August 2012, Vol 1, No 3

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Facilitating the Next Generation of Precision Medicine in Oncology

Sheila D. Walcoff, JD


Key Points

  • Key stakeholders are increasingly considering new measures to protect and advance innovation and investment in diagnostics
  • Efforts are under way to establish more appropriate and least burdensome regulatory policies to address stakeholder concerns specific to in vitro diagnostic tests
  • FDA is concerned with the risk of false-positive and false-negative test results that would be incorporated into clinical treatment decisions
  • FDA has struggled to find the most appropriate way to address regulatory oversight where gaps between CLIA and FDA are perceived
  • FDA’s move toward greater oversight of the clinical validity of genomic-based tests has, thus far, not resulted in a path to personalized medicine paved with greater clarity, certainty, and confidence

Value of Diagnostics in Healthcare – Foundation of Personalized Medicine in Oncology

Clinical laboratory testing has a tremendous impact on patient outcomes and health economics. Over 7 billion laboratory tests are performed annually in the United States,1 and clinical tests contribute to an estimated 70% or more of all decision making in medical practice.2 Yet, the total cost of laboratory services accounts for merely 1.8% of all Medicare spending annually and only 2.3% of national healthcare spending.3

Key stakeholders, including industry, patient advocates, regulators, and legislators, are increasingly considering new measures to protect and advance innovation and investment in diagnostics. There is particular interest in so-called advanced personalized diagnostics (APDx), which drive greater “precision” in medical diagnosis and targeted treatment. APDx has been defined in draft federal legislation as in vitro diagnostic products that provide “an analysis of deoxyribonucleic acid (DNA), ribonucleic acid (RNA), a chromosome, a protein, or a metabolite…intended principally for use in detecting genotypes, mutations, patterns, or chromosomal changes for the purpose of diagnosis, prevention, cure, mitigation, or treatment of any disease or impairment, including prognosis or prediction of the outcome of a treatment or the assessment of the health of humans” and “…excluding methods of analysis principally comprising routine chemistry or routine immunology.”4

The important healthcare and economic benefits of APDx include, for example, more accurate and timely diagnoses (eg, fewer hospital bed days, longer survival, etc); surgery avoidance (eg, organ resection and resulting lifelong pharmacotherapy); appropriate therapy selection (eg, pharmacogenomics to optimize therapy selection and treatment response monitoring); and better avoidance of ineffective therapies (eg, toxic and costly side effects of chemotherapy). Despite regulatory and reimbursement uncertainty, these tests promise to be even more widespread in the very near term as physicians across specialties overwhelmingly believe genetic testing will improve patient care and anticipate testing to impact 14% of patients in their own practice within 5 years.5

Evolving Regulation of Diagnostic Tests, Including APDx: CLIA Versus FDA

Molecular diagnostic tests performed in clinical laboratories have long been regulated by multiple federal and state agencies. Since the enactment of the federal Clinical Laboratory Improvement Amendments of 1988 (CLIA), tests developed and performed in clinical laboratories have been regulated chiefly by the Centers for Medicare & Medicaid Services (CMS) and various states pursuant to state-by-state laboratory licensure laws. But certain test components and reagents, whether a single analyte-specific reagent or combinations of components and reagents packaged together as a “kit,” general-purpose reagents, laboratory equipment, and software offered by manufacturers for sale or distribution to clinical laboratories for research, investigational, or clinical uses remained regulated by the FDA under the authority of the Federal Food, Drug and Cosmetic Act (FFDCA) as amended.6 Pursuant to its authority under section 201(h) of the FFDCA, FDA defines in vitro diagnostic tests and components as “medical devices.” Specifically, “…reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions, including a determination of the state of health, in order to cure, mitigate, treat, or prevent disease or its sequelae.” Such products are intended for use in the collection, preparation, and examination of specimens taken from the human body.7 Importantly, state authorities (rather than the federal government) regulate the practice of medicine, including laboratory medicine.

