Originally Published IVD Technology April 2005
Anniversary Essays
1. Looking back
The trends, events, and developments that shaped the IVD industry during the past 10 years.
Donald M. Powers
 |
| Donald M. Powers, PhD, is president and principal consultant of Powers Consulting Services (Pittsford, NY). He can be reached at powers@ frontiernet.net. |
By 1995, the major trends that would shape the IVD industry during the next decade had already begun to materialize. Reimbursement policies were driving belt-tightening measures in all areas of healthcare around the globe. Clinical laboratories were passing on cost pressures to their suppliers. Bayer’s acquisition of Technicon in 1989 foreshadowed the ensuing industry consolidation that is still under way. Researchers were dreaming about IVD tests tailored to individuals. And even though IVD manufacturers and clinical labs recognized the potential of nucleic acid amplification technologies, few understood what molecular diagnostics would ultimately deliver.
On the regulatory front, FDA was accused of being too conservative for holding back beneficial technologies. Clinical laboratories in the United States were coming to grips with the complexities of the Clinical Laboratory Improvement Amendments of 1998 (CLIA). The quality system regulation (QSR) was imminent, and with a high percentage of recalls attributed to design flaws, manufacturers were losing the debate over extending regulatory controls to new product design and development. New European regulations were on the horizon due to economic forces driving the creation of a single market. And with country-specific regulatory hurdles varying from highly prescriptive to none, global harmonization initiatives began emerging.
Economic Forces and Trends
The consolidation that occurred among IVD manufacturers and laboratories was the inevitable result of healthcare reforms and new reimbursement policies. Once Medicare and private insurance companies began to view IVD tests as commodities, labs had to reduce their costs to compete. Group purchasing organizations like MedAssets Inc. (Atlanta), Novation (Irving, TX), and Premier Inc. (Charlotte, NC) helped hospitals put pressure on their suppliers to lower prices. In addition, as hospitals organized into networks to gain efficiency, many of their laboratories became redundant. The acquisition of independent clinical labs led to the establishment of commercial chains such as LabCorp (Burlington, NC) and Quest Diagnostics (Teterboro, NJ).
Commodity pricing and overcapacity started a wave of industry consolidation as IVD manufacturers scrambled to become the lowest-cost provider. While familiar names in the IVD industry such as Boehringer-Mannheim, Kodak, and DuPont vanished overnight, Abbott Laboratories (Abbott Park, IL), Bayer HealthCare (Tarrytown, NJ), Beckman Coulter Inc. (Fullerton, CA), Dade Behring Inc. (Deerfield, IL), Roche Diagnostics (Indianapolis), and Johnson & Johnson (New Brunswick, NJ) solidified their positions through acquisitions and mergers. Suppliers to physicians’ laboratories also disappeared as CLIA made office testing unaffordable.
The IVD industry now consists of a few giant corporations, some midsized companies, and a lot of small start-ups. While only six giant companies supply most of the IVD devices, the small players are the innovators, selling their inventions to the large companies and often getting acquired in the process. At the same time, even though far more IVD tests are performed, Medicare’s total payment for lab tests remains about the same today as it was in 1983.
Another significant trend that emerged was a shortage of experienced medical technologists, which resulted in a surging interest in automation. As the workcell concept caught on, IVD manufacturers responded by developing pre-analytical robotics, integrated technology platforms, versatile modular instruments, and highly automated analytical systems with broad menus. Immunoassays also became widely available on automated chemistry platforms. Today, one manufacturer’s largest analyzer offers more than 200 different analytes with throughput of up to 10,000 tests per hour.
In addition, analytical technologies kept improving. Sensitive chemiluminescence detection became routine, pushing the limits for analytes like thyroid-stimulating hormones, troponin, and prostate-specific antigens.
Meanwhile, the depletion of a skilled laboratory workforce, the growing complexity of test systems, and national initiatives to reduce lab errors shifted much of the responsibility for test quality to IVD manufacturers. As a result, IVD devices with on board quality control and electronic function checks are now commonplace. Manufacturers establish calibrator traceability so that patient results are comparable from lab to lab, and microprocessor-controlled instruments and bar coded reagent lots prevent users from modifying their calibration. Rules-based autoverification systems enable chemistry and hematology laboratories to cope with the sheer vol-ume of test results representing hun-dreds of different analytes.
