FDA Suspends LDT Regulation, But Liability Still in Play

After two years and seemingly endless sturm und drang, the FDA’s device center has announced it will suspend its proposed framework for regulation of lab-developed tests. The agency made it clear this is not the end of its interest in the matter, but Congress has an eye on this issue as well, which makes the outcome of all this activity difficult to forecast. If there is anything resembling certainty in all this, it may be that lab-developed tests will soon be subject to more liability under state tort law.

PMA Preemption Likely to Hold

The FDA said in its Nov. 18 announcement that the agency is aware of the importance of working with “stakeholders, our new administration, and Congress” to forge the appropriate approach to regulation of lab-developed tests (LDTs). However, the statement includes the remark that the FDA will publish an outline of what the agency sees as an appropriate risk-based paradigm for LDT regulation “in the near future,” which could be used to “help guide continued discussions” on the subject. Clearly, the FDA intends to stay in the game as this controversy evolves in 2017, although it is interesting to ask whether the agency would have pulled back on the draft had the presidential election yielded a different result.

The House Energy and Commerce Committee had floated a discussion draft of a new framework for regulation of LDTs in 2015, which calls for the establishment of a new center at FDA that would regulate these tests, and which would report to the FDA commissioner “in the same manner as the other agency centers.” This passage would seem to put LDTs on the same regulatory footing as therapeutic devices, which in turn would suggest a similar legal status where preemption of tort law for PMA devices is concerned. The draft also cited preemption with the statement that the states would not be allowed to sustain any existing or establish any new requirements for LDTs that would be “different from, or in addition to” the mandates set out in the discussion draft, a seemingly familiar passage that presumably would not pertain to tests cleared under the 510(k) program.

Regardless of how the preemption question evolves, there are a number of parties who have expressed concern about the potential for an LDT-specific regulatory regime to increase legal exposure. The American Society for Human Genetics said in a Feb. 2, 2015, letter to the FDA that the agency’s proposed LDT regulation framework would subject tests for genomic purposes “to the states’ strict product liability tort regimes.” The American Clinical Laboratory Association raised a similar set of concerns in a June 2013 citizen’s petition to the FDA requesting the agency scupper the LDT regulation effort.

Lawsuits Already a Risk

There have already been several liability cases for LDTs, including the wrongful birth case in the state of Washington that cost LabCorp – and the hospital where the test was conducted – a total of $50 million. LabCorp was on the receiving end of another lawsuit, Khadim v. LabCorp, a case the company managed by having itself identified in legal terms as a provider, which in Virginia limits the damages available to plaintiffs. It does not seem a stretch to imagine that provider status under state law would suffer in a formal federal regulatory environment.

There are other ways the FDA can boost its enforcement activities in this area, such as the issuance of a safety alert, a move that would lead to increased media scrutiny and possibly media coverage-driven lawsuits. There is one inescapable fact to consider, however: Modern medicine’s reliance on LDTs will continue to increase and grow increasingly visible, particularly as gene sequencing technologies become less expensive and more commonly used to determine a course of treatment that may or may not achieve the desired result.

Obviously there are several moving parts to this predicament, but the net effect is unavoidably that the stakes for makers of these tests will grow, regardless of how Congress, the FDA and the White House answer the LDT regulation question.

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