For tests performed in clinical laboratories, CLIA requires that each clinical laboratory that introduces a test system not subject to FDA clearance or approval, or uses a test system for which performance specifications are not provided by the test kit manufacturer, must establish for each test system the performance specifications for certain performance characteristics, including accuracy, precision, analytical sensitivity and specificity, reference intervals, and reportable ranges for results.8 Additionally, clinical laboratories often are accredited by other independent organizations, such as the College of American Pathologists (CAP).9 Clinical test systems are subject to rigorous certification by state entities as well, for example, the New York State Clinical Laboratory Evaluation Program (CLEP). Laboratories located in and holding clinical laboratory permits from several state programs, including the New York CLEP program, have been granted exempt status by CMS from additional accreditation under CLIA.10 The New York CLEP program is a well-known example of a very rigorous state licensure program designed to ensure the accuracy and reliability of results of laboratory tests on specimens obtained within the state. For clinical laboratories and blood banks holding New York state permits, CLEP also performs laboratory inspections, proficiency testing, and evaluation of laboratory personnel.10

In vitro diagnostic tests that are manufactured outside the clinical laboratory and then distributed to 1 or more clinical laboratories must be cleared or approved by the FDA prior to such distribution, although these tests may be modified later by clinical laboratories under the CLIA bridge testing and other validation requirements. FDA also has authority over reagents and instrumentation labeled for research use or investigational use, defined in regulations as in vitro diagnostic products. Specifically, the FDA considers products labeled Research Use Only (RUO) “…to be products that are in the laboratory research phase of development, that is, either basic research or the initial search for potential clinical utility, and not represented as an effective in vitro diagnostic product.” During this phase, the focus of manufacturer-initiated studies is typically to evaluate limited-scale performance and potential clinical or informational usefulness of the test. These products must be labeled “For Research Use Only. Not for use in diagnostic procedures.”11 FDA does not require RUO products to be cleared or approved by FDA since such products are not “intended” to be used for clinical purposes. Likewise, no premarket review or notification is required by FDA for products labeled for Investigational Use Only (IUO) that are intended only for controlled investigations to gather performance data on products with informed consent/Institutional Review Board approval. However, such products have long been used in practice by CLIA-accredited laboratories in tests offered by such clinical laboratories and validated pursuant to CLIA standards and requirements in each laboratory. This practice of laboratory validation is widely accepted and subject to the regulatory rigors of both state and federal laboratory regulations.

With regard to tests developed and performed by clinical laboratories, known as laboratory-developed tests (LDTs), the FDA has long asserted that it has the authority to require premarket review of LDTs under the legal definition of “medical device” but has historically deferred to CMS to regulate LDTs at the federal level under CLIA. FDA’s policy of not requiring CLIA-accredited laboratories, including hospital and academic medical center laboratories, to submit LDTs to FDA prior to offering such tests for clinical purposes is called “enforcement discretion.” Importantly, FDA has applied enforcement discretion only to those clinical diagnostic tests it defines as LDTs, meaning “…for use in the diagnosis of disease or other conditions that was developed by [CLIA] certified clinical laboratory for use in that laboratory” and are “neither an analyte-specific reagent nor are the components for research use only.”12 Notably, FDA has taken enforcement action against laboratories performing tests as LDTs that have not been entirely developed and validated in a single facility.13 FDA has asserted that even the provision of customized reagents with instructions for clinical use or the transfer of data alone, such as instructions for use, performance characteristics, or protocols, between a manufacturer, research entity, CLIA laboratory, or other entity and CLIA laboratory, disqualifies the test as an LDT with enforcement discretion protection and subjects it to the FDA premarket review or notification requirements.13

