by Gail Javitt, Sidley Austin LLP*
The penchant of the Food and Drug Administration (FDA) to use “guidance” documents as a means to effectuate substantive regulatory change may have reached its zenith on July 31, 2014, when FDA’s Center for Devices and Radiological Health announced its intent to issue two new draft guidances. Those draft guidances would fundamentally alter the oversight of clinical laboratory testing in the United States, by regulating clinical laboratories as medical device manufacturers and the laboratory developed tests (LDTs) they perform as medical devices.
As mandated by Congress under the 2012 Food and Drug Administration Safety and Innovation Act (FDASIA), FDA notified the House and Senate committees of jurisdiction that the agency intended to issue draft guidance, and also unveiled advance copies of the guidance documents. These documents announce the agency’s “risk-based” framework for LDTs, which comprise essentially all laboratory testing that is not performed using an in vitro diagnostic test kit in accordance with a manufacturer’s instructions for use.
Under the proposed framework, all clinical laboratories that perform laboratory developed tests will, at a minimum, be required to register with FDA, list the LDTs they perform, and report “adverse events” to FDA. LDTs that FDA classifies as “high” or “moderate” risk will also need to obtain FDA premarket review and authorization. They will additionally be subject to quality system regulatory requirements for medical devices, although the agency has not yet explained how it plans to adapt these to the clinical laboratory context.
Much has been said over the past several years regarding the rationale for, merits of, and potential implications of FDA regulation of clinical laboratories. Much more will no doubt be written as the diverse range of stakeholders affected by these guidances—including not only clinical laboratories but also manufacturers of in vitro diagnostic medical devices, biopharmaceutical companies, payors, physicians, and patients—digest and evaluate the implications of this new framework.
Whatever one’s view of the substantive merits of FDA’s proposed framework, there is an important procedural point that must not be overlooked, namely, that FDA may not lawfully initiate regulation of LDTs through the use of guidance documents.
I first made this point more than three years ago, when FDA’s issuance of a regulatory framework appeared imminent (one of many false alarms, as it turns out). In a nutshell, according to longstanding principles of agency law and administrative procedure, FDA may not lawfully issue guidance that contravenes agency regulation. In the case of clinical laboratories specifically, FDA may not lawfully, through guidance, require clinical laboratories to register as medical device establishments, since FDA by regulation exempted clinical laboratories from registration and listing almost 40 years ago.
Congress first gave FDA explicit authority over medical devices under the Medical Device Amendments of 1976. A year later, FDA began issuing regulations to implement the new statute, including those requiring medical device establishments to register with the agency and list the products they manufacture. FDA explicitly exempted clinical laboratories—along with other health care entities that used medical devices to provide a clinical service to the public—from registration, stating that “the Commissioner believes that full service laboratories and similar establishments are exempted from registration.” (42 Fed. Reg. 45,520, 45,522 (Sept. 3, 1976). This exemption remains on the books.
The proposed LDT framework attempts an end-run around the regulatory exemption by stating that laboratories need not “register” with FDA but rather may choose to simply submit a “notification” informing FDA that they are “manufacturing” LDTs and providing “basic information” to FDA regarding each LDT—information that must be updated every time the laboratory makes a “significant change” to the LDT. Such notification does not, according to the draft guidance, “constitute compliance with registration and listing requirements, nor will the laboratory be considered to be registered or to have listed its devices with the FDA” as a result of notification. Notifying laboratories, however, will be subject to “enforcement discretion,” meaning that FDA will not undertake enforcement action for failing to register and list if a laboratory has submitted a notification. In contrast, laboratories that fail to submit a notification to FDA will be subject to FDA enforcement for failure to register and list to the same extent as other device manufacturers, for whom such omission would constitute a statutory violation.
So, in short, to avoid the consequences of the agency’s prior decision to exempt clinical laboratories from registration and listing, FDA simply renames the activity, using the agency’s newly-coined term “notification.” The agency then presents clinical laboratories with a Hobson’s choice—“notify” the agency or face enforcement for failure to register and list. Furthermore, laboratories that do “voluntarily” notify FDA will, down the road, still be required to register and list at the time they submit an application for premarket review, and to pay device establishment user fees at that time.
The requirement to register with the agency is no mere formality; rather, registration is also the legal “trigger” for submission of a 510(k) premarket notification. Section 510(k) of the Federal Food, Drug, and Cosmetic Act (FDCA) provides that “[e]ach person who is required to register under this section and who proposes to begin the introduction or delivery for introduction into interstate commerce for commercial distribution of a device for human use” must submit a premarket notification submission to FDA at least 90 days before making that introduction or delivery for introduction. (21 U.S.C. § 360k). Similarly, FDA regulations provide that “each person who is required to register his establishment” must submit a 510(k) premarket notification submission. (21 C.F.R. § 807.87(a)). The statute and regulations therefore necessarily imply that those persons not required to register also are not subject to premarket notification requirements.
FDA’s attempted rulemaking circumvention only serves to underscore the importance of notice and comment rulemaking. FDA has exempted clinical laboratories from regulation for 37 years. Regardless of the asserted public health rationale, implementing a new regulatory scheme can be expected to cause significant disruption, at least in the short term, and not-insignificant new costs. Furthermore, the agency’s legal authority to regulate LDTs, which are used to provide a medical service and are not distributed in interstate commerce as freestanding products, remains a subject of debate.
Rulemaking would require FDA to articulate more clearly the basis for and purpose of its regulatory approach. The process of developing regulations would also require agency officials to evaluate and communicate publicly about the economic impact of the proposed framework. In rulemaking, FDA would also have to provide clinical laboratories and other stakeholders a meaningful opportunity to comment, and FDA would be required to respond to all stakeholder comments. In the absence of rulemaking, neither stakeholders nor the general public have any assurance that the agency will consider their concerns or will weigh the asserted benefits of regulating clinical laboratories against the costs and potential adverse impact on innovation and access.
Although FDA’s motivation to avoid rulemaking may stem from the perception that the rulemaking process is unduly cumbersome and would impede the implementation of measures to protect the public health, the rulemaking process need not take longer than the issuance of guidance. Furthermore, notwithstanding an asserted public health rationale, violation of required procedure creates grounds for legal challenge, which would delay the implementation process. Moreover, absent proper procedure, a court would be unlikely to give deference to the agency’s asserted public health objective, further weakening the framework’s chances of success. Thus, regardless of whether one favors or opposes FDA regulation of LDTs, the agency’s disregard for longstanding principles of agency law and administrative procedure should be a matter of serious concern.
*Ms. Javitt is Counsel in Sidley Austin LLP’s Washington, D.C. office. The views expressed in this article are exclusively those of the author and do not necessarily reflect those of Sidley Austin LLP and its partners.