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Regulatory options for IVDs: Selecting the best path to market
Jeffrey N. Gibbs
For most medical devices, the regulatory pathways to market are, if not always easy to navigate, at least easy to discern. A company may face a difficult choice between submitting a premarket approval (PMA) application or a premarket notification (510(k)); or may need to determine whether clinical trials must be conducted under an investigational device exemption (IDE) or can be done without an IDE; but there the basic regulatory choices end.
Successfully following any one of these regulatory pathways can be quite challenging, and many device companies falter along the way. Yet the variety and complexity of these few regulatory options pale by comparison with the choices available to IVD companies.
At least superficially, the regulatory options for IVDs resemble those for other device manufacturers. To obtain FDA clearance for an IVD, the manufacturer must generally choose between submitting a PMA or a 510(k) notice. (FDA's much-ballyhooed product development protocol is rarely considered a viable alternative.) If a clinical study is required, however, the IVD manufacturer has three choices: an IDE study, a nonsignificant risk study, or a study that is entirely exempt from the IDE regulation.
This last option is unique to diagnostic manufacturers. It allows an IVD sponsor that fulfills the requirements of a four-part test to conduct studies without regard for compliance with the IDE regulation.1 An exempt study offers a distinctive and potentially valuable option for an IVD manufacturer. It enables the sponsor to generate data in support of an FDA submission, but imposes fewer regulatory obstacles than faced by other device manufacturers.
There are some limitations on IDE-exempt studies that make them less permissive than is commonly assumed. For instance, even if a study is exempt from the IDE regulation, FDA has asserted that sponsors must still comply with the requirements relating to informed consent and institutional review board approval. Moreover, in a recent warning letter to an IVD company, the agency at once acknowledged that the IDE regulation does not apply to exempt studies, yet asserted that sponsors must still comply with certain elements of that regulation in order for their studies to be considered valid. And even when a clinical study is entirely exempt, IVD sponsors sometimes elect to submit their protocols in order to get the benefits of FDA's insights and to try to enhance their odds for approval.
Research and Investigational Products
The regulatory pathways that most distinguish IVDs from other devices—and the ones that require the greatest amount of regulatory strategizing—are those that enable a manufacturer to commercialize its product without obtaining FDA approval. This regulatory option, which is largely unavailable to other types of device companies, comes in several varieties for IVD companies.
B>Investigational Use Only. One long-standing option that originated as a parallel to the IDE regulation has been to sell a particular IVD as an investigational use only product (IUO). IUOs are essential to the progress of IVD product development, and numerous products have been cleared as a result of data generated during the IUO phase. But while FDA originally intended the IUO category as a vehicle for distributing products in order to generate data, it has become a means by which IVDs have entered and remained on the market for an essentially unlimited duration.
FDA has expressed concern over the widespread commercialization of IUOs, and has on occasion taken enforcement action against the manufacturers of such products. Nevertheless, the sale of IUO-labeled products has been a substantial source of revenue for some IVD companies and has, in practice if not by regulation, provided an alternative route to market. IUO labeling has enabled manufacturers to sell IVD kits with some clinical and analytical performance claims, and many standard-of-care diagnostic reagents have been, and continue to be, sold as IUOs.
However, IUOs have some commercial drawbacks. Because they are not cleared for marketing, manufacturers cannot promote them as aggressively as they would a product that had been cleared by FDA. Where PMA-approved assays can now be promoted as "Approved by FDA," IUOs can make no such claim. Similarly, safety and effectiveness claims for IUOs are prohibited. And although FDA-cleared assays are ordinarily reimbursed by third-party payers, reimbursement for IUOs is more problematic because they are unapproved tests.
It is unlikely that FDA will permit companies to continue using IUO status as part of a product marketing strategy. The agency has spent many years developing a compliance policy guide (CPG) to regulate investigational and research products. The final version of this CPG is now expected to be published this year, in a form largely unchanged from the draft version issued last year.2
Publication of the final CPG will not mean an utter end to IUO products. The need to conduct investigations using IVDs will continue to exist. Such investigations can encompass a variety of data-gathering efforts, including external feasibility studies, external design validation studies, studies designed to evaluate the performance of the device in larger populations, and studies of sample panels. In short, although adoption of the CPG may make IUO status less attractive than it has been in the past, IUO status will certainly remain an option for at least some products in some circumstances.
Research Use Only. The new CPG will also place limitations on the labeling of IVDs for research use only (RUO), another status used by manufacturers to bring products onto the market without FDA approval. Under the new CPG, RUO status will not be available to products that are intended for diagnostic purposes. In fact, the draft version of the CPG even denies RUO status to products that are used for diagnostic purposes, regardless of the manufacturer's intent. Since many RUO products are used diagnostically by at least some clinicians, FDA's new strictures could shrink the number of products eligible for RUO labeling, at least according to the CPG. The reimbursability of RUO products used diagnostically could also be problematic.
Despite the new limitations imposed by the CPG, RUO status will remain a viable pathway to market for products that are truly used only for research purposes. In compiling the CPG, FDA rejected a petition from the Joint Council of Immunohistochemical Manufacturers to create a new category of experimental use only products. Nevertheless, the agency has acknowledged that some products are research tools that are not expected to have diagnostic utility. As such, they may continue to be sold with the RUO label. FDA has recognized a variety of legitimate research purposes, including studies to determine the clinical utility of the marker; studies to determine whether a prevalence pattern can be established; and studies to identify kit methods, components, and analytes to be measured. Although regulatory pressures under the new CPG may reduce the utility of RUO status as a pathway to market, this category will not fade into oblivion.
