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Makers of Medical Tests Likely to Wait for Clarity on Oversight Rules

By Kerry Young, CQ Roll Call

August 6, 2015 -- Federal regulators and legislators may keep makers of high-tech medical diagnostics waiting for months for a clear signal on how oversight of some of the products could evolve, even amid complaints from industry about the effects of prolonged uncertainty.

The Food and Drug Administration doesn't have an estimate on when it will unveil a final framework for regulatory oversight of laboratory-developed tests, a spokeswoman said last week. The draft proposal was released in October 2014, and the agency is in the midst of reviewing more than 200 comments submitted about the plan.

Industry watchers see FDA officials as likely to hold off on finalizing the proposal until they know whether lawmakers will act on policies for laboratory-developed tests. The Bipartisan Policy Center last month suggested that the Senate Health, Education, Labor, and Pensions (HELP) Committee clarify the rules on laboratory-developed tests. This suggestion was made as part of a package of recommendations regarding the committee's planned legislation on medical innovation.

Senate HELP Chairman Lamar Alexander, R-Tenn., and committee Democrat Michael Bennet of Colorado expressed interest in the laboratory-developed tests at a May hearing. Bennet, whose state is home to several companies working in the field, spoke of a need to "create predictability" in regulatory practices.

"There is some concern that the draft framework could require the FDA to register and approve thousands of labs, or at a minimum thousands of tests," Bennet said.

Laboratory-developed tests are monitored through the Centers for Medicare and Medicaid Services (CMS), while the FDA approves other diagnostics. Critics of this bifurcated approach have said that CMS' oversight, guided by the Clinical Laboratory Improvement Amendments, or CLIA, check only on how well a test measures for a marker, and that FDA approval procedures are better designed to gauge how meaningful that marker is in helping doctors and patients make health decisions.

The FDA had long left alone lab-developed tests, which once were largely limited to tests done within hospitals and single medical organizations. But with increased knowledge of human genetics, laboratory-developed tests now also include many commercial services with significant sales. Sequenom Inc., for example, makes almost all of its money from laboratory-developed tests (LDTs) designed to detect specific fetal abnormalities and genetic conditions. Revenue for the San Diego-based company last year rose by 27 percent to $151.6 million.

A more aggressive FDA approach to regulating laboratory-developed tests could put that revenue at risk and limit Sequenom's potential for growth, the company said Thursday in a regulatory filing. It's possible that the company would have to cease its testing services, Sequenom said, repeating a caution that it has included in previous filings.

"We cannot predict the extent of the FDA's final guidance on regulation of LDTs in general or with respect to our LDTs in particular," the firm said, adding that it can't predict at this time if it could meet a new FDA standard and be able to continue to sell its testing services. "(O)ur ability to generate revenues from providing such products may be delayed and we may never be able to generate significant revenues from providing diagnostic products."

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