FDA’s assertion of the existing framework for review and approval of traditional medical devices (like heart valves) is not well suited for both LDTs and distributed in vitro diagnostic kits. Consequently, efforts are under way to establish more appropriate and least burdensome regulatory policies, including evidentiary requirements and review standards, to address stakeholder concerns specific to in vitro diagnostic tests. These proposals range from creating a new category of regulated product for risk-based review of all in vitro diagnostic products under FDA while retaining CLIA oversight of laboratory operations and the actual performance of the test (the premise of the draft legislation contemplated by US Senator Orrin Hatch), to expanding the regulatory role of CMS under CLIA and excluding FDA entirely from LDT oversight (the premise of US House of Representatives Bill 3207 introduced by Representative Michael Burgess), to creating a “transitional” class of novel or “emerging” in vitro diagnostic kits for which manufacturers could obtain conditional clearance as part of the existing medical device framework (identified as a potential approach in the most recent FDA agreement on reauthorization of medical device user fees).4,14,15

FDA Steps Into the Clinical Laboratory

As the field of genomic testing began to evolve and move increasingly into clinical practice, the FDA became concerned about the analytical and clinical validity standards for genomic tests. In particular, the FDA is concerned with the risk of false-positive and false-negative test results that would be incorporated into clinical treatment decisions for serious and life-threatening diseases such as cancer. Although FDA has long limited its premarket oversight of in vitro diagnostic tests to those that constitute “kits” manufactured and sold or distributed to clinical laboratories, in recent years the regulatory paradigms have begun to shift dramatically as more multianalyte assays using algorithmic analysis and new faster sequencing technologies, such as next-generation sequencing (NGS), have entered the field. The FDA has struggled to find the most appropriate way to address regulatory oversight where gaps between CLIA and FDA are perceived, yet, at the same time, avoid erecting further barriers to innovation.

After failed attempts to target additional premarket regulation to a more limited class of multianalyte LDTs, FDA announced in 2010 its intent instead to regulate LDTs broadly.16-18 However, the now years-long process FDA has undertaken to develop and publish Draft Guidance on LDT regulation has been stalled, first due to substantial concerns expressed by both stakeholders and government policy makers regarding the awkward and ill-defined approach taken by FDA to determine LDTs potentially subject to dual oversight by CLIA and FDA, and later due to broader-based concerns regarding the potential negative impact the proposed policies would have on the advancement of personalized medicine in general. Nonetheless, the FDA remains committed and has indicated that the Draft Guidance on LDT policy remains a priority for 2012 publication.19

In the meantime, top FDA officials continue to be vocal in expressing the agency’s distrust of the CLIA regulations to appropriately establish analytical and clinical validity of LDTs, whether single analyte, multianalyte, or NGS based.20 And although stakeholders and legal scholars alike have challenged the FDA’s assertion of authority over LDTs and the agency’s proposal to require FDA premarket oversight of LDTs absent formal rule making by the FDA [guidance documents cannot, as a matter of law, “create or confer any rights for or on any person.” See 21 U.S.C. Sec. 371(h)(1)(A)], the agency has proceeded to develop policies impacting LDTs through “draft” guidance documents, which lack transparency of process and predictably of policy compared with regulations established through formal rule making.21

Still, the FDA has moved forward with the publication of a plethora of other Draft Guidance related to in vitro diagnostics, 2 of which could have immediate impact on clinical laboratories and LDTs: Draft Guidance for Industry and FDA Staff – Commercially Distributed In Vitro Diagnostic Products Labeled for Research Use Only or Investigational Use Only: Frequently Asked Questions, June 1, 2011 (Draft RUO/IUO Guidance); and Draft Guidance for Industry and Food and Drug Administration Staff – In Vitro Companion Diagnostic Devices, July 14, 2011 (Draft Companion Diagnostic Guidance).22,23

