Labs developing their own tests for a variety of conditions make up a significant part of testing in the U.S. and other countries. While there is a $70 billion market for in vitro diagnostic (IVD) products, commercial IVD tests are not always sufficient for demand. Lab-developed tests were controversial before the COVID-19 pandemic, and there were attempts at regulating them more in the U.S. where an enforcement loophole has kept labs relatively unregulated, as the U.S. Food and Drug Administration (FDA) does not regulate laboratories.

The majority of lab-developed tests are based on molecular diagnostic technologies such as nucleic acid amplification, array-based hybridization, next-generation sequencing, and liquid biopsies. The FDA regulates tests sold as kits by diagnostic companies to clinical laboratories but has exercised "enforcement discretion" regarding lab-developed tests.

Prior to the pandemic

Although the FDA has issued statements about the topic, it has not been regulating tests that are developed and performed by a single laboratory. The U.S. Centers for Medicare and Medicaid Services (CMS) regulates clinical laboratories, ensuring that all laboratories (including labs performing genetic testing) comply with the Clinical Laboratory Improvement Amendments (CLIA) of 1988 regulations.

The CLIA regulations cover the certification of testing quality, including both procedures and education of technicians performing tests, and also proficiency testing for some tests. The FDA's regulatory authority is broader and includes regulating safety and effectiveness of genetic tests as medical devices.

In November 2016 the FDA indicated that it would delay finalizing the draft guidance on lab-developed tests. On January 13, 2017, the FDA issued a "Discussion Paper on Laboratory Developed Tests." This discussion paper synthesizes feedback that the FDA received on the 2014 draft guidance and proposes a prospective oversight framework.

Some of the proposals in the discussion paper include "grandfathering" lab-developed tests (except when required to protect public health), exempting certain categories of new or significantly modified lab-developed tests, reducing the timeframe for phasing in regulation of lab-developed tests with risk-based and phased-in oversight, and introducing evidence standards, third-party review, clinical collaboratives, transparency, quality system requirements, and post-market surveillance.

Since then there have been no updates from the FDA on progress toward regulating this segment of the industry.

Unexpected demand due to the pandemic

The situation seemed to be leading toward the direction of more enforcement of lab-developed tests. But this was before the onset of the threat presented by COVID-19, and a lack of commercially marketed tests for it until some delay. That has reset the debate to some extent.

An attempt to bridge the standoff in 2020 proved ill-timed. In March 2020, lawmakers introduced a bill that would increase strictness of the oversight system for diagnostics in the U.S. and give the FDA explicit authority to regulate tests developed by labs. Legislators and the media were confused by what seemed to be a reversal of the need for more testing. The bipartisan Verifying Accurate, Leading-edge IVCT Development (VALID) Act was designed to streamline regulations and speed access to tests in public health emergencies like the present COVID-19 pandemic.

Lab-developed tests are likely to make up a fair number of the total tests run for COVID-19. In all, 21% of labs said that lab-developed tests were their primary testing method in a recent survey conducted by the Association for Molecular Pathology (AMP). This occurred after many major companies -- Abbott, Roche, bioMerieux, and Cepheid -- launched tests for the disease.

Labs had wanted to use testing as soon as the virus emerged in the U.S. but needed to be sure of the regulatory situation first, causing a delay. Lab-developed tests were critical for the crisis in late March. For instance, when media reports in January stated that the SARS-CoV-2 virus had reached the U.S., lab professionals said they were hesitant to launch lab-developed tests. They were unsure if the agency would practice "enforcement discretion." Initially, Congress disfavored lab-developed tests, excluding them from funding in early coronavirus bills and adding it in after protest from AMP and other organizations.

AMP is a supporter of lab-developed tests and a bill introduced by Sen. Rand Paul called the Verified Innovative Testing in American Laboratories (VITAL) Act of 2020. The VITAL Act's main provisions work to clarify that the regulation of lab-developed tests within the CLIA program under CMS and not the FDA, including during a public health emergency, and defines lab-developed tests as a professional medical service, a position that AMP has supported for many years. While the legislation was not acted on, the American Clinical Laboratory Association, AdvaMedDx, and the Biotechnology Innovation Organization urged Congress in a letter to finalize changes to proposed legislation overhauling diagnostics regulation by the end of the year.

The American Association for Clinical Chemistry (AACC) urged Congress to exempt the many national and regional clinical laboratories that are separate from the public health system, but that also have the expertise and capacity to develop and perform coronavirus tests. As early as 2014, the AACC warned that "too much additional FDA oversight could prevent labs from helping underserved patient populations."

Bruce Carlson is the publisher of Kalorama Information, part of Science and Medicine Group.

Disclosure: Kalorama Information is a sister company of The Science Advisory Board.