The demand for IVD testing outside the United States and Europe has also proliferated during the past 10 years as the clinical laboratory marketplace has become more global. Integrated analytical systems have enabled clinics and small hospitals throughout Asia and Latin America to offer the same broad array of lab tests as their U.S. and European counterparts. In this global environment, European-trained pathologists in Mexico may implement European laboratory practices, while following standards developed by the Clinical and Laboratory Standards Institute (Wayne, PA) and sending out specimens to a Quest reference laboratory in Texas.
The Human Genome Project
The mapping of the human genome was the most important scientific event for IVDs during the past decade. The first publication in February 2001 led to a resurgence in the development of new diagnostic tests. Terms such as genomics, proteomics, pharmacogenomics, microarrays, and lab-on-a-chip entered the IVD vocabulary. Numerous new companies sprang up to explore the possibilities of nanotechnology and capitalize on discoveries in molecular diagnostics. Such discoveries led to a better understanding of the mechanisms of human disease and promised more-personalized healthcare.
For example, gene sequencing technologies can analyze single nucleotide polymorphisms (SNPs) for deleterious mutations and cancer predisposition. A single microarray chip the size of a dime can also detect hundreds of potential disease conditions. With such technologies, the ability to determine how individual patients respond to drugs should reduce the cost and risk of ineffective therapies. Pharmacogenomics is already optimizing cancer therapy by using smart drugs such as Herceptin, which is effective only if breast cancer cells carry extra copies of the Her-2/neu protein. Even though molecular diagnostics are only beginning to affect patient care, there is no question they have already made an impact.
In addition, polymerase chain reaction (PCR) and other nucleic acid technologies have revolutionized the screening and monitoring of infectious diseases by positively identifying microorganisms from their genetic makeup and by measuring viral loads. Using PCR, physicians can even monitor infectious agents for mutations in individual patients and therefore try different drugs. Although discovered in 1983, PCR has only recently become widely used in clinical laboratories. Roche’s strategy of licensing this technology not only expanded its usage and promoted standardization but also accelerated real-time PCR’s availability.
Sweeping Regulatory Changes
 |
| The VITROS ECi immunodiagnostic system by Ortho-Clinical Diagnostics Inc. (Raritan, NJ). |
IVD regulations have undergone a major overhaul during the past 10 years. In the United States, the 20-year-old good manufacturing practices (GMPs) were replaced with a new approach based on the ISO 9000 quality system concept. This move laid the groundwork for eventual harmonization of regulatory requirements worldwide. Less prescriptive but more demanding, the QSR was initially resisted by a skeptical IVD industry. Since being implemented in 1996, QSR has been embraced and now even praised for leading to better system design.
FDA enforcement was also stepped up, with high-profile regulatory actions against Abbott Laboratories and Johnson & Johnson’s LifeScan subsidiary. The LifeScan case involved incorrect reporting of design-related adverse events. These incidents led to a massive recall of glucose monitors and prompted IVD manufacturers to reexamine their medical device reporting (MDR) and recall criteria. In Abbott’s case, the five-year consent decree sent shock waves through the IVD industry. The record $100 million fine that Abbott paid represented FDA’s new disgorgement policy. As painful as such a large fine was, the even greater penalty for Abbott was the embargo on approvals for its new products and the removal of all but the medically necessary of its products from the market.
While FDA was pressuring the IVD industry to improve product quality and avoid recalls, manufacturers were pressuring FDA to improve cycle times for new-product submission reviews. Reducing the 510(k) and premarket approval (PMA) backlog was a major campaign in the mid-1990s.
The demand for FDA reform led to the FDA Modernization Act (FDAMA), which made the agency more accountable and more approachable. The Center for Devices and Radiological Health (CDRH) responded by implementing several initiatives to speed up the product clearance process. The 510(k) paradigm allowed new pathways to clearance, such as the introduction of abbreviated and special 510(k)s. Some PMAs were downclassified to Class III 510(k) status.
The creation of the Office of In Vitro Diagnostic Device Evaluation and Safety (OIVD) was an attempt to apply a total product life-cycle philosophy to IVD regulations. Bringing the disparate device evaluation and compliance functions related to IVDs under one roof in late 2002 enhanced the industry’s stature, since no other medical device sector has had its own office within FDA.
 |
| The LightCycler real-time thermal cycler by Idaho Technologies Inc. (Salt Lake City). |
A discussion of U.S. regulatory trends would not be complete without mentioning the home-brew controversy. After sparring with several IVD manufacturers, FDA worked with AdvaMed (Washington, DC) to develop a rule that defined analyte specific reagents (ASRs) and allowed their use with restrictions. According to this rule, manufacturers could receive clearance for their ASRs without making performance claims, and clinical laboratories would take responsibility for validating their clinical utility under CLIA.