Clinical Laboratory Use of Products Labeled Research or Investigation Use Only

The Draft RUO/IUO Guidance suggests that if a manufacturer of products labeled RUO or IUO sells or distributes those products to a clinical laboratory, and the manufacturer or distributor knows or should have known that a CLIA laboratory is using the products in clinical tests beyond research or investigational purposes, the manufacturer should “cease sales” to such CLIA laboratory.23 This proposed requirement has been widely viewed as a departure from historic FDA enforcement policy, which requires a manufacturer to advertise or promote the product as validated for clinical use, not merely sell to a clinical laboratory. Moreover, the suggestion that the burden is on manufacturers to understand the ultimate use of products sold to third parties and to cease sales if such “known” use is inconsistent with the manufacturer’s label, absent unlawful promotion or advertising of the product, has caused widespread concern among laboratories and other stakeholders.23 Many reagents and components are available to clinical laboratories only as RUO products, but the FDA has announced its intent to step up enforcement against manufacturers that sell products to clinical laboratories with an RUO label rather than seeking separate clearance or approval for such RUO diagnostic “kits” under the FDA’s medical device regulations.22

Contrary to widely accepted laboratory practice under CLIA, the FDA has asserted in this Draft Guidance that validation of the performance specifications of such products as part of a test legally offered to patients by the laboratory under CLIA regulations (or state licensure laws for those states exempt from CLIA, like New York) does not extinguish the responsibility of the manufacturer to properly label its products based on the use of the product by the laboratory. However, the agency specifically exempted CLIA laboratories from enforcement action by FDA for using RUO- or IUO-
labeled products in clinical tests. This was an important public health decision given the necessity of many of these products in widely used clinical tests. Moreover, the FDA made it clear in the guidance that it was not intended to be a mechanism to modify or limit the policy of “enforcement discretion” for LDTs generally.22 Nevertheless, the widespread and accepted use of products labeled RUO or IUO by clinical laboratories as components of tests developed and validated in those CLIA laboratories, uncertainty about the trigger for the manufacturer “awareness” of purchaser use of its products, and the related requirement to “cease sales” to laboratories when such “knowledge” is achieved, has created regulatory uncertainty and confusion. The potential disruption of physician orders for thousands of clinical laboratory tests and the resulting detrimental impact on public health, as described in public comments on this Draft Guidance, has prompted criticism and a congressional inquiry into this FDA policy in particular, and use of Draft Guidance, more generally to establish or modify its enforcement policy.24,25 Consistent with previous public comments from agency officials, FDA responded to the congressional inquiry by citing its established regulations on labeling requirements for medical devices and suggesting that products labeled RUO/IUO are generally not manufactured under Good Manufacturing Practice guidelines and may lack important design controls.26 These are important public health concerns and of particular importance to the FDA in the context of driving treatment or clinical trial selection decisions in serious or life-threatening diseases like cancer, but it fails to recognize the important role of CLIA to ensure clinical tests are properly validated for use in patient treatment and management (Figure 1).



“Companion Diagnostics” as Essential Drivers of Precision Oncology

Genomic-based assays have become critical tools and are more frequently becoming accepted standard of care in clinical guidelines for oncology.28-30 For tests that FDA has deemed “essential” for the safe and effective use of a novel therapeutic product, its new Draft Companion Diagnostics Guidance will require the companion test to be approved by FDA before the drug product can be approved and labeled, whether developed by a clinical laboratory and offered as an LDT or manufactured and distributed as a “kit” to clinical laboratories.23 Following the publication of this Draft Guidance, FDA quickly approved 2 such companion diagnostics and novel drugs, illustrating how the FDA considers these types of dual product approvals (Figure 2).


