim Stenzel, MD, PhD, will discuss what clinical laboratories need to know about the draft LDT rule, FDA memo on assay reclassification, and ISO-13485 harmonization
Many clinical laboratories anxiously await a final rule from the US Food and Drug Administration (FDA) that is expected to establish federal policies under which the agency will regulate laboratory developed tests (LDTs). The agency released a proposed rule on Oct. 3, 2023, setting a Dec. 4 deadline for submission of comments. The White House’s Office of Management and Budget received a draft of the final rule less than three months later on March 1, 2024.
“Given how fast it moved through HHS, the final [rule] is likely pretty close” to the draft version, wrote former FDA commissioner Scott Gottlieb, MD, in a post on LinkedIn. Gottlieb and other regulatory experts expect the White House to submit the final rule to Congress no later than May 22, and perhaps as soon as this month.
Stenzel, who retired from the FDA last year, emphasized that he was not speaking on behalf of the federal agency and that he adheres to all FDA confidentiality requirements. He formed a new company—Grey Haven LLC—through which he is accepting speaking engagements in what he describes as a public service.
“I’m taking a wait and see approach,” said Tim Stenzel, MD, PhD (above), former director of the FDA’s Office of In Vitro Diagnostics, in an interview with Dark Daily. “The rule is not finalized. The FDA received thousands of comments. It’s my impression that the FDA takes those comments seriously. Until the rule is published, we don’t know what it will say, so I don’t think it does any good to make assumptions.” Clinical laboratory leaders will have an opportunity to learn how to prepare for FDA regulation of LDTs directly from Stenzel at the upcoming Executive War College in May. (Photo copyright: LinkedIn.)
FDA’s History of LDT Regulation
Prior to his five-year stint at the agency, Stenzel held high-level positions at diagnostics manufacturers Invivoscribe, Quidel Corporation, Asuragen, and Abbott Laboratories. He also directed the clinical molecular diagnostics laboratory at Duke University Medical Center in North Carolina. In the latter role, during the late 1990s, he oversaw development of numerous LDTs, he said.
The FDA, he observed, has long taken the position that it has authority to regulate LDTs. However, since the 1970s, after Congress passed the Medical Device Amendments to the federal Food, Drug, and Cosmetic Act, the agency has generally exercised “enforcement discretion,” he said, in which it declined to regulate most of these tests.
At the time, “many LDTs were lower risk, small volume, and used for specialized needs of a local patient population,” the agency stated in a press release announcing the proposed rule. “Since then, due to changes in business practices and increasing ability to ship patient specimens across the country quickly, many LDTs are now used more widely, for a larger and more diverse population, with large laboratories accepting specimens from across the country.”
Clinical Labs Need a Plan for Submission of LDTs to FDA
The FDA proposed the new rule after Congress failed to vote on the VALID Act (Verifying Accurate Leading-edge IVCT Development Act of 2021), which would have established a statutory framework for FDA oversight of LDTs. Citing public comments from FDA officials, Stenzel believes the agency would have preferred the legislative approach. But when that failed, “they thought they needed to act, which left them with the rulemaking path,” he said.
The new rule, as proposed, would phase out enforcement discretion in five stages over four years, he noted. Labs would have to begin submitting high-risk tests for premarket review about three-and-a-half years from publication of the final rule, but not before Oct. 1, 2027. Premarket review requirements for moderate- or low-risk tests would follow about six months later.
While he suggested a “wait and see” approach to the final rule, he advises labs that might be affected to develop a plan for dealing with it.
Potential Lawsuits
Stenzel also noted the likelihood of litigation in which labs or other stakeholders will seek to block implementation of the rule. “It’s a fairly widespread belief that there will be a lawsuit or lawsuits that will take this issue through the courts,” he said. “That could take several years. There is no guarantee that the courts will ultimately side with the FDA.”
He acknowledged that it is a controversial issue among clinical laboratories. Many labs have voiced opposition to the rule as well as the Valid Act.
Currently in retirement, Stenzel says he is making himself available as a resource through public speaking for laboratory professionals and other test developers who are seeking insights about the agency.
“The potential value that I bring is recent experience with the FDA and with stakeholders both inside and outside the FDA,” he said, adding that during his presentations he likes “to leave plenty of time for open-ended questions.”
In the case of his talks at the Executive War College, Stenzel said he anticipates “a robust conversation.”
