FDA Proposal to Regulate Laboratory Developed Tests Raises Legal Liability Questions for Labs
Back in August, we wrote about the FDA’s controversial plan to release draft guidance on a new regulatory framework for Laboratory Developed Tests (LDTs) — diagnostic tests developed by and used within individual laboratories across the country. As it stands now, LDTs are overseen by the Centers for Medicare and Medicaid Services under the Clinical Laboratory Improvement Amendments (CLIA), though the FDA has claimed that it has the authority to regulate LDTs as medical devices under the Federal Food, Drug, and Cosmetic Act (FDCA). The deadline to comment on FDA’s draft guidance was February 2 with FDA receiving hundreds of comments.
FDA proposes to implement risk-based classification of LDTs as medical devices, imposing varying levels of enforcement discretion based on the risk category of the test. With a few exceptions, for moderate and high risk LDTs, FDA would require registration and listing, MDR reporting, QSR compliance, and premarket clearance or approval.
Comments poured in for and against the proposal. Among the comments is the notion that regulation of LDTs as medical devices could have implications in the area of product liability law. The American Society of Human Genetics commented that regulation of genomics as a medical product “raises a large set of ancillary legal issues — such as potentially subjecting genomics to the states’ strict product liability tort regimes.” In a citizen petition to the FDA in June 2013, arguing that FDA has no authority to regulate LDTs, the American Clinical Laboratory Association warned: “[R]egulation of LDTs as devices could trigger application of additional state liability laws, thus imposing substantial unintended economic burdens for laboratories. Under many current state laws, laboratories are subject to negligence standards. If FDA were to require laboratories to list LDTs as devices, plaintiffs could argue that laboratories also should be subject to the product liability standards applicable to product manufacturers.”
It is unclear, of course, how the law would develop with increased regulation of LDTs. In recent years, labs have been subject to suit for negligent testing in courts across the country. Many of these cases are framed as “wrongful life” cases where a child with genetic defects that could have been caught by proper testing and reporting of results is born. See, for example, Khadim v. Laboratory Corporation of America, 838 F.Supp.2d 448 (W.D. Va. 2011), where the court allowed the case to move forward on the cause of action of wrongful birth due to alleged negligence in performing genetic testing. In another case in Washington state, a jury ordered LabCorp to pay $25 million to a couple who gave birth to a child with genetic defects after the lab reported a negative test result. Importantly, it is unknown how often suits against labs for negligence in testing result from faults with the tests themselves versus negligence by individuals performing the tests or reporting results.
FDA has argued that a laboratory which develops an LDT has created a “device” that can be regulated under the FDCA, separate from the performance of per-patient testing which would remain a service regulated under CLIA. Under FDA’s position, laboratories performing LDTs might potentially be subjected to two regulatory frameworks applicable to the same test.
The American Society of Human Genetics contends in its comment to the FDA that legal liability for labs will expand with FDA regulation, subjecting labs to the same tort liability as medical device manufacturers. It is true that some jurisdictions apply strict liability schemes to manufacturers of medical devices. However, other courts have expressly rejected the application of strict liability to medical device manufacturers, as they have to prescription drug manufacturers. See, for example, Terrell v. Davol, 2014 U.S. Dist. LEXIS 103695 (E.D. Pa. July 30, 2014), where the court found that Pennsylvania, which already barred strict liability claims against drug manufacturers, also prohibited such claims against device manufacturers.
Notably, in Khadim, the laboratory sought protection under the Virginia Medical Malpractice Act, noting that as a laboratory certified under CLIA, it was a “health care provider” under the Virginia law. The court agreed, applying the statute’s malpractice cap on damages.
If laboratory tests are regulated under the FDCA as medical devices subject to premarket approval, labs might be able to take advantage of another protection — preemption. Typically, claims against devices approved by a premarket approval application (PMA) are preempted where those claims would impose requirements on the manufacturer different from FDA requirements. Riegel v. Medtronic, 552 U.S. 312 (2008). Presumably, the requirement of premarket approval for some LDTs could bring with it the protection of federal preemption. On the other hand, some LDTs could be cleared for market through the 510(k) premarket notification process, which is not accompanied by preemption protection. Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996). Consequently, the higher-risk tests subject to PMA requirements under FDA proposed framework for LDTs might receive the benefit of preemption, while the lower-risk tests might not.
The actual requirements imposed by the FDA should the agency finalize the guidance and/or issue regulations also could determine the scope of protection. Open questions include whether and how the FDA would impose labeling requirements typically applied to medical devices to laboratory tests that have no packaging or inserts, and whether the absence of such requirements would leave test developers open to product liability claims for failure to warn.