Laboratory Developed Tests (LDT)The Gap Between Regulation or Innovation Could CAP be the Answer?

In most cases, the genesis of currently available laboratory methods began as Laboratory Developed Tests (LDTs). The typical trajectory of an assay's journey into use in a clinical laboratory involves three key phases: observation, experimentation, and validation. Traditionally, once an assay is validated, it can either exist as a broadly available generic LDT procedure or be patented and commercialized as an In Vitro Diagnostic (IVD) kit.

Regulating commercial IVD assay kits is a relatively straightforward process, typically overseen by organizations like the FDA in the United States or the PMDA in Japan. In contrast, the regulation of LDTs falls under the purview of government-approved third-party accreditation organizations. The most significant and rigorous of these organizations is The College of American Pathologists (CAP). ISO 15189 is a more recent entrant as a third-party accreditation laboratory standard.

In comparison to government agencies, these third-party laboratory accreditation organizations differ in one crucial aspect: they do not independently validate the clinical efficacy of specific procedures. Instead, they assess whether the proper validation and verification processes were followed before reporting results for clinical use. Essentially, the responsibility for interpreting the data and drawing conclusions lies with the laboratory.

It's estimated that approximately half of the tests reported in some laboratories are LDTs. This includes routine procedures such as microscopic analysis, tissue staining, manual blood differential analysis, and most traditional microbiology procedures. Traditional LDTs also encompass methods like HPLC, electrophoresis, and even age-old titration / spectrophotometry.

Government regulation is often seen as expensive and cumbersome, causing significant delays in the introduction of new methods. In some cases, the economics simply don't justify the effort and business risk, leading potentially promising procedures to remain undeveloped. Conversely, lax laboratory practices can lead to negative consequences, ranging from economic inefficiencies to increased patient morbidity and mortality.

The primary regulatory loophole for LDTs lies in the fact that if a procedure is developed in-house and not duplicated outside the originating laboratory, it is designated as an LDT. There are no limitations on accepting samples from outside the laboratory network. Even the requirement for third-party regulation is often tied to government financial reimbursement. Ultimately, for some marketed LDT procedures, the age-old adage "buyer beware" applies. This can be particularly concerning for Direct-to-Consumer (DTC) testing as consumers lack the technical wherewithal to make an independent evaluation.

This is where things become interesting.

With the advent of emerging technologies like Next-Generation Sequencing (NGS), Polymerase Chain Reaction (PCR), and CRISPR, molecular procedures aim to address significant issues such as categorizing neoplasm-related mutations or identifying genetic disorders in patients (or embryos). These technologies also have applications in determining parentage, ethnic history, and providing dietary recommendations. The potential clinical and peri-clinical applications appear nearly boundless.

Many of these newly available testing procedures are LDTs. From the laboratory's perspective, this approach makes sense. It not only reduces the required investment but also accelerates time-to-market. Furthermore, LDTs offer technical flexibility. Imagine the administrative burden of submitting a regulatory application for each new cancer mutation or algorithm tweak for emerging clinical observations. Additionally, given the challenges in protecting intellectual property (IP) related to genetic discoveries, LDTs allow laboratories to maintain proprietary positions.

It is noteworthy that regulation has some business related advantages, including increased likelihood of third-party reimbursement and inclusion in required clinical protocols. However, it also brings the risk of technical stagnation, reduced clinical utility, and economic uncertainty.

Considering the overall situation, it is not surprising that the inventors and developers of these procedures generally oppose government regulation. They are unlikely to be enthusiastic about revealing their methods or entering the market of traditional test kits. As a result, some companies may choose to establish laboratories in unregulated jurisdictions, evading the need for direct government oversight. The ease and cost-effectiveness of shipping specimens worldwide have made this option feasible, with only minimal additional turnaround times. If government regulation is eventually introduced, this offshoring movement may become a viable business strategy, particularly for highly sought-after and proprietary testing.

The frustration of the FDA regarding this situation is evident. Attempts to push LDT regulation through the U.S. Congress have failed due to concerns about potential impacts on innovation. Consequently, the FDA has proposed unilateral regulation of LDTs without specifying the exact approach. Regulating thousands of procedures in tens of thousands of laboratories presents a daunting task, but history suggests that government bureaucracies tend to expand in such scenarios. Nonetheless, many insiders express doubt about the FDA's ability to implement LDT regulatory processes within a meaningful timeframe, given the substantial budgetary and infrastructure requirements.

While I generally advocate for a free market, I must acknowledge the FDA's valid point regarding molecular LDT testing. Third-party accreditors currently lack the biostatistical capacity to validate the extensive data used in the clinical validation process. Although the College of American Pathologists (CAP) has been addressing this issue by developing molecular proficiency testing programs, there is inherent lag time between the availability of the latest testing methods and the development of corresponding proficiency testing. Furthermore, the International Organization for Standardization (ISO) is currently an inadequate participant in third-party accreditation programs for molecular diagnostics, lacking the essential technological capability and proficiency testing programs.

At first glance, the stakeholders involved in molecular testing face a choice between accepting direct government regulation, which might stifle investment and innovation, or embracing the limitations associated with third-party accreditation. However, an alternative solution may exist. CAP could expand the scope of its accreditation programs to include biostatistical analysis of clinical validation data. This expansion would involve evaluating the adequate number of samples for statistical significance, assessing clinical case acceptance criteria, and validating the appropriateness of the algorithms used in the validation and verification processes. Such evaluations can be effectively carried out by CAP's extensive member network, leveraging their core competency. The inspection cycles already in place can accommodate the evaluation and re-evaluation of new targets, ensuring continuous oversight without impeding the pace of innovation.

In addition to CAP's impressive existing capacity, the potential of Artificial Intelligence (AI) to aid in the analysis and validation of large datasets positions CAP as a promising and practical option. Integrating AI into the process can bridge the gap between the FDA's safety concerns and the vast potential of these valuable and potentially life-altering technologies. By harnessing AI's analytical prowess and validation capabilities, CAP can effectively address the FDA's concerns while facilitating the advancement of molecular testing in a safe and innovative manner.