New FDA lab tests rule could bankrupt small labs

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Yesterday the Food and Drug Administration (FDA) announced that on May 6 it will promulgate a rule under its authority to regulate medical devices. The rule is a short amendment to an existing rule. The rule would seize control of a large sector of the diagnostic industry that does not need FDA’s heavy hand.

The sector in FDA’s sights comprises certified laboratories that conduct diagnostic tests in house. FDA refers to such tests as laboratory developed tests, or LDTs. The new rule threatens smaller laboratories that cannot afford the delays and millions of dollars that FDA applications and reviews cost. Downstream from them, patients will lose access to LDTs that are withdrawn from the market when the income from the tests, particularly in cases of rare diseases, does not cover the cost of compliance with FDA regulations or when the laboratory manufacturing them goes out of business as a result of the costs.

A comment CEI submitted to FDA when the rule was proposed last fall explained why FDA had no authority for this seizure of jurisdiction. The purpose of the rule is to transform the systems that constitute LDTs into “devices,” which the Food, Drug, and Cosmetic Act gives FDA authority to regulate. The rule accomplishes that alchemy by amending an existing rule that defines “in vitro diagnostic products” to include systems and declares in vitro diagnostic products to be devices.

That existing rule is the first step in FDA’s departure from its statutory authority. The Food, Drug, and Cosmetic Act does not say that in vitro diagnostic products are devices. It says an “in vitro reagent” is a device, along with an instrument, apparatus, implement, machine, contrivance, implant, or other similar or related article, including any component, part, or accessory.

The second step in the FDA’s departure from its statutory authority is the rule the agency has just announced. It will expand further the existing rule’s definition of in vitro diagnostic products, a term not found in the statute to begin with. The rule adds “including when the manufacturer of these products is a laboratory” to the end of the definition. As a result, a system of diagnostic testing within a laboratory becomes a device even though it is not an in vitro reagent or a similar or related article.

In response to that critique of its statutory authority, FDA argues that “in vitro reagent” was added to the statute’s definition of device “to clarify that all in vitro diagnostic products were devices rather than drugs.” That would certainly be a strange way to make that clarification. Reagents are a specific type of diagnostic product. A reagent is a substance used to produce a chemical reaction so as to detect, measure, or produce other substances. It would be like saying that adding stallion to a definition of horses clarifies that horses include all livestock.

CEI’s comment also observed that FDA failed to estimate the cost of either laboratories going out of business because they cannot bear all the expense of compliance with FDA’s voluminous regulations or of the cost to patients from the loss of their diagnostic products and services. The preamble to the final rule responds that FDA will exercise enforcement discretion. That is cold comfort because the preamble announces at the outset that FDA is phasing out its enforcement discretion.

With regard to patients’ loss of diagnostic products and services, FDA speculates that other laboratories that can afford compliance will come along and fill the void.

Meanwhile, those laboratories and patients will be the unfortunate victims of herculean efforts to finalize questionable rulemakings as the deadline for Congressional Review Act scrutiny by the next Congress draws nigh.