FDA Outlines Personalized Medicine Policy with Publication of LDT Draft Guidance Document, Final Guidance on Companion Diagnostics

On July 31, FDA announced drastic changes to regulation for personalized medicine products and services when it coupled the release of the long-awaited final guidance document on the regulation of companion diagnostic devices with a proposed framework for regulating laboratory developed tests (LDTs), which was also long-awaited or long-feared, depending on your perspective.

The final guidance on In Vitro Companion Diagnostic Devices was welcomed by the personalized medicine community because in the document, FDA clarified the path for co-developed drug-diagnostic products, and finalized their assertion that new targeted therapeutics will not be kept from the market if the diagnostic kit is not ready at the same time. This enables promising new drugs to come to market while also allowing the laboratory community to fill testing needs in cases where an FDA-approved kit is not available for therapeutic selection, dosing and avoidance decisions.

However, many issues remain to be addressed.

To address concerns that FDA regulation will pose obstacles to an already challenged laboratory industry, there is a rather long transition phase — nine years — and an initial focus on high-risk. FDA defines high-risk LDTs as those with the same intended use as cleared or approved companion diagnostics, LDTs with the same intended use as an FDA-approved Class III medical device, and certain LDTs for determining the safety and efficacy of blood or blood products. This focus and transition period will allow clinical laboratories and FDA time to adjust. By focusing initial regulation on high-risk LDTs, FDA makes a strong argument for the framework, and slices off a rather small segment of the LDT market.

Many have argued that FDA does not have the bandwidth to regulate LDTs. FDA responded to this claim by reiterating enforcement discretion for the vast majority of LDTs and outlining a process for LDT regulation, which might be less onerous than traditional regulatory pathways for medical devices.

Although FDA made great efforts to address concerns about the Agency’s new regulatory enforcement, it did not address perceived conflicts between laboratory regulation under Clinical Laboratory Improvement Amendments (CLIA) and this new framework. Furthermore, FDA intends to use an expert advisory panel to provide recommendations to the Agency on LDTs risks and classification on certain categories of LDTs, as appropriate. I suspect that defining those categories will be contentious and, at times, difficult.

Investors have long argued that clarity is necessary in both regulation and reimbursement for continued advancement of personalized medicine. We now have clarity on FDA’s current thinking although many issues remain unresolved. The community has time to consider this framework and may soon have a chance to provide public comments. And finally, the pharmaceutical industry has the FDA’s assurance that targeted treatments will not be held up by co-development challenges.

BREAKING NEWS: FDA Notifies Congress of its Intent to Publish Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs)

Summers in D.C. are notoriously slow. FDA, however, has added excitement to this summer by informing Congress of its intent to publish a long-awaited framework for LDT regulation.

In its notice to Congress, FDA included what appears to be a draft of the document. After the mandatory 60-day Congressional review, the draft guidance document will be formally issued for public comment.

Within the draft framework, FDA proposes a risk-based, phased system of oversight. They recognize community concerns around access and do not intend to interrupt the marketing and sale of currently available tests. Furthermore, FDA expresses the intent to continue using enforcement discretion for forensic and organ transplantation uses, traditional LDTs, and LDTs for unmet needs.

The document outlines the history of LDT regulation, FDA’s policy of enforcement discretion, and how personalized medicine has caused FDA to reconsider that policy.

We will continue to provide updates on the development of framework for regulatory oversight of LDTs, with additional in-depth commentary next week on this issue and the related news of FDA’s final guidance on companion diagnostics.

For additional information on the current regulation of LDTs, please read PMC’s report “Pathways for Oversight of Diagnostics.”

Key SGR Fix Brings Relief to Diagnostics Industry

On April 1, the diagnostics industry let out a collective sigh of relief as President Obama signed into law HR 4302. Officially known as the Protecting Access to Medicare Act of 2014, many refer to the law as “Doc Fix” or “SGR fix”, focusing on the delay, yet again, of the 24 percent physician pay cut as a part of Medicare’s sustainable growth rate (SGR) formula.

However, my attention, along with that of the diagnostics industry, focused on the provisions in the law that protect clinical diagnostics from unpredictable repricing (subscription required) under the Centers for Medicare and Medicaid Services (CMS) Clinical Lab Fee Schedule (CLFS).