As FDA was introducing the QSR, the European Union (EU) was heading off a proliferation of national regulations by enacting directives for medical devices, including IVDs. IVD manufacturers welcomed the IVD Directive, which prescribed the essential requirements for safety and relied on harmonized consensus standards to provide a presumption of compliance.
The European Commission mandated the European Committee for Standardization (CEN; Brussels) to develop 20 standards for IVD products. At the same time, concerned that these new European standards would impose another set of regional requirements that manufacturers would have to meet, ISO created technical committee 212 to develop IVD standards with international status. Since ISO and CEN had a cooperative relationship, many of the planned European standards could be codeveloped as international standards.
By December 7, 2003, all IVD products distributed in Europe were required to comply with the IVD Directive and be CE marked. IVD manufacturers encountered surprisingly few implementation problems. This was partly because the directive imposed few additional requirements beyond the U.S. QSR.
Nonetheless, in implementing the IVD Directive, IVD manufacturers had to deal with two major issues: translation and calibrator traceability. The Medical Devices Directives respected each country’s right to require labeling in its own languages. Consequently, the typical number of languages on IVD product labeling jumped from 6 to 11 official EU languages, plus Japanese. The language requirements also led to the development of international symbols for IVD product labeling, which FDA finally accepted last year.
 |
| The OneTouch Ultra blood glucose monitoring system by LifeScan Inc. (New Brunswick, NJ). |
The calibrator traceability requirement ignited a flurry of activity to create an infrastructure so IVD manufacturers could be compliant. Every calibrator had to be traceable to a higher-order reference material or method, if one were available. Manufacturers were initially uncertain which reference materials and methods qualified as higher order, and whether they needed to adjust their calibrator values. In the end, a remarkable cooperation developed among professional clinical chemistry societies, the international metrology community, and IVD manufacturers. The Joint Committee for Traceability in Laboratory Medicine (JCTLM) has been helping manufacturers comply with the law and prioritize requirements for new reference materials for orphan analytes.
IVD manufacturers had to deal with several other issues as a result of the new EU directives. While the IVD Directive only requires self-declaration of conformity for most IVD products, those IVDs in high-risk categories such as blood typing, infectious-disease assays, and self-testing require third-party notified body oversight. New packaging and waste management restrictions have forced reductions in packaging materials and the reformulation of reagents to remove heavy metals and toxic organic compounds.
An unfortunate consequence of the new regulations in Canada, Europe, and other regions has been the withdrawal of low-volume products from these markets because of the prohibitive cost of bringing them into compliance with the new regulations. Compliance with the new regulatory requirements has added substantially to IVD manufacturers’ costs due to increased documentation, labeling updates, additional translations, and packaging changes. However, on the positive side, there is now only one set of European regulations instead of 25,
better manufacturing documentation to support safer products, and achievable global harmonization.
Conclusion
All of the consolidation, innovation, and regulation during the past 10 years in the IVD industry has been accompanied by marked changes in healthcare demand. The increasing prevalence and burden of obesity, aging, and diabetes has affected clinical laboratories and the industry. For example, new definitions of diabetes have increased the number of U.S. diabetics by millions. However, diabetes management has also been aided by improved HbA1c assays and simpler, faster, and more-reliable glucose meters. The recognition of new diseases such as SARS, West Nile virus, BSE, and HIV has also created new testing and diagnostic needs, particularly in virology.
The importance of IVD test results in medical decision-making has also increased during the past decade. It is widely quoted, albeit without solid scientific proof, that 80% of medical decisions are now based on laboratory results. In addition, the fact that IVD tests are no longer considered only adjunctive explains why IVD MDRs have significantly increased and a greater percentage of IVD recalls are Class I and Class II, compared with a decade ago.
Americans continue to be the most tested people on earth. Today, some 10 billion laboratory tests are performed each year in the United States, costing $10 billion to $12 billion for reagents and $30 billion to $50 billion for the laboratories that use them. Even though lab tests still contribute only a small percentage to total healthcare costs, these numbers will increase as IVD testing gains in importance during the next 10 years.
Copyright ©2005 IVD Technology
