One of the most significant challenges facing diagnostics is the FDA’s decision to regulate laboratory developed tests, however, the change provides current suppliers of LDTs with several advantages, Dr. Alastair Mackay of GARP Research & Securities says.
“There are many more LDTs than (in vitro diagnostic) kits, and the median test volume of an LDT is much, much lower,” Mackay said. “This means that most labs will be unable to make an economic case for strengthening claims of analytical validity, and supplementing them with new proof of clinical validity.”
Additionally, the FDA is expected to create a “grandfather” clause for LDTs already on the market. The result is unintended adverse effects on labs in low-volume markets and a competitive edge for suppliers of high-volume, high-price LDTs, such as Myriad Genetics (MYGN).
“Myriad has already sponsored multiple clinical trials on the clinical utility of its offerings, ready for inclusion in whatever FDA filing is introduced. And they have the cash in hand to fund additional studies,” Dr. Mackay said. “Further, these regulations will probably serve as barriers to competition, especially for potential startups. So all in all, I don’t think that LDT mandates will be especially burdensome to these companies.”
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