New Diagnostics Pathway

Details emerge of Sen. Hatch plan for new regulatory pathway for diagnostics

FDA and members of Congress are putting the finishing touches on different proposals to create a new regulatory pathway for diagnostics, making it almost certain that major changes will be unveiled in 2011. The question is which approach will prevail - and whether either approach solves the problem of value-based reimbursement.

Top FDA officials and lawmakers have concluded that the current oversight system for diagnostics, which imposes premarket review requirements for in vitro diagnostics (IVDs) but not for the vast majority of laboratory-developed tests (LDTs), is not sufficient to protect the public or to support the development of innovative tests that are at the heart of hopes for widespread adoption of personalized medicine.

The only option that is off the table is the status quo.

Sen. Orrin Hatch (R-Utah) is lining up bipartisan support - and his staff is trying to build consensus among labs, diagnostics companies and investors - on draft legislation that would preempt FDA's efforts.

His approach would create a new regulatory category encompassing both LDTs and IVD tests.

Under the Hatch bill, IVDs would no longer be regulated as medical devices. Also, FDA would for the first time routinely regulate tests performed in labs, although lab services and operations would continue to be regulated by the Centers for Medicaid and Medicare Services (CMS) under the Clinical Laboratory Amendments (CLIA) (see "BETTER at a Glance").

Hatch hopes to use a new regulatory system to go even farther, as a platform for launching reform of diagnostics reimbursement policies, and shifting Medicare from a payment system based on the complexity of test procedures to one based on the value of tests, according to diagnostics industry executives and attorneys who are advising his staff.

It has taken over a year of intensive negotiations to gain preliminary consensus among stakeholders on a new regulatory roadmap, a prerequisite for reimbursement reform. As a result, discussions on reimbursement policies are still at a preliminary stage, Sheila Walcoff, a partner in the law firm of McDermott Will & Emery LLP

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