Ending counterproductive, counterintuitive regulation

Ending counterproductive, counterintuitive regulation
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Early in the COVID-19 crisis, House Speaker Nancy PelosiNancy PelosiOn The Money: McConnell says Congress will take up stimulus package at start of 2021 | Lawmakers see better prospects for COVID deal after election Overnight Health Care: House Dem report blasts Trump coronavirus response | Regeneron halts trial of antibody drug in sickest hospitalized patients | McConnell says Congress will take up stimulus package at start of 2021 McConnell says Congress will take up stimulus package at start of 2021 MORE (D-Calif.) chided the Trump administration’s response and demanded “testing, testing, testing.” Yet, when the administration recently rescinded a Food and Drug Administration policy that caused many of the early testing delays, Pelosi’s colleague Rep. Frank Pallone (D-N.J.), Chairman of the House Energy and Commerce Committee, declared the action “deeply concerning” and demanded an investigation. The administration’s early handling of the pandemic was far from flawless, but its curb on FDA regulation of laboratory-developed diagnostic tests should be applauded, not criticized. 

When the first COVID-19 cases were detected in the United States in January, several academic and hospital laboratories offered to create tests for the novel coronavirus but were thwarted by the FDA and Centers for Disease Control. A research lab at the University of Washington that had already collected nasal swabs for an ongoing study of influenza started to test the samples for coronavirus but was ordered to stop.  

The FDA insisted no COVID-19 tests could be used without its say-so, which usually means lengthy premarket approval or clearance. The declaration of a public health emergency gave the agency authority to issue expedited emergency use authorizations. But the only authorization FDA granted during February was for a CDC-developed test that proved defective. It wasn’t until Feb. 29 that the agency relented and allowed hospital and academic laboratories to use their own tests in advance of seeking emergency authorization, a move that kick-started the wide-scale testing necessary to combat the pandemic.


The delay threw a spotlight on a long-simmering regulatory morass. Federal law gives the FDA broad authority to regulate medical devices “intended for use in the diagnosis of disease.” The agency mandates a premarket review of diagnostic test kits manufactured by one entity and sold for use in other laboratories. But, while the FDA also claims authority to review tests that are designed, manufactured, and used within a single lab, it almost never does, claiming “enforcement discretion.”

That doesn’t mean these laboratory-developed tests (LDTs), have gone unregulated. The Clinical Laboratory Improvement Amendments of 1988 (CLIA) authorize the Centers for Medicare and Medicaid Services to regulate labs that perform diagnostic testing for humans. Only laboratories that are certified to perform high-complexity testing may develop and use LDTs, and CLIA requires the labs to demonstrate that each test accurately and reliably measures its intended target substance. While the FDA review is more in-depth, CLIA-certified labs have a sterling performance record.  

Hospital and academic labs argue their customized tests are more akin to medical services than the commercial tests that require FDA approval. Exempting LDTs from FDA oversight provides the flexibility they need to create new tests for rare diseases and emergent situations like COVID-19. In a prescient 2015 paper, Paul Clement and Laurence Tribe wrote that, 

FDA oversight would also render critical testing, particularly for patients with emergent infectious diseases, unavailable in the “lag time” before FDA approval. The FDA approval process is protracted and not designed for the rapid clearance of tests. Many clinical laboratories track world trends regarding infectious diseases and have demonstrated immediate or near- immediate responses to infectious diseases ranging from SARS to H1N1 and Avian Influenza. In these fast-moving, life-or-death situations, awaiting the development of manufactured test kits and the completion of FDA’s clearance procedures could entail potentially catastrophic delays, with disastrous consequences for patient care.

Nevertheless, the FDA, citing 20 problematic LDTs, argued its oversight is needed. The Association for Molecular Pathology accurately claims most of those cases did not actually involve a defective test but reflected problems with the way treating physicians interpreted and used test results for clinical purposes, which could also occur with FDA-approved products. In addition, 20 flawed tests over many years represent a tiny fraction of the tens of thousands of LDTs developed and used during that time. Faulty medical devices sometimes slip through the FDA approval process too.


In 2014, the Obama administration FDA released draft guidelines for regulating LDTs and solicited public comment. The intense backlash from the public health community forced the agency to withdraw the guidelines. But that hasn’t stopped the FDA from singling out a handful of LDTs for special regulation, albeit without reference to any specific statutory or regulatory criteria. This approach is arbitrary — there is no notice about which LDTs require premarket review. And, as we saw when the FDA declined to apply enforcement discretion and exempt COVID-19 LDTs from premarket review, it creates uncertainty that inhibits the development of innovative tests just when they are needed most. 

This combination of opacity and intransigence kneecapped the University of Washington and other respected labs that have enormous experience with the technique used to detect the coronavirus that was known to cause COVID-19. It delayed widescale testing just as the virus was gaining a foothold in the U.S. We believe that by rescinding that informal policy and declaring that the FDA could only require a premarket review of laboratory-developed tests if it conducts notice-and-comment rulemaking, the Trump administration has ensured that any future policy will be more transparent, predictable, and publicly accountable.  

Rescission of the FDA’s policy on LDTs has probably come too late to combat COVID-19, but it may save millions of lives in future pandemics. By choosing a regulatory approach for LDTs that permits flexibility and fast-paced development, and pushing the FDA to provide clear rules, the administration has done a huge favor for future patients.

Joel M. Zinberg is a senior fellow at the Competitive Enterprise Institute and an associate clinical professor of surgery at the Mount Sinai Icahn School of Medicine in New York. He served as a senior economist and general counsel at the Council of Economic Advisers, 2017-19. Gregory Conko is a senior fellow at the Competitive Enterprise Institute.