March 2024 CLIA Database

March 2024 CLIA Database

March 2024 CLIA Database

Laboratory Economics is offering a database of over 318,000 Clinical Lab Improvement Amendments (CLIA) certified laboratory facilities. The database is freshly updated as of March 31, 2024 and includes more than 8,000 independent labs, 122,000 physician-office labs, 9,000 hospital labs and all other labs. 

Importantly, the database includes all 3,470 new CLIA-certified labs that have been formed so far in 2024, including 231 new moderate/high-complexity labs and 3,239 waived testing labs. 

Metro areas showing the greatest number of new lab formations include New York City (202 labs), Seattle (180 labs), Los Angeles (159 labs), Dallas (122 labs), Miami-Ft. Lauderdale (120 labs), Houston (104 labs), Atlanta (74 labs) and Chicago (62 labs). 

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FDA Finalizes LDT Regulation; Partial “Grandfather” Exemptions for Existing LDTs

FDA Finalizes LDT Regulation; Partial “Grandfather” Exemptions for Existing LDTs

FDA Finalizes LDT Regulation; Partial “Grandfather” Exemptions for Existing LDTs

Although less severe than the FDA’s initial proposed regulations, the Final Rule (published May 6) will add a new complex layer of bureaucracy for labs offering laboratory-developed tests (LDTs). LDTs on the market prior to May 6 will not have to go through the full FDA application and clearance process. However, labs will need to develop quality system complaint files, registration, labeling, etc. for each LDT they currently offer. New LDTs will ultimately need to go through the full FDA application and
clearance process.

Jonathan Genzen, MD, PhD, Chief Medical Officer and Senior Director of Governmental Affairs at ARUP Laboratories (Salt Lake City, UT), has been closely following the FDA’s movement toward regulating laboratory developed tests. Below we summarize Dr. Genzen’s perspectives on the Final Rule with an emphasis on what it means for currently marketed LDTs. 

What are the Stage 1 requirements for “grandfathered” LDTs under the Final Rule?

These tests are not fully “grandfathered” under the Final Rule, as certain FDA oversight requirements still apply.

Currently marketed LDTs (on the market prior to May 6, 2024) will need to comply with FDA Medical Device Reporting (MDR) regulations. This includes reporting certain device-related adverse events and product problems to the FDA, as well as correction and removal reporting requirements.

Currently marketed LDTs will also need to comply with one of the Stage 3 quality system requirements (Complaint Files — 21 C.F.R. 820.198). Laboratories will be required to establish and maintain procedures for receiving, reviewing, and evaluating complaints for their LDTs.

The Stage 1 requirements will need to be met by May 6, 2025.

What are the Stage 2 requirements for “grandfathered” LDTs under the Final Rule?

Currently marketed LDTs will need to comply with FDA registration, listing, labeling, and investigational use requirements by May 6, 2026. The most complex of these requirements is labeling. It appears that all LDTs eligible under the currently marketed enforcement discretion policy will need to meet full FDA labeling requirements for IVDs. This will be a complex task to conduct retrospectively, as labeling requirements are extensive and will need to be completed within two years to remain in compliance with the Final Rule.

Which anatomic pathology services are covered under the Final Rule for LDTs?

From my interpretation, with the exception of manual staining and manual immunohistochemistry (“1976-type” LDTs), the Final Rule doesn’t distinguish between AP and CP testing. The Final Rule appears to apply to all LDTs, with the exception of manual interpretation of the final slides by a pathologist. This means that currently performed anatomic pathology LDTs, including non-manual IHC staining, are now subject to FDA oversight.

What happens when an existing LDT is modified?
The moment a currently marketed test has a modification considered to be significant by the FDA (and they provide representative examples in the Final Rule), then the LDT would be subject to additional QS requirements including design controls, purchasing controls, acceptance activities, corrective and preventive action (CAPA), and records requirements. Such  modifications to existing LDTs will also require a premarket submission to the FDA.