He also expects to address other FDA-related issues, including:
A recent memo in which the agency said it would begin reclassifying most high-risk In Vitro Diagnostic (IVD) tests—those in class III (high risk)—into class II (moderate to high risk).
The emergence of multi-cancer detection (MCD) tests, which he described as a “hot topic in the LDT world.” The FDA has not yet approved any MCD tests, but some are available as LDTs.
A new voluntary pilot program in which the FDA will evaluate LDTs in situations where the agency has approved a treatment but has not authorized a corresponding companion diagnostic.
An FDA effort to harmonize ISO 13485—a set of international standards governing development of medical devices and diagnostics—with the agency’s own quality system regulations. Compliance with the ISO standards is necessary to market products in many countries outside the US, particularly in Europe, Stenzel noted. Harmonization will simplify product development, he said, because manufacturers won’t have to follow two or more sets of rules.
To learn how to prepare for the FDA’s future regulation of LDTs, clinical laboratory and pathology group managers would be wise to attend Stenzel’s presentations at this year’s Executive War College. Visit here to learn more and to secure your seat in New Orleans.
New vaccine could give clinical laboratories and antimicrobial stewardship programs the tool they need to dramatically reduce hospital-acquired infections
The innovative approach focuses on bolstering the patient’s immune system itself, rather than relying on proteins to fight infections, according to a USC Today article.
Developed by senior study author Brad Spellberg, MD, Chief Medical Officer at the Los Angeles General Medical Center, and colleagues, “The experimental vaccine takes an entirely different approach: It gooses the body’s preexisting supply of pathogen-gobbling immune cells called macrophages, which engulf and digest bacteria, fungi, and other bad actors. These activated fighters, found in all tissues, quickly neutralize incoming invaders which might otherwise multiply rapidly and overwhelm the body’s defenses,” USC Today reported.
“This is very different from developing new antibiotics,” Jun Yan, a doctoral student at Keck School of Medicine and the study’s first author, told USC Today. “This is using our own immune system to fight against different superbugs, which is a different approach than everybody else.”
To develop the vaccine [the USC researchers] formed a biotechnology startup called ExBaq LLC in Bethesda, Md.
“The pandemic stimulated unprecedented innovation in vaccine development, where federal funding and university-industry partnerships were game changers for translating promising discoveries from academic labs for the good of all,” said Ishwar K. Puri, PhD (above), senior vice president of research and innovation at USC. “We are both pleased and proud of the critical support the USC Stevens Center provided to enable the development of ExBaq’s experimental vaccine that protects vulnerable populations from serious infections.” Clinical laboratories that work with hospitals in the fight against hospital-acquired infections understand the importance of this discovery. (Photo copyright: University of Southern California.)
USC Vaccine Details
The USC team developed a “protein-free vaccine, composed of aluminum hydroxide, monophosphoryl lipid A, and fungal mannan, that stimulates the innate immune system and confers protection,” the researchers wrote in Science Translational Medicine.
“Tested in two independent labs, the vaccine works within 24 hours and lasts for up to 28 days. In lab models, the number of pathogen-eating immune cells in the blood increased dramatically, and survival time of invasive blood and lung infections improved. Early data suggest that a second dose could extend the window to prevent infection,” USC Today reported.
Unlike anything currently available, the new vaccine focuses on boosting the body itself instead of creating antibodies against certain pathogens. A mere dose of the vaccine is described to “provide rapid protection against nine different bacteria and fungi species,” USC Today noted.
“It’s an early warning system. It’s like Homeland Security putting out a terror alert. Everybody, keep your eyes open. Keep an eye out for suspicious packages. You’re alerting the soldiers and tanks of your immune system. The vaccine activates them,” Spellberg told USC Today.
“The vaccine acted through stimulation of the innate, rather than the adaptive, immune system, as demonstrated by efficacy in the absence of lymphocytes that were abrogated by macrophage depletion. A role for macrophages was further supported by the finding that vaccination induced macrophage epigenetic alterations that modulated phagocytosis and the inflammatory response to infection. Together, these data show that this protein-free vaccine is a promising strategy to prevent deadly antimicrobial-resistant healthcare-associated infections,” the researchers wrote in Science Translational Medicine.
“Patients who acquire infections from surgery spend, on average, an additional 6.5 days in the hospital, are five times more likely to be readmitted after discharge and twice as likely to die. Moreover, surgical patients who develop infections are 60% more likely to require admission to a hospital’s intensive care unit. Surgical infections are believed to account for up to 10 billion dollars annually in healthcare expenditures,” the CDC reports.