The ASR Approach
Although the IUO and RUO pathways may be less attractive in the future, the category of analyte specific reagents (ASRs) opens whole new possibilities.3 The ASR regulation became effective on November 23, 1998, and IVD companies have been able to ship reagents under the rule since then. The vast majority of ASRs can be sold without the need for FDA clearance, allowing manufacturers to gain rapid access to the market.
Since ASRs are neither investigational nor research products, their reimbursement profile is very different from IUO and RUO products. Under FDA's rule, laboratory reports based on ASRs must disclose that the test was generated using an ASR rather than an approved assay.4 After the rule was issued, however, FDA agreed to allow laboratories to supplement the disclosure by noting the fact that FDA clearance is not needed. This information should reduce the likelihood that third-party payers will dispute reimbursability. If claims are denied on the grounds that a test lacks FDA approval, companies can assert that ASRs do not need FDA clearance, that they are not experimental, and that tests using ASRs should be reimbursed.
Even if they are reimbursed by third-party payers, ASRs may still not offer the best pathway to market. After all, ASRs are only reagents, not full kits. Manufacturers cannot provide instructions for test use with ASRs, making them less convenient for users and also reducing their pricing. Moreover, this makes laboratory users fully responsible for validating the assay's compliance with the requirements of the Clinical Laboratory Improvement Amendments of 1988 (CLIA).
Companies selling ASRs are also handicapped when it comes to promotional activities. The ASR rule prohibits companies from "making any statement regarding analytical or clinical performance."5 (The constitutionality of this restriction is an open question.6) Although journals may publish papers that describe the clinical value of ASRs and tell laboratories how to prepare and use them, IVD companies cannot market their ASRs for specific clinical purposes. If a competitor offers an approved assay incorporating a comparable reagent, the ASR manufacturer will be at a disadvantage when it comes to marketing its product. Conversely, companies that wish to sell full IVD kits will need to weigh the benefits of FDA approval (taking into account the regulatory costs and delays associated with obtaining approval) against the benefits of selling by way of an ASR status.
Manufacturer-Owned Labs
Yet another regulatory option is for an IVD manufacturer to establish its own laboratory—or to collaborate with an existing laboratory—to offer home-brew tests that have not been approved by FDA. The advantage of such an arrangement is that the tests developed by a laboratory using its own components (including ASRs) are not required to include the disclaimer specified in the ASR regulation. Conducting tests within a laboratory owned by or affiliated with an IVD company can therefore be a rapid route to commercialization without FDA control, and a number of IVD companies have taken advantage of this strategy.
Of course, in-house laboratory testing is not exempt from federal regulation. FDA has asserted that it has the authority to regulate laboratories, but it has also made it clear that it does not ordinarily intend to exercise this authority. Instead, manufacturer-owned laboratories will find themselves subject to the regulations of a number of other agencies, some of which can be at least as onerous as those of FDA. The lab must validate its tests, and must comply with CLIA and with applicable state laws. Laboratory advertisements are subject to the jurisdiction of the Federal Trade Commission and state authorities, and can be attacked by competitors. And if testing is done for Medicare beneficiaries, the laboratory must comply with the Health Care Financing Administration's rules for coding, billing, and receiving payment under Medicare, and is also subject to false claims laws and other antifraud and abuse laws.
The headaches of operating a laboratory—an activity that is foreign to most IVD companies—can be greater than the associated rewards. It is the laboratory, for instance, that must submit claims for testing done under Medicare. And since home-brew tests cannot be shipped to other laboratories for their use, the market for in-house testing can be relatively limited. Nevertheless, companies surveying the competitive landscape may want to consider this option. At a minimum, they should be aware that in-house laboratories might be used by competitors to leapfrog their way to the market. This is particularly true for novel assays that will take a long time to negotiate the FDA clearance process.
Conclusion
The various regulatory options available to IVD companies are not mutually exclusive. A company could sell a product as an ASR while simultaneously seeking FDA approval, or it could offer a test through a laboratory subsidiary while also selling test kits that are being used in a clinical study designed to support a PMA. Given the variety of pathways available to IVD manufacturers, a number of such permutations are possible, each with its own calculus of risks and benefits.
New developments will make it even more difficult—and more important—for manufacturers to choose the correct regulatory strategy. The pending CPG may limit the viability of the RUO and IUO options, while the advent of ASRs offers an entirely new regulatory alternative. In-house laboratories offer yet another marketing option that can be appropriate for novel tests with tortuous routes to approval. IVD companies will need to weigh these regulatory choices carefully, and select wisely.
References
1. Code of Federal Regulations, 21 CFR 812.2(c)(3).
2. JN Gibbs, "FDA's RUO/IUO Policy: A Small Step Forward," IVD Technology 4, no. 2 (1998): 27–30.
3. JN Gibbs, "ASRs: FDA Issues Final Rule," IVD Technology 4, no. 1 (1998): 28–32.
4. 21 CFR 809.10(e).
5. 21 CFR 809.10(d)(4).
6. JN Gibbs, "Free Speech Decision Could Advance Off-Label IVD Promotion," IVD Technology 4, no. 7 (1998): 22–26.
Jeffrey N. Gibbs is a partner in the law firm of Hyman, Phelps & McNamara (Washington, DC). This article originated in a presentation delivered at the Barnett International conference on Clinical Development for IVDs, December 7–8, 1998 (Arlington, VA).