Over time, I anticipate that many routine test modifications, including sample type changes and automation of manual assays on liquid handlers, will now necessitate FDA submissions. And I suspect that the FDA is underestimating the number of tests that will ultimately need to go through premarket review, as well as the financial impact to the clinical laboratory community.

Is the NYS CLEP less expensive and a quicker process than FDA review?

I believe that LDT submission and review under the NYS Clinical Laboratory  Evaluation Program (CLEP) – which oversees clinical laboratory testing for NY patients – is available only to NYS-accredited labs. NY clinical laboratory accreditation is likely not a practical option for most laboratories that do not intend to perform testing on NY patients. The NY CLEP performs outstanding, high-quality work, and they will need to share their perspective on how the program should or should not be used in the context of the FDA’s Final Rule.

Is a lawsuit challenging FDA’s authority to regulate LDTs likely?
I believe that litigation is very likely. The FDA’s language in the Final Rule regarding “illegality” (page 30) makes this even more likely in my opinion. If not following the FDA’s new framework for LDTs is deemed illegal—even if it compromises the ability to care for patients (e.g. emergency validations for clinically urgent testing in acute settings) – then the lab industry has been backed into a corner and judicial review could be the only remaining remedy.

Google Releases AI Tool for Pathology

Google Releases AI Tool for Pathology

Google Releases AI Tool for Pathology

Google has released a free cloud-based tool (“Path Foundation”) that 
transforms digitized slide images into numerical data that researchers 
can use to create AI tools for pathology. “This is a landmark for us,” says 
David Steiner, MD, PhD, Clinical Research Scientist at Google. Based on  feedback to Path Foundation, Google will make decisions toward  developing commercial AI tools for pathologists. 

For more than seven years, Google has employed a team of clinical research scientists based in Mountain View, California and London, England, tasked with developing AI software tools for radiology and pathology. Below is a summary of LE’s interview with Google’s David Steiner, MD, PhD, Clinical Research Scientist.

How can labs and pathologists use Path Foundation?

Commercial labs and academic medical centers, for example, can use Path Foundation to convert patches of their digitized slide images into numerical vectors, known as embeddings. These embeddings capture important features and patterns contained in digitized slide images which are learned by Path Foundation during its training on millions of pathology images. After the embeddings for each image are collected, this data can be used to train and create custom algorithms for a range of tasks such as identifying tissue type, tumors, or performing quality assurance on digitized images.

What’s the benefit of using a “Foundation” model to analyze content in images?
Leveraging the embeddings from Path Foundation requires less data and computational resources than traditional methods, giving researchers a big head start toward developing their own algorithms.

In contrast, traditional methods such as strongly supervised deep learning models require more resources because every task requires fresh training in its own unique deep learning model and many labeled images for each category of interest.

The foundation model is similar to that of seasoned guitar player quickly learning a new song by ear. Because the guitar player has already built up a foundation of skill and understanding, they can quickly pick up the patterns and groove of a new song.

Where did you get the digitized images to train Path Foundation on?
We used 20,000 whole-slide images, covering millions of image patches, from a variety of sources, including the National Cancer Institute’s Cancer Genome Atlas, as well as academic medical centers and some private pathology labs.

What is the user roadmap to getting started with Path Foundation?
After filling out the access form, users can run a small demo notebook that walks them through how to train a tumor classifier. To use Path Foundation on their own task (i.e., identifying tissue type) they would need to collate a set of digital pathology images with accompanying labels. The user would then upload these images and labels into Google Cloud.

From there, the users can adapt the demo notebook to call the Path Foundation API on their uploaded images. Using the existing code in the demo notebook they would then train a model to classify their images based on the labels and evaluate its performance on a held-out part of
the dataset not used to train the model. In the future we hope to make it even easier to use Path Foundation and the embeddings directly in your pathology slide viewer with no coding required.

We’re offering Path Foundation free to users on github.com/Google-Health.