“All hospitalized patients are susceptible to contracting a [hospital-acquired] infection. Some patients are at greater risk than others: young children, the elderly, and persons with compromised immune systems are more likely to get an infection. Other risk factors are long hospital stays, the use of indwelling catheters, failure of healthcare workers to wash their hands, and overuse of antibiotics,” the CDC notes.
Therefore, USC’s new vaccine may be just what the doctor ordered to protect patients in hospitals and other healthcare settings from deadly HAIs.
Looking Ahead
There are currently no vaccines that are FDA-approved that treat “the most serious antibiotic resistant infections,” USC Today reported.
“Even if there were such vaccines, multiple vaccines would have to be deployed simultaneously to protect against the full slate of antibiotic-resistant microbes that cause healthcare-acquired infections,” Brian Luna, PhD, assistant professor of molecular microbiology and immunology at USC’s Keck School of Medicine, told USC Today.
Thus, USC’s new vaccine could be a boon to hospital antimicrobial stewardship programs. But so far, it has only been tested on mice.
“The next step is getting guidance from the US Food and Drug Administration (FDA) on the design of a clinical trial. The first such trial would be done in healthy volunteers to find the right dose of vaccine that is safe and triggers the same kind of immune response in people as seen in the mice,” USC Today reported.
ExBaq LLC has begun talking with potential larger partners who might be willing to help develop the vaccine into clinical testing.
For years hospitals and other healthcare settings—such as long-term care facilities, urgent care clinics, and clinical laboratories—have fought an uphill battle against superbugs. So, for a vaccine to be on the horizon that can prevent life-threatening hospital-acquired infections would be a game changer.
With antimicrobial stewardships being a requirement in all hospitals, medical laboratory managers and microbiologists may celebrate this new development and its potential to be a useful tool in fighting antimicrobial resistant bacteria in their facilities.
FDA says the move will make it easier to gain authorization for other clinical laboratory tests to utilize at-home collection kits
In another sign of how diagnostic testing is responding to changing consumer preferences, the US Food and Drug Administration (FDA) granted marketing authorization to LetsGetChecked for the company’s Simple 2 test for chlamydia and gonorrhea, which includes at-home collection of samples sent to the test developer’s clinical laboratories in the US and in Ireland.
This marks the first time the FDA has cleared a diagnostic test for either condition in which samples are collected at home. It’s also the first test with at-home sample collection to be authorized for any sexually transmitted infection (STI) other than HIV, the FDA said in a new release.
Samples are collected through a vaginal swab or urine sample. “Results are delivered online in approximately 2-5 days with follow-up virtual consultations and treatment available if needed,” the company press release states.
Previously authorized tests for the conditions required sample collection at the point of care. The company also offers telehealth and online pharmacy services.
“This authorization marks an important public health milestone, giving patients more information about their health from the privacy of their own home,” said Jeff Shuren, MD, JD (above), Director of the FDA’s Center for Devices and Radiological Health. “We are eager to continue supporting greater consumer access to diagnostic tests, which helps further our goal of bringing more healthcare into the home.” With this emphasis on at-home testing from the FDA, clinical laboratories in the US and Ireland will likely be processing more at-home collected samples. (Photo copyright: FDA.)
Simple 2 Process and Costs
Prior to collecting the sample, the user goes online to complete a questionnaire and activate the kit, the FDA news release notes.
LetsGetChecked, headquartered in New York City and Dublin, Ireland, says its US labs are CLIA– and CAP-certified. The company currently offers more than 30 at-home tests covering STIs, men’s health, women’s health, and COVID-19, at prices ranging from $89 to $249 per test.
The Simple 2 test costs $99, and is not covered by insurance, Verywell Health reported. Consumers can get discounts by subscribing to quarterly, semiannual, or annual tests.
New Regulatory Pathway
The FDA said it reviewed the test under its De Novo regulatory pathway, which is intended for “low- to moderate-risk devices of a new type,” according to the news release.
“Along with this De Novo authorization, the FDA is establishing special controls that define the requirements related to labeling and performance testing,” the agency stated. “When met, the special controls, in combination with general controls, provide a reasonable assurance of safety and effectiveness for tests of this type.”
This creates a new regulatory classification, the agency said, that will make it easier for similar devices to obtain marketing authorization.
Citing data from the federal Centers for Disease Control and Prevention (CDC), the FDA news release states that chlamydia and gonorrhea are the most common bacterial STIs in the US. The CDC estimates that there were 1.6 million cases of chlamydia and more than 700,000 cases of gonorrhea in 2021.
