Clinical Laboratory Testing

Last revised: 


While translational research into a new biomarker is a laudable goal, in actual practice, very few scientific discoveries ever make it into clinical practice. The process of getting new laboratory tests into routine use is complicated and expensive. National and local funding agencies have not traditionally fund the studies necessary to demonstrate the utility of such tests. Therefore, in practice, new clinical laboratory tests are collaboration between the basic and clinical scientist, and the in vitro diagnostics (IVD) industry. The driving force for an IVD company to collaborate is usually the potential marketing value of a new biomarker.

Although some integration has been achieved by small venture-capital based bio-tech companies, full implementation of new biomarkers usually requires licensing to larger corporations or, the creation of a new public company through an Initial Public Offering (IPO). There is interest in establishing biomarkers to support the introduction of novel therapeutics; however, pharmaceutical companies are reluctant to go with this approach unless there is no alternative for the drug.

CLIA certification

All laboratory tests to be used for clinical purposes must be ordered by a physician licensed in the State of California. Patients and researchers cannot order clinical laboratory tests on anyone including themselves. All moderate and high complexity testing (see below) must be conducted in laboratories certified by the Clinical Laboratory Improvement Act (CLIA). Physician office laboratories can receive a Certificate of Waiver for waived tests. Most clinical laboratories are accredited by either the College of American Pathologists or The Joint Commission. All clinical laboratory tests must be performed by California licensed Clinical Laboratory Scientists (CLS).

Testing categories

Clinical laboratory tests fall under three main categories. The US Food and Drug Administration (FDA) determines the testing categories of tests that they have cleared for clinical use using a scoring system that takes into account the complexity of the testing, stability of calibrators, controls, pre-analytical steps required and need for interpretation of results. See a complete listing.

Waived tests are simple to perform, low risk for erroneous results, and carry low clinical significance. Many of these tests are available for sale as OTC (over the counter) for consumer use. Examples include pregnancy tests, drugs of abuse testing, strept tests, dipsticks, glucometers, etc. All of these tests are approved by the U.S. Food and Drug Administration and are not likely to be applicable for UCSF-derived tests.

Moderately complex tests are usually those that are available on automated clinical laboratory equipment such as electrolyte profiles, chemistry profiles, complete blood count, urinalysis, urine drug screen, and automated immunoassays.

High complexity tests include those that require clinical laboratory expertise beyond normal automation to perform. If the output of the data requires some expertise, these would also be highly complex. Examples include cytology, immunohistochemistry, peripheral smears, flow cytometry, gel electrophoresis, and most molecular diagnostic tests including RT-PCR, gene chip arrays, multiplexed analyses, dot blots, viral loads, expression arrays, CGH arrays, etc.

All moderately and high complexity clinical laboratory tests must be validated by CLS personnel prior to being put into use. Validation studies cannot be conducted by unlicensed research personnel, no matter how competent. For tests that are FDA-cleared, the validation studies include test accuracy, precision, and verification of the test's reportable range.

"Home brew" tests refer to procedures that are not cleared by the FDA and are validated by each laboratory that intends on using the test. Validations for home brew tests are not transferable to other clinical laboratories, i.e., each lab must conduct analytical and clinical validations. In addition to accuracy, precision, and verification of reportable range, other studies include analytical sensitivity and specificity, analyte stability, clinical sensitivity and specificity, reference range, analyte stability, and other performance characteristics that are needed for the test. Each batch of reagents must be validated, ideally under Good Laboratory Practice guidelines. It would be anticipated that any research assay developed by a researcher who wants to apply this test to clinical practice will have to follow the home brew category.

Analyte-specific reagents is a process whereby manufacturers of diagnostic reagents can sell products to clinical laboratories for their fabrication into a diagnostic test. This category was originally established for supplying specific reagents for molecular tests, e.g., DNA primers for PCR amplification. Manufacturers are not allowed to market these reagents as a diagnostic test. However, vendors have been selling complete test kits therefore the FDA is looking to eliminate this designation. The advantage of ASRs to clinical laboratories it that the manufacturer of the ASR is responsible for lot-to-lot reagent validations and not the clinical laboratory itself.

The FDA approval process for clinical laboratory tests

There are two mechanisms for FDA clearance. The premarket approval (PMA) usually involves a multi-center prospective clinical trial of the laboratory test as an investigational device. This process typically takes 2-3 years from conception of the trial to approval, and $5-10 million of expenditures. Ultimately, claims for the usefulness of the test must be determined. The clinical study documents the accuracy and limits of these medical claims made of the test. All clinical trials must be reviewed and approved by the appropriate institutional review board for human studies.

If a similar test has already gained FDA approval, an equivalence study or 510K can be conducted, whereby the performance of the new test is shown to have equal efficacy as another that is already FDA cleared. A study on the claims of the test is unnecessary if they are unchanged from the predicate test. Thus these studies are shorter, can be retrospective, and are considerably less expensive ($1-2 million). However, it is unlikely that any new test developed by a UCSF researcher can be approved through the 510K route.

Reimbursement for clinical laboratory tests

Clinical laboratory tests are reimbursed according to the Current Procedural Terminology (CPT) coding established by the American Medical Association. CPT reimbursement codes are not prospectively established. New codes are created only after the test has been put into routine clinical practice for several years. The AMA holds annual CPT coding committee to determine if a CPT code is needed and the mechanism by which reimbursement rate will be determined. Clinical laboratory tests that do not have a separate CPT code are minimally reimbursed using a generic code based on the test methodology. It should be noted that for in-patients covered by Medicare and Medicaid, clinical laboratory tests follow the Diagnostic Related Groups (DRGs) system, whereby a fixed total medical reimbursement is given based on the discharge code established by the International Classification of Diseases (ICD-9). There is no additional reimbursement for laboratory tests.

Most new clinical laboratory tests are not justified based on existing reimbursement codes. Cost justification can be made on the basis of improved clinical diagnosis that enable better clinical management decisions that either reduce morbidity and/or mortality, or if such decisions have economic advantages, such as a shorter hospital length of stay. These medical and economic outcome studies are difficult to demonstrate because there are multiple uncontrolled variables that determine how well and how efficiently patients are managed.

UCSF Department of Laboratory Medicine

The Lab Medicine Department has clinical and research faculty that specialize in conducting clinical trials and validation studies needed to bring new biomarkers into clinical practice. The faculty are responsible for the delivery of current and any new clinical services. The majority of these trials are funded by the IVD industry for 510K approval. Each year, very few truly new tests become available.

Faculty with Interest in Potential Collaborations to Develop Clinical Tests


Area of expertise


Alan Wu

Cardiac biomarkers, toxicology, pharmacogenomics, basic clinical chemistry, infectious diseases

[email protected]
Steve Miller Microbiology [email protected]
Farid Chehab Molecular diagnostics [email protected]
Jingwei Yu Cytogenetics [email protected]
Parul Bhargava All administrative issues [email protected]

Please contact potential collaborators directly. For general questions, contact Parul Bhargava.