Court Ruling Allows Clinical Labs to Continue Developing Tests for Patients

Much-awaited news broke yesterday, and I’ll be honest: this story alone was one of the reasons I wanted to start Salisbury’s Take. For industry insiders, the U.S. District Court’s decision to overturn a recent FDA rule about laboratory-developed tests is a big deal. But for everyone in our lives who doesn’t pay attention to the ins and outs of clinical laboratory news, this court ruling still has a real impact. It’s time for a layman-friendly explanation of what just happened.

For all those Salisbury’s Take readers who haven’t been on tenterhooks awaiting this decision, here’s what happened — and why it matters for your own healthcare.

If your doctor says you need to get a lab test, it’s a clinical laboratory that will run it. While there are many thousands of clinical tests, they fall broadly into two categories: commercially available tests manufactured by companies and approved for clinical use by the FDA; and tests that clinical laboratories develop and validate themselves. The vast majority of tests in a clinical lab fall into the first category, and this court ruling has nothing to do with them.

Historically, tests developed within clinical labs do not get reviewed by the FDA, because lab operations are governed by a different regulation managed by the same agency that oversees Medicare and Medicaid (the regulation is known as CLIA, but I promise there won’t be a test later). Laboratory professionals who develop these tests have to jump through a number of hoops to prove their quality and safety to the government.

This regulatory framework was challenged last year, when the FDA stepped in and announced that it would have oversight for lab-developed tests. It established a new rule under which clinical labs would have to put their own tests through standard FDA review proceedings.

If you’re wondering why that matters — I mean, commercial test developers do it already, right? — there are two short answers: money and time. It costs a small fortune to get a test through FDA review, and most clinical labs don’t have budgets that would allow this. FDA review is also notoriously slow and cumbersome, which directly contradicts one of the most important reasons to have lab-developed tests at all.

Labs don’t build their own tests for fun. Given a choice between running their own test and implementing a commercially available test, most lab teams would gladly pick the commercial option. But there are many scenarios for which a commercial test doesn’t make sense, and anyone reading this just lived through one: the Covid pandemic.

Clinical lab teams, including many academic medical centers, reference laboratories, and community health systems across the country, have to develop their own tests when there is a clear patient need for a diagnostic but there is no commercially available test (or at least none of sufficient quality). When there’s an emerging infectious disease, such as Covid, it can take months before a company can rush a new test through FDA review and get it on the shelves. Laboratories can move much faster, developing their own tests based on publicly available scientific data. And it’s not just novel pathogens; laboratories might develop their own tests for a wide range of diseases when new scientific or clinical discoveries warrant them. In the rare disease realm, there might not be enough potential revenue to entice a company to design and manufacture a test — but clinical labs can build their own to diagnose affected patients.

All of this — the rapid response tests, the rare disease tests, and more — was at stake when the FDA threw down the gauntlet with its new rule for laboratory-developed tests last year. So why did the agency even bother? It was a response to a few very unfortunate situations in which clinical laboratories did not validate their tests properly, and patient care suffered as a result. Some patient advocacy groups had been pushing Congress and the FDA to bolster oversight of test quality.

But the new rule laid out by the FDA would have been so onerous to clinical labs that countless patients might have lost the benefit of laboratory-developed tests. That’s why an association representing these labs sued (looking for trivia points? The group is the Association for Molecular Pathology, the same outfit that got gene patents struck down by the Supreme Court more than a decade ago). They claimed that the FDA had strayed past the bounds of its authority, and in yesterday’s decision from the U.S. District Court for the Eastern District of Texas, Judge Sean Jordan agreed.

This story is far from over. The government could appeal the ruling. Congress could step in with its own legislation to clarify which agency should oversee these tests, and how. And the clinical lab community itself will no doubt continue to work with government regulators to ensure that past failures in lab-developed tests don’t get repeated in the future. (I have been lucky enough to work with a lot of clinical lab professionals in my career, and I can’t begin to imagine a group more obsessed with quality than these folks.)

For now, though, I see this ruling as a win for patients. Our access to non-commercial tests for a wide variety of healthcare needs has been protected.

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