TRICARE Announces Demonstration Program that Would Expand LDTs Eligible for Coverage During 3-Year Period and Possibly Beyond; Coalition Urges FDA to Create Single Framework for both Diagnostic Kits and LDTs

June 27, 2014

By Jamie K. Wolszon

In the past two months we have seen two newsworthy items in the Laboratory-Developed Test (“LDT”) world.  In June, the Defense Health Agency (“DHA”) announced that TRICARE, the U.S. health care program serving Uniformed Service members, retirees and their families, has launched a three-year demonstration program that would expand the LDTs potentially eligible for coverage.  Meanwhile, in May, the Combination Product Coalition (“CPC”) sent a letter to FDA Commissioner Margaret A. Hamburg that argues that FDA should regulate diagnostic kits and LDTs the same way, and that the current dual system is arbitrary and capricious.  Although the letter is framed in terms of equal treatment, since FDA is unlikely to deregulate in vitro diagnostic tests, it appears that the letter is intended to increase FDA regulation of LDTs. 

LDTs are diagnostic tests developed and performed by a laboratory.  They are widely used; among other tests, this category includes genetic tests, tests for rare conditions, and companion diagnostics.  Thousands of different LDTs are currently available, many of which are the standard of care.  Starting in 1992, FDA stated that LDTs were medical devices but that it generally was exercising enforcement discretion.  FDA announced in June 2010 that it was revisiting this years-long policy of exercising enforcement discretion over LDTs and was holding a public workshop to discuss the issue in July 2010.  FDA officials subsequently indicated that it was developing a plan to more actively regulate LDTs under a risk-based framework, to be issued for comment as guidance.  The recently enacted Food and Drug Administration Safety and Innovation Act (“FDASIA”), requires FDA to notify Congress at least 60 days prior to issuing a draft or final guidance on the regulation of LDTs.  The notice must include anticipated details of the action (see here). 

In June 2013, Hamburg renewed FDA’s call for more active FDA regulation of LDTs and touting the Agency’s risk-based framework for regulating LDTs that is “under development.”  Only two days after Dr. Hamburg’s comments, the American Clinical Laboratory Association (“ACLA”) submitted a Citizen Petition expressly requesting that FDA refrain from issuing draft or final guidance, or a proposed or final rule, regarding the Agency’s regulation of LDTs, and also asks FDA to respond to its Citizen Petition by explicitly confirming that LDTs are not devices under the Federal Food, Drug, and Cosmetic Act (“FDCA”). 

TRICARE Demonstration Project.  The TRICARE Management Authority (“TMA”), which prior to the creation of the DHA administered TRICARE, instituted a policy decision that generally required LDTs to receive FDA premarket (“PMA”) approval or 510(k) clearance before TMA would pay for LDTs.  As discussed above, FDA generally exercises enforcement discretion for LDTs, so it is rare for an LDT to be FDA approved or cleared.  As a result, TRICARE beneficiaries could not obtain coverage for almost all LDTs. 

On December 27, 2011, TMA announced a demonstration project that would allow individual laboratories to seek coverage for their LDTs for three years and, if the demonstration project was successful, possibly beyond.  However, the original demonstration project was limited to tests that had both a Centers for Medicare & Medicaid Services (“CMS”) national or local coverage determination and significantly informed clinical decision making for surveillance, surgical interventions, chemotherapy, or radiation therapy for cancer.  That demonstration program is ongoing; however, the new demonstration program expands the original demonstration program to include an LDT that DHA determines demonstrate “reliable evidence” as defined in the TRICARE regulations.  The new demonstration project also includes LDTs for rare disorders for which the test does not necessarily demonstrate “reliable evidence” as defined in the regulations.  TRICARE defines a rare disease as any disease or condition that has a prevalence of less than 200,000 persons in the United States.

In addition to LDTs for rare disorders and tests that demonstrate “reliable evidence,” the demonstration project will include LDTs for prenatal and preconception cystic fibrosis carrier screening, when provided in accordance with American Congress of Obstetricians and Gynecologists ("ACOG") guidelines. 

CPC Letter to Hamburg Advocating for Equal Treatment of LDTs and Diagnostic Kits.  The CPC sent the May 15, 2014 letter in response to ACLA’s Citizen Petition.  The CPC describes itself as an association of “drug, biologic, and device/diagnostics manufacturers dedicated to working with FDA to improve regulation of combination products.”  The letter does not provide a list of the companies that are members of the coalition. 

CPC asks FDA to create a single regulatory framework for diagnostic kits and LDTs, and argues that the current two-tier system is not legally or clinically viable.  CPC argues in its letter that the dual system does a disservice to patients and manufacturers: “If a more restrictive FDA-type system is needed to assure the safety and effectiveness of in vitro diagnostics, FDA’s failure to regulate LDTs is putting patients at risk.  Conversely, if CLIA regulation alone is sufficient, FDA is making IVD manufacturers waste billions of dollars each year complying with unnecessary requirements; dollars better spent developing new tests under a CLIA system without FDA oversight.”  The issue of LDT regulation is a long-standing one, and this letter probably will not spur the immediate issuance or release of a draft policy, but it helps to ensure that the controversy will continue.