“Typically, both infections can be easily treated, but if left untreated, both infections can cause serious health complications for patients, including infertility,” the news release states. “Expanding the availability of STI testing can help patients get quicker results and access to the most appropriate treatment, ultimately helping to curb the rising rates of STIs.”
Experts Praise the FDA’s Authorization of the Lab Test
STI experts contacted by STAT said they welcomed the FDA’s move.
“There are many people who would like to be tested for STIs who may not know where to go or who have barriers to accessing medical care,” said Jodie Dionne, MD, Associate Professor of Medicine in the University of Alabama at Birmingham (UAB) Division of Infectious Diseases. “If we are going to do a better job of reaching more sexually active people for STIs … we need to be creative about how to get them tested and treated in a way that is highly effective and works for them.”
Family physician Alan Katz, MD, a professor at the University of Hawaii John A Burns School of Medicine, told STAT that the Hologic assay is also used by clinicians who treat people in remote locations to diagnose STIs and is regarded as being highly accurate.
“This option is exceptionally useful for individuals who live in rural areas or are geographically distanced from a clinic where STI testing can be done and there is no telehealth option available,” he told STAT.
With this latest move, the FDA is recognizing that it is time to give consumers more control over their healthcare. This is a signal to clinical laboratories that they should be developing their own strategies and offerings that serve consumers who want to order their own tests. Of course, many states still require a physician’s signature on lab test orders, but that is likely to change over time.
Prior to that, however, the FDA had already announced its intention to issue a proposed rule giving the agency regulatory oversight of LDTs.
“The FDA has continually supported the passage of the VALID Act by Congress,” attorney Charles Dunham IV, a Shareholder at Greenberg Traurig LLP in Houston, told Dark Daily. “In fact, there is speculation that the VALID Act will be attached to the Pandemic and All Hazards Preparedness Act as it moves through Congress.”
“The FDA may not actually proceed with promulgating rules to regulate LDTs if it is concerned it will not be successful in court if the rules are challenged, which would happen,” said attorney Charles Dunham IV (above), a Shareholder at Greenberg Traurig, LLP. Clinical laboratory leaders can learn more from Dunham during a panel discussion at next week’s 2023 Executive War College on Diagnostics, Clinical Laboratory, and Pathology Management in New Orleans. (Photo copyright: Greenberg Traurig LLP.)
Arguments For and Against FDA LDT Regulation of LDTs
Supporters of the VALID Act contend that putting LDTs under FDA regulation will lead to improved patient safety and less review for low-risk tests. Their argument is that LDTs should undergo the same FDA review and approval process as other medical devices.
Hospital laboratory managers and pathologists—particularly in academic medical center laboratories—have largely opposed FDA regulation of LDTs. They prefer to keep the current setup under which lab-developed tests are validated under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). They argue that FDA intervention will slow down development of new tests.
In response, an FDA official indicated during the American Clinical Laboratory Association’s (ACLA) annual meeting on March 1 that the federal agency plans to issue a proposed rule to regulate LDTs, BioWorld reported. That rulemaking has not yet emerged. It’s possible the FDA will wait and see what happens in Congress with the VALID Act.
“Some legal experts have suggested that one significant new legal challenge FDA may face is the Supreme Court’s West Virginia v. EPA decision last summer that limited the ability of the EPA to cap power plant emissions by regulation due to the EPA’s lack of explicit congressional authority to do so,” said Gee, who also will appear on the Executive War College legal panel next week.
“The West Virginia v. EPA ruling provides support for those in the clinical lab industry who point to the FDA’s lack of clear statutory authority to regulate LDTs and therefore fundamentally disagree with FDA’s longstanding position that LDTs are medical devices subject to FDA’s authority to regulate,” he added.
Actions Clinical Laboratory Managers Can Take
Clinical laboratory managers who want to share their thoughts about the future of LDT regulation may want to take one or both of the following actions:
Contact their representatives in Congress.
Find out whether any trade associations they belong to have taken a position on the VALID Act.
Clinical laboratory professionals should monitor the VALID Act’s progress while also paying attention to industry groups and manufacturers that support or oppose the bill.
Doing so will provide a clearer indication of who has the most to gain or lose should the legislation be passed. Pathologists and medical laboratory managers should also remain alert for further efforts by the FDA to issue proposed rulemaking to regulate LDTs.
