The Murky Regulatory Arena of Genetic Testing

The FDA has undertaken several measures to make the regulatory process less burdensome for diagnostics companies, but these may not be enough to incentivize companies to take their new genetic tests through the approval process. At the same time, confusion reigns: a special HHS advisory committee on genetic testing has been disbanded, and the FDA is reviewing its jurisdiction to regulate home brews, which are the dominant route to commercialization for genetic tests. Some critics worry that these developments may stifle innovation and companies are waiting for clarity.

It's been a big quarter for organizational changes at the US Food and Drug Administration: a new candidate for Commissioner, the consolidation of some CBER functions into CDER (see "A New Commissioner and Revamped Review Process for the FDA," in this issue (Also see "An FDA Nominee, Biologics Reviews Move to CDER" - In Vivo, 1 Oct, 2002.)), and now a new office to handle approval and monitoring of in vitro diagnostic devices.

The new diagnostics group will consolidate all IVD-related functions, including premarket, compliance, and postmarket review activities—an effort intended to bring efficiency to disparate operations, not shake up policies. But these moves don't address some of the key technology-driven issues dogging the agency, notably the growing confusion surrounding genetic testing regulations.

Nonetheless, regulatory affairs and diagnostics industry experts praise the effort, as well as other recent FDA initiatives to reduce the burden on manufacturers filing for new diagnostic products. Notably, the FDA has been strongly encouraging industry to explore opportunities for using the de novo classification route to filing, in which products that normally would have to go through a lengthy and resource-consuming PMA can instead be filed as an enhanced 510K, which incorporates supporting data from existing scientific literature about the product. De novo is available for most products that don't have a "predicate"—or comparable—device on the market, as long as they are supported by published data.

That the agency continues to sidestep the issue of how to regulate genetic testing is glaring because, while it constitutes only a small percentage of total diagnostic industry revenues, such tests include some of the industry's most profitable and rapidly growing assays. (See "Genetic Testing's Regulatory Quagmire," IN VIVO, December 2001 (Also see "Genetic Testing's Regulatory Quagmire" - In Vivo, 1 Dec, 2001.).)

For reasons only partly understood, just a handful of genetic tests have gone through the traditional FDA approval process. Most manufacturers are opting, instead, to introduce their new genetic products as analyte specific reagents (ASRs), which are components of diagnostic assays that must be sold separately and not in kit format. They must be registered with the FDA and must adhere to Good Manufacturing Practices, but don't need to undergo clinical trials or advisory committee review. Manufacturers cannot supplement the components with validation, labeling or guidance about test utility.

ASRs allow companies to get their products on the market quickly and at much less cost than PMAs or 510Ks. Regulators and others, however, are concerned that their widespread use is leading to lack of standardization of results among different labs and decreasing the ability to gather efficacy data from clinical trials—even those that are well planned. They note that ASRs aren't clearly defined and thus their role is subject to misinterpretation. They never were intended to be the mainstream route to diagnostic approval but are nonetheless being used for that purpose, these critics argue.

Industry experts say companies are "pushing the envelope" these days when they promote ASRs. ASR categorization is particularly murky when it comes to new technologies like microarrays, which aren't available for clinical purposes at the moment but which, many analysts predict, will be increasingly important. For example, at the American Association for Clinical Chemistry meeting this summer in Orlando, FL, one didn't have to venture far to see activities surrounding microarray development.

"ASRs were intended to be used for oligonucleotides, or monoclonal antibodies," says Daniel Farkas, PhD, director of molecular diagnostics at Baylor College of Medicine . Recently recruited from Clinical Micro Sensors, a biochip-oriented business unit of Motorola Inc. , to set up Baylor's molecular diagnostics laboratory, Farkas says biochips are going to fall into a regulatory "gray zone." "The array is a collection of reagents, but without a system, it's not worth the slide it's printed on," he adds. At Motorola, top executives spent a great deal of time debating whether to take chip-based products through the full regulatory process or sell them as ASRs, and that issue hadn't been decided when he left, he says.

The problem, he and others say is that with microarrays, as with a host of other issues in genetic testing, the FDA isn't clear about what it wants. The lack of direction, they argue, stifles innovation and keeps companies from investing more heavily in certain technologies. For example, the three-year-old Molecular and Clinical Genetics Panel, an advisory committee that reviews applications for approval and makes recommendations to the agency, has had only one test application to review in several years of existence.

Adding to the uncertainty, this summer the agency's parent, the Department of Health and Human Services (HHS), disbanded the Secretary's Advisory Committee on Genetic Testing (SACGT), set up four years ago to offer broad advice to the FDA on how and if the government should regulate genetic testing. The SACGT worked closely with the FDA and last year presented formal recommendations to the agency, but had not gotten a response before disbanding. HHS plans to inaugurate a new committee with a broader mission, whose members aren't likely to rely on SACGT's recommendations, industry experts say—although no one knows yet what that mission will be.

Former SACGT committee chairman Edward McCabe, MD, PhD, physician-in-chief at Mattel Children's Hospital in Los Angeles and a professor at the University of California, Los Angeles, says that despite four years of work, most of which isn't likely to be used by the new committee, he holds no grudges. He argues that the current administration is entitled to formulate its own agenda with people it selects, noting that genetic testing isn't being treated differently than scores of other advisory committees, many of which HHS under President Bush re-evaluated and disbanded.

He believes that one factor in the dissolution of SAGCT was the FDA's concern about its authority to regulate home brews at all, since laboratories design and use the tests for internal purposes only. People inside and outside the agency say that it is actively reviewing its jurisdiction over home brews. "The FDA's right to regulate genetic testing is murky because its mandate is to regulate interstate commerce and it's not clear that home brews are sold inter-state, " says one scientist, who turned down a high-level position at the FDA not long ago. "Therefore, the FDA is being very tentative until its authority in this area is clarified."

IVD companies say they are mulling over the best ASR candidates to push ahead through the regulatory process. But they've been talking about this for several years and, with one or two exceptions, have yet to move forward. Most companies, in fact, don't see cost benefits in spending so much money up front to get approval for products with limited sales potential.

The agency's olive branch is less expensive and faster de novo filings as an alternative to PMAs, which it hopes will move companies away from using ASRs. Two companies have filed this way. Visible Genetics Inc. , which Bayer Diagnostics , a subsidiary of Bayer AG , is acquiring for $61.4 million in cash [See Deal], used de novo to get its TruGene HIV-1 Genotyping assay approved last year. More recently, Biosite Inc. used it to get approval for its BNP (B-type natriuretic peptide) cardiac disease test. Visible Genetics had no choice because it involved a system that couldn't be sold as an ASR; Biosite's product is expected to have a large enough market to justify the expense.

But FDA officials are stumped as to why more companies aren't taking advantage of de novo filing. Regulatory experts at diagnostics manufacturers say they are considering de novo applications, but that process is still burdensome. Visible Genetics' CEO Richard Daly says de novo as compared to a PMA saved his company about $5 million and two years of work. But Bayer is paying roughly $1.50 a share, or 4.3 times 12-month trailing revenues for Visible Genetics, hardly a bonanza for a company with the only FDA-approved genetic test on the market (compared to the December 2001 offering in which the company sold 2.6 million shares at $8.64 each, even then a 17% discount to the average market price [See Deal]). Daly believes that the big problem is that laboratories won't switch from cheap home brews to more expensive FDA-approved kits like TruGene unless the FDA forces them to.

All of these factors point to what many complain are FDA-created obstacles to technology innovation. Whether that's true, the FDA's advisory committee on genetic testing is still waiting for work to do.