The passage of this law showcases the need and value of the industry to unite in highlighting policies that, though unintended, challenge innovators by creating an uncertain reimbursement environment. Predictable reimbursement policies encourage exploration and innovation within the diagnostics community, improving health care through advances in diagnosis and beyond.

This law acknowledges the transformative scientific advancements the industry has achieved in recent years, catching our policies up with our technologies.

Many questions remain as we look at the implementation of this law, and as such we remain committed to convening the personalized medicine community to work in collaboration with CMS.

Collaboration Key to Improved Reimbursement Policies for Personalized Medicine

Significant reimbursement challenges to personalized medicine began in 2012 when the Centers for Medicare and Medicaid Services (CMS) changed payments for diagnostics from a stack of different types of codes describing different parts of lab testing to a unique code for a type of test.

The Personalized Medicine Coalition (PMC) has engaged with CMS on reimbursement issues for personalized therapies and companion diagnostics in a variety of ways, most recently when Patrick Conway, M.D., Deputy Administrator for Innovation and Quality and Chief Medical Officer, CMS, delivered the keynote address at the Tenth Annual State of Personalized Medicine Luncheon.

Dr. Conway outlined his perspective on the state of personalized medicine and where it is headed, noting that we are in an era in which the power of genetics is driving innovation, informing treatments and improving patient outcomes.

As Dr. Conway noted, diagnostics are a challenge as a new market, and CMS is working with FDA to streamline the process further. We want and need diagnostics that enable physicians’ to tailor therapies for individual patients and influence decision making, all resulting in better health outcomes and improved patient care.

Dr. Conway emphasized innovation, noting that we need a system that values innovation and pays for it appropriately. We should cover and pay for technology that may have greater costs in the short-term, but which will result in long-term savings and improved outcomes.

Yet, innovators are facing significant challenges stemming from CMS policies, through the unintended consequences related to coding, in particular. PMC is focused on working with CMS to ease the pressure on innovators, and identifying opportunities to make sure this does not happen again.

A key theme of Dr. Conway’s talk was that of collaboration. PMC will continue to facilitate engagement with CMS, taking up Dr. Conway on his open door policy to ensure that future policies encourage innovation and support continued developments in personalized medicine.

Dr. Conway’s presentation is available at the PMC website.

Balancing the Need for Guidance, Communications, and Education to Support Innovation in Personalized Medicine Diagnostics

Recently, I had the opportunity to moderate a thought-provoking panel at the PMC/BIO Solutions Summit. The summit brought together key stakeholders to discuss solutions to barriers in the development of innovative personalized medicine diagnostics. A big question for those developing potentially game-changing technologies in an increasingly cost conscious environment is the need for “Evidentiary Standards and Data Requirements for Payer Coverage.”

Determining the data requirements for coverage is becoming an increasingly frustrating issue for diagnostics manufacturers, which face rising demands for evidence but continued lack of clarity about payer standards for evidence-based decision-making, leading many to ask the question, “Why can’t payers just tell us what their standards are?” Complicating the picture is that diagnostics can come to market via different pathways with different levels of supporting evidence (e.g., companion diagnostics reviewed by FDA for clinical validity with the companion therapeutic and tests developed, validated, and introduced to the market by laboratories).

The panelists – who represented leaders from industry, non-profit advocacy, and government working to create solutions for some of these market access barriers – noted a couple of issues at play. One is that having a payer “pick list” or hard criteria for coverage removes the flexibility that is so often needed in these gray-area coverage decisions. The second is that given the volume of products they are evaluating, most payers don’t have the bandwidth to be experts in the nuances of the trial design for every technology. Third is that across all stakeholders, there is a wide range of knowledge on innovative products and personalized medicine and that basic education for the majority of stakeholders to better understand these products is lacking.

Several lessons and next steps came out of this discussion. First, panelists agreed that there must be more education for all stakeholders so that each stakeholder can actually evaluate novel products appropriately, a key finding echoed throughout the day. Second, the emphasis on outcomes must shift from only clinical outcomes to clinical outcomes and quality of life for patients. Finally, all panelists agreed the ideal situation is open, trusting lines of communication and split of the responsibility according to expertise.

At the end of the day, it may be incumbent on the molecular diagnostic community to shape the paradigm for evidence requirements so that payers can act as enablers, rather than watchdogs.