Do labs that use Path Foundation need to share their digitized images or the results of their research with Google?
They don’t need to share the images or the results of their research with Google. They do need to have their images stored in Google Cloud (in their own private or institution account), but these are kept private to the user and not accessible by Google. In addition, when the images are sent to the Path Foundation model to compute the embeddings, they are not saved or stored by Google.

Any plans to develop commercial AI software tools like Ibex, Paige or PathAI?
Yes. Path Foundation represents a landmark toward that end.

What is the next step for your research team in terms of developing AI tools for pathologists?
We’ll take feedback on users from Path Foundation to understand key-use cases and how to make the tool better and easier to use. We’ll also explore how these embeddings might be used with large language and large multimodal models (LLMs & LMMs). And then we plan to develop useful approaches and models for working with whole slide images (WSIs), in addition to the “patch-based” models and applications that this current tool represents.

Has Google completed any studies related to AI-assisted diagnostic tools for cancer?
Yes. We have published several studies in peer-reviewed journals.

Most recently, we published a study that used AI to predict immunotherapy outcomes from digitized slide images in non-small cell lung cancer (Cancer Research, vol. 84, 2024).

In 2023, we published a paper that showed how AI can be used for clinical decision-making in colorectal cancer (Nature Communications Medicine, vol. 3, 2023). And, in 2022, we published a study that used AI for diagnosis and Gleason Grading of prostate cancer (Nature Medicine, vol. 28, 2022).

We have also published studies focusing on AI models for breast cancer.

Will AI algorithms eventually replace pathologists?
AI will make pathologists better rather than replace them. Initially, AI will be used to automate repetitive tasks such as locating the image patches that pathologists should focus their eyes on. Eventually, AI could be used to query images. Pathologists and researchers may someday be able to
type in specific questions and get AI answers about an image.

Is there the potential to integrate pathology and radiology image data using AI?
I’m excited to explore this and do see the promise in bringing these two specialties together. I believe the combination will yield more than the sum of the parts. Google does have a team of research scientists working on AI tools for radiology. And we did introduce an AI tool for chest x-rays (CXR Foundation) in July 2022.

FDA Finalizes LDT Regulation; Partial “Grandfather” Exemptions for Existing LDTs

FDA Final LDT Rule Could be Published Soon

FDA Final LDT Rule Could be Published Soon

On March 1, the FDA submitted its final rule for LDT regulation to 
the White House’s Office of Information and Regulatory Affairs 
(OIRA). This is a perfunctory last step before the final rule is published
in the Federal Register. This could occur as soon as April 1. This will be
the most impactful new regulatory change for laboratories since PAMA
completely overhauled the Medicare CLFS in 2018.

FDA FINAL LDT RULE COULD BE PUBLISHED SOON

OIRA (pronounced “oh-eye-rah”) is a statutory part of the Office of Management and Budget within the Executive Office of the President. OIRA is responsible for reviewing all federal regulations (i.e., the Executive Branch’s administrative actions) to ensure they meet all statutory requirements. OIRA is currently headed by Richard Revesz, Administrator, who was appointed by President Biden and confirmed by the U.S. Senate in late 2022.

“OIRA reviewed the proposed rule in record time, so it is reasonable to expect that the review of the final rule will not be protracted. I would not be surprised if OIRA completes its review in 30 days and FDA publishes the final rule in the federal register in the first week of April,” according to attorney Sheila Walcoff, Chief Executive at the IVD consulting firm Goldbug Strategies (Gaithersburg, MD).

Typically, a final rule will specify an effective date of 30 or 60 days after the publication date, adds Walcoff.

Once a final rule is published it will be difficult to overturn.

Last Chance to Sway OIRA Against Regulation 

OIRA staff held nine teleconferences with organizations advocating both for and against FDA LDT regulation last year. OIRA is next scheduled to meet with The Association for Diagnostics and Laboratory Medicine (ADLM — formerly AACC) on March 18. ADLM, which represents approximately 8,000 members, including clinical labs and IVD manufacturers, has steadfastly
opposed FDA regulation of LDTs. This could be the last chance that the lab industry has to sway OIRA against rubber-stamping the final rule.

