The US government is finally examining a regulatory loophole that has allowed companies like Theranos to market diagnostic tests to patients without going through the US Federal Drug Administration first. FDA officials pointed out today in a hearing that these tests endanger patient safety — and that bad tests can require costly clean-up.

The Energy and Commerce's Subcommittee on Health held a hearing in Washington today to discuss a controversial category of diagnostic tests called "lab developed tests" or LDTs. This category is basically a huge loophole that has been around for about 30 years (longer if you consider that regulation wasn't enforced before the loophole was coded into law in 1988); it gives companies that develop and conduct a diagnostic test in a single lab the ability to avoid submitting their tests to the FDA before using them on patients. The LDT category exists because research hospitals often need to modify commercial tests to suit patient needs. And because academic researchers tend to publish their results anyway, this form of regulation hasn't raised too many eyebrows.

Some tests may have caused women to abort a normal pregnancy

But over the past several years, a number of startups have figured out that the loophole could benefit them as well; they, too, could make tests that diagnose serious medical conditions without having to demonstrate the tests' validity to the FDA first. And, unlike academics, many of these companies haven't published their results out in the open — which makes it very hard for anyone to figure out if these diagnostics actually work. As a result, some tests may have caused pregnant women to abort a healthy fetus, or to seek the wrong breast cancer treatment. So, today's hearing was designed to hear arguments for and against a change proposed by the FDA last year that would require that developers of certain LDTs obtain approval before they start to market their tests to patients. Developers would also have to monitor customer complaints after they put out their tests.

The FDA wants to make sure that these tests "are accurate, reliable and that they do, in fact, identify a disease," said Jeffrey Shuren, director of the FDA's Center for Devices and Radiological Health, during the hearing. Right now, this form of verification isn't conducted by FDA or federal lab inspectors. And that's a problem, Shuren told the subcommittee. If diagnostic tests return inaccurate results, "physicians can make the wrong decisions and patients can get hurt."

In fact, the FDA yesterday released a report that discusses 20 LDTs that caused harm to patients, Shuren said. Among them was a genetic breast cancer test that gave out inaccurate results in 20 percent of cases. That means that some breast cancer patients may not have received the right treatment. The FDA also mentions prenatal tests that were based on "disproven scientific concepts." These could have caused women to abort a normal pregnancy or to deliver a child with an undiagnosed genetic syndrome.

"Why in the world would a lab develop a test that wasn’t safe and accurate?"

Many representatives were receptive to Shuren's arguments. But the examples in the FDA's report weren't enough to convince Congressman Marsha Blackburn (R-TN) and Congressman Michael Burgess (R-TX), who is also a physician. Both went after the FDA's report for what they said was a small number of case studies. "It took you three years to provide us with 20 [examples]!" Burgess told Shuren. Congressman Joe Barton (R-TX), perhaps unfamiliar with capitalism’s incentive system, raised similar objections. "Why in the world would a lab develop a test that wasn’t safe and accurate?" he said. "My office isn't being overrun by calls from doctors and patients saying that there are some terrible LDTs out in the marketplace."

That may be because his constituents don't know that some tests ordered by their doctors are wholly unverified. In the case of Pathway Genomics, a startup that began selling a cancer blood test in September, the company hadn't conducted the type of study that would have shown that a positive result really did lead to the development of a disease. The company's CEO, Jim Plante, didn't think that was a problem, however. It wasn't until the FDA sent the company a letter calling the test potentially harmful that it stopped letting patients apply for the test online. Physicians can still order the $699 test through Pathway's website.

Theranos failed to document quality audits

And more recently, the blood testing startup Theranos has come under fire following a Wall Street Journal Investigation that questioned testing practices in Theranos' labs. This was supported by an FDA inspection this past August, which slammed Theranos for failing to document quality audits. That wasn’t the end of Theranos’ sloppiness, according to the report. It also faulted Theranos for selling an unregulated medical device — the "Nanotainer" — which is meant to contain blood from a fingerstick draw. This inspection occurred only because Theranos voluntarily submitted its tests to the FDA.

Shuren countered points raised by these Republican subcommittee members by explaining that the US currently has no reporting system on LDTs. "We are not monitoring for problems," he said, which makes it hard to identify inaccurate tests. That's exactly the kind issue that the FDA's proposal would address. The FDA's report shows that developers are, in fact, selling faulty tests, and results are being used to make medical decisions.

And some LDT developers aren't doing the kinds of studies that would show that their tests work, Shuren explained. (Pathway Genomics is one such company.) "Regardless of whether we regulate them or not, a lab shouldn't put any test on the market that they don’t have the data to validate," he said. The FDA's new proposal would change that by requiring that companies validate their tests before they hit the market.

"We are not monitoring for problems."

Patient safety isn't the only incentive, however. The cost of regulating LDTs before they hit the market would be smaller than the current cost of helping patients recover after they receive a faulty test result, Shuren said. For example, the FDA estimates that the public health cost associated with a single faulty test — a test named "CARE Clinical Autism Biomarkers Test" that led to the incorrect treatment of children — was $66.1 million.

The FDA plans to release the finalized guidance for the regulation of LDTs sometime in 2016. You can watch the hearing in full, here.