Like the Draft Guidance for products labeled RUO or IUO, the FDA has continued to maintain the policy of “enforcement discretion” under the Companion Diagnostics Draft Guidance for LDTs pending the publication of the long-anticipated LDT Draft Guidance. While a companion diagnostic cleared or approved by FDA may be developed as an LDT by a clinical laboratory or by a manufacturer as a test “kit,” FDA at this time is only requiring a single test be approved with the therapeutic.23 This means that all other LDTs offered for the same purpose by CLIA-accredited laboratories before, or even after, the FDA approves a companion diagnostic for the same purpose may remain on the market and will not be required to seek additional FDA approval as long as the test meets the FDA’s definition of LDT.23 Additionally, in the practice of medicine, physicians are not bound by federal regulatory authorities to choose a particular test or therapy for any given patient. FDA has complicated the marketplace for companion diagnostics further by using only a test description in the drug product labeling rather than the proprietary name of the FDA-approved test (eg, the drug label requires testing using an “FDA-approved” BRAF V600E test).23,33 Given the substantial investment necessary to meet the FDA standards for a Class III Premarket Application for a medical device coupled with the lack of requirements for CLIA laboratories performing LDT companion diagnostic testing to seek additional FDA approval, it is unlikely FDA will be flooded with applications for approval of LDTs offered in clinical oncology that are offered as a “companion” to an approved drug.

FDA has announced it hopes to publish “final” Companion Diagnostics Guidance this year,20 but unless the agency establishes a new framework for LDTs that is not overly burdensome, duplicative of, or contradictory to CLIA, and physicians find greater medical value in tests approved by FDA than those offered by trusted laboratories accredited by CLIA or accredited state programs, it will be difficult to discern meaningful impact from the FDA review of companion diagnostics on the practice of medicine.

Implications of New Technologies on Companion Diagnostics in Oncology

The rapid advances of NGS and other medical information processing technologies have created incredible excitement in the field of oncology, in particular. At the same time, FDA remains deeply concerned about the lack of tools to evaluate the accuracy, reliability, and clinical validity of test results based on these rapidly advancing technologies. A senior FDA official described the view of the agency as deep concern about “…the rapid ability to transfer from research to clinical use.”27 FDA has held a public meeting on novel sequencing issues and, in addition to companion diagnostics, also published Draft Guidance on Mobile Apps in 2011.34,35 The FDA already regulates certain standalone software as a “medical device,” and the agency is working  to update its policy with respect to regulatory requirements for clinical decision support tools that process information intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease.

With respect to use of these technological advances in clinical laboratories, while manufacturers and clinical laboratories continue to await new regulatory requirements and standards from the FDA, third-party accreditation entities and professional societies continue to press forward to advance personalized medicine. For example, CAP published guidelines in 2009 for validating molecular tests in clinical laboratories, and the American College of Medical Genetics and Genomics published a policy statement, “Points to Consider in the Clinical Application of Genomic Sequencing,” in early 2012. These recommendations, in the absence of more definitive statements by the FDA on LDTs, in particular tests using NGS and other advanced information technology platforms, will continue to drive best practices and standards for both analytical and clinical validity that will usher in the new era of precision media in

Achieving the Next Generation – the Outlook for Personalized Medicine in Oncology

The FDA’s move toward greater oversight of the clinical validity of genomic-based tests has, thus far, not resulted in a path to personalized medicine paved with greater clarity, certainty, and confidence. Regardless, physicians and patients alike continue to seek increasingly individualized genomic-based treatment options. Given the accelerated pace of new discoveries in sequencing and information technologies as well as clinical applications, the promise of continued advancement in genomic pathology that will drive greater precision in medical and clinical oncology likely will continue to be measured by new regulatory hurdles. The challenge for federal policy makers at both CMS and FDA, Congress and, to some extent, the federal courts, will be to balance new regulatory paradigms to support continued investment in innovative technologies and diagnostic test capabilities without creating overly burdensome barriers or duplicative and overlapping requirements that in practice fail to support public health.

Disclosure Statement

S. Walcoff is a consultant to various stakeholders in genomics and personalized medicine, including clinical laboratories, biotechnology and pharmaceutical companies, investors, coalitions, and diagnostic device manufacturers. She has received no financial compensation or other content contribution for this work, and the paper has not been shared with her clients prior to publication.


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