Laboratory-developed tests (LDTs) or more familiarly, “home brew,” tests have been around for decades. Traditionally their scope was small; low-volume, simple, and well-characterized tests, for low-risk diagnostic applications. This is no longer the case. Today, high-risk, complex tests have been developed as LDTs and are being used to provide clinical results to physicians and their patients.
Clinical laboratories can develop LDTs based on any diagnostic test technology used in the clinical lab.
Clinical laboratories can develop LDTs based on any diagnostic test technology used in the clinical lab. For some technologies, such as chemistry tests or immunoassays, automated platforms with large test menus are commercially available. As a result, in some labs, development and use of LDTs based on these technologies may be less than the number of LDTs based on newer technologies such as next-generation sequencing. However, laboratories may develop tests on widely used technologies such as immunoassays to offer tests for rare diseases. Clinical laboratories may also perform tests on types of specimens that are not included in the approved labeling for a test, or may have other reasons why they decide to develop an LDT.
Much of the focus and attention in recent years has been on the emergence and growing use of complex LDTs based on technologies such as polymerase chain reaction (PCR), microarrays, next-generation sequencing, or other complex technology. To generate test results that were not previously possible, LDTs are being developed and used in many different applications. The largest segments of this market are in oncology, genetic (inherited) disorders, and infectious disease, but laboratory developed tests can be developed and used for virtually all disorders.
LDTs meet clinical needs that are not otherwise being addressed. For this reason, Kalorama has estimated a lab-developed test market of $11.1 billion, growing at a compound annual growth rate of 9% to $17.4 billion by 2022. This was estimated in our market study The Worldwide Market for Laboratory-Developed Tests: Services (Labs Performing LDTs) and Equipment (Instruments and Reagents Used in LDTs). This significant activity in the development of new LDTs, growing revenues from current LDTs, and large addressable markets for many of the emerging LDTs has attracted the interest of investors and also other companies looking for acquisitions.
Sudden changes to the market (such as a requirement that all LDTs meet stringent regulations or be removed from the market) could potentially result in many essential clinical tests no longer being available.
Figure: Laboratory Developed Test Services Market 2017-2022 (in millions USD)
This is a real concern, though it might be less of an issue than it was four years ago. In July 2014, the FDA announced the release of draft guidance for a risk-based framework for the regulation of some LDTs, which would be phased in over a period of nine years. The announcement was met with criticism, however, from the clinical research community; labs and pathologists maintained that LDTs are services, rather than devices, and that updates to regulations should be made through changes to CLIA. The American Association of Clinical Chemistry (AACC) recommended that LDT regulation should remain under CMS oversight via CLIA, unless there were certain high risks that should be subject to both CMS and the FDA.
In January 2017, the FDA produced a discussion paper taking into account the feedback and scaling back the scope of LDTs under its watch, suggesting all LDTs currently on the market remain exempt, save for adverse event and malfunction reporting. Groups like the ACLA, AMA, American Cancer Society, and many others have expressed a degree of careful satisfaction with the new guidance.
With newly produced LDTs, low-risk and traditional tests continue to be regulated as they are with no additional oversight by the agency, but the FDA does reserve the ability to enforce premarket review if it is found that a test is not analytically or clinically valid, if the LDT’s manufacturer is deceptive in its promotion of the test, or if a test’s erroneous results could lead to serious health consequences.
Significant concerns still exist regarding potential future changes in the regulation of LDTs, including FDA regulation of LDTs, but for now they are thriving and a “no news is good news” sense is pervading the industry. Meanwhile, there are clinical needs for LDTs for assays that are not available commercially. That is why laboratories continue to develop and use LDTs.
About the Author
Bruce Carlson is the publisher of Kalorama Information, a New York City-based market research firm with a focus in in vitro diagnostics and biotechnology.