Expected Legal Challenge

A final rule is almost guaranteed to trigger a lawsuit from lab trade groups, which will argue that the FDA does not have the authority to regulate LDTs.
The American Clinical Laboratory Assn. (ACLA — Washington, DC) seems to be gearing up for a lawsuit to the impending final rule. In a statement, ACLA President Susan Van Meter said:

ACLA has significant concerns about the legality and impact of FDA unilaterally imposing an ill-fitting medical device scheme on laboratory-developed testing services, which are professional services and not medical products. Should the agency promulgate a final rule, ACLA will assess its options at that time; but we continue to urge the agency to withdraw the proposed rule and reengage on advancing appropriate legislation.

Could a New Trump Administration Put the Kibosh on LDT Regulation?

As a component of OMB, OIRA is part of the Executive Office of the President and helps ensure that covered agencies’ rules reflect the President’s policies and priorities.

The FDA is moving quickly because the national election in November could result in a new administration opposed to LDT regulation. A new President could, immediately upon taking office, prevent a proposed rule from being finalized, according to long-time lab regulation expert Dennis
Weissman (Falls Church, VA).

However, Weissman says that changing or canceling a final rule is much more difficult. Once a federal rule has been finalized a new administration would be required to undergo the formal rulemaking process (i.e., opportunity for public comment on a proposal followed by final rule) to change or repeal all or part of a final rule.

In addition to this administrative action, Congress could also take legislative action to overturn a final rule, notes Weissman.

 

New Market Research Report on U.S. Clinical Laboratory Market

New Market Research Report on U.S. Clinical Laboratory Market

New Market Research Report on U.S. Clinical Laboratory Market

Laboratory Economics has just released The U.S. Clinical Laboratory  Industry Forecast & Trends 2023-2025. With this special report, you can 
tap into 100+ pages of proprietary market research that reveals critical  
data and information about key business trends affecting the U.S.
laboratory testing market.

The report reveals that the U.S. laboratory testing market represented
an estimated $125 billion of revenue in 2023 with a long-term annual
growth rate of 3-4%. Growth is currently being driven almost entirely by
increased PCR-based microbiology testing.

The U.S. laboratory testing market faces unprecedented challenges,
including the post-pandemic employee wage inflation, greater utilization
management and claims denials by private payers and persistent
reimbursement pressure. Despite these challenges, the U.S. lab industry
has shown persistent growth.

“The adoption of new higher-priced PCR-based test panels for respiratory
viruses, UTIs and STDs is helping to offset price and volume pressure on
routine clinical lab tests,” according to Jondavid Klipp, President of
Laboratory Economics.

The report includes:

  • More than 100 charts and graphs
  • U.S. lab market size and growth rates for 2012-2025
  • Detailed estimates for market subsets like hospital-based labs,
    independent labs, and physician-office-based labs
  • In-depth analysis of the PCR-based testing market size, growth rate,
    and highest-volume laboratories
  • Top 50 hospital outreach labs by Medicare CLFS and PFS payments
  • Detailed reimbursement rate information from Medicare CLFS, Aetna,
    Cigna, UnitedHealthcare, etc.
  • Comprehensive lab M&A valuation metrics by revenue and EBITDA
  • Results from Laboratory Economics Clinical Lab Trends Surveys from
    2014 through 2023
  • The biggest challenges and opportunities for labs

Laboratory companies highlighted include:

  • ACL Laboratories
  • ARUP Laboratories
  • Exact Sciences
  • Fulgent Genetics
  • Labcorp
  • Mayo Clinic Laboratories
  • Myriad Genetics
  • NeoGenomics
  • Northwell Health Labs
  • OPKO/BioReference Labs
  • PathAI/Poplar Healthcare
  • PathGroup
  • Quest Diagnostics
  • Sonic Healthcare

The U.S. Clinical Laboratory Industry: Forecast & Trends 2023-2025 is
published by Laboratory Economics (www.laboratoryeconomics.com), an
independent market research firm focused exclusively on the business of
pathology and laboratory medicine.