Unpacking Impacts of FDA Reclassification on Diagnostic Innovation and Access

Recently, an FDA reclassification process was announced that will reclassify many high-risk medical devices into the less burdensome “moderate risk” category. This includes certain infectious disease and companion diagnostic tests, allowing them to go through 510(k) premarket notification rather than full premarket approval.

While the FDA will still review reclassified devices, this shift shows their openness to using discretion based on new safety data. Many expect it signals a forthcoming risk-based approach to regulating lab-developed tests (LDTs), rather than blanket high-risk classification. LDTs have faced uncertainty amid debate over appropriate oversight.

The FDA’s willingness to reevaluate device classification when sufficient safety controls exist, bolstered by their progressive view on novel technologies like AI, suggests flexibility in LDT regulation. Rather than one-size-fits-all premarket approval, LDTs may see nuanced, data-driven oversight with controls tailored to each test’s unique risks and benefits. This balanced approach can enable critical innovation while protecting patients.

What is FDA reclassification?

The FDA assigns each medical device to one of three regulatory classes based on its risks and the regulatory controls needed to reasonably assure safety and effectiveness.

Class I devices have the lowest risks, Class III devices have the highest risks. Class III devices must get premarket approval, the most stringent review.

FDA reclassification is the periodic re-evaluation of these classifications as new safety data emerges. If certain Class III high-risk devices appear to have become lower risk based on real world experience, the FDA can reclassify them to Class II moderate risk.

This allows the device manufacturer to go through a simpler FDA review process called 510(k) premarket notification rather than full premarket approval. The 510(k) process verifies the reclassified device is substantially equivalent to an already approved device.

Reclassification opens the door for more manufacturers to develop important technologies by reducing regulatory burdens once there is sufficient evidence those burdens are no longer needed to assure safety and effectiveness. This process allows the FDA to adapt its oversight as scientific understanding evolves.

In summary, reclassification is how the FDA shifts devices to lower regulatory classes when emerging data indicates higher classes and their stricter processes are no longer essential to protecting public health.

What are the benefits of FDA reclassification?

The FDA reclassification of some infectious disease and companion diagnostics from Class III to Class II will spur innovation in these critical test areas in several key ways:

• Lower regulatory burdens encourage more test developers to enter the market. The lengthy and expensive Class III premarket approval process discouraged smaller companies and academic labs from bringing new diagnostics to market. Class II 510(k) notification is more accessible.
• Increased competition drives faster iteration and improvement. More developers working on similar types of tests will lead to rapid iterations and technical advances as they aim to improve sensitivity, accuracy, and other performance metrics.
• Quicker path to market benefits patients. With Class II, important new diagnostics can reach patients faster without compromising reasonable safety assurances. This is critical for example during infectious disease outbreaks.
• Tailored special controls enhance oversight. Class II doesn’t mean lax oversight. The FDA can establish specific testing, labeling, and other special controls to address unique risks of each type of diagnostic. This maintains safety while enabling innovation.
• Stimulates investment and test access. By reducing regulatory uncertainty and barriers, reclassification makes diagnostics a more attractive area for investors. This expands test availability and access for patients and doctors.

In summary, reclassifying deserving diagnostics to Class II has the potential to accelerate development of life-saving and life-improving new tests while retaining FDA’s ability to reasonably assure their safety and effectiveness. It’s a win for innovation, business, and most importantly public health.

What are the risk to FDA reclassification?

While the benefits of FDA reclassification likely outweigh the risks for most diagnostic manufacturers, the costs and challenges of increased FDA oversight under Class II 510(k) should not be underestimated.

• Increased competition could threaten market share. More developers entering the market due to lower Class II barriers could threaten established companies’ dominant market positions in certain diagnostic areas.
• Greater transparency requirements. Class II 510(k) process requires detailed test information be made public, which some developers may not want disclosed.
• Ongoing costs of regulatory compliance. While less than Class III, Class II tests still require following quality systems regulations, adverse event reporting, and other oversight measures that add operational costs.
• Stricter manufacturing standards. Class II diagnostics may need to meet higher bar for manufacturing practices and quality control vs LDTs, increasing production costs.
• Potential for weaker intellectual property protection. With more similar competing tests on the market due to eased Class II requirements, developers may have difficulty establishing strong IP protection.
• Possible payer reimbursement issues. Payers may balk at reimbursing a wider array of competing but incremental test innovations absent compelling clinical utility data.
• Can still be rescinded to Class III. If new safety issues emerge, tests could get bumped back up to Class III, disrupting business plans.

While the benefits likely outweigh the risks for most diagnostic manufacturers, the costs and challenges of increased FDA oversight under Class II 510(k) should not be underestimated. The reclassification expands market opportunities but also brings new complexities to the space.

The FDA’s planned reclassification of certain high-risk medical devices like infectious disease and companion diagnostics tests to moderate risk categories will enable more rapid innovation in critical diagnostic areas. By allowing these devices to go through the 510(k) premarket notification pathway rather than full premarket approval, barriers to market entry will be reduced. This should spur development of new lifesaving tests. However, diagnostic manufacturers will also face challenges from increased competition, transparency, and ongoing regulatory compliance costs. Overall, leveraging the FDA’s risk-based reclassification framework strengthens patient access to emerging diagnostics while maintaining reasonable safety and effectiveness oversight.

Read more on the FDA’s website.