On October 3rd, the Food and Drug Administration (FDA) published its widely anticipated proposed rule on the regulation of laboratory developed tests (LDTs). Last year, Congress failed to pass the Verifying Accurate, Leading-edge IVCT Development Act (VALID), legislation endorsed by the agency that would have addressed the regulation of LDTs in the context of enacting comprehensive reform of in vitro diagnostics (IVD) regulation. Subsequently, FDA signaled an intention to address LDTs through notice and comment rulemaking, while continuing to voice support for comprehensive legislative reform.

Comments on the proposed rule are due 60 days after publication. It is widely anticipated that FDA will prioritize finalizing the rule next year, at which point it is likely to face one or more court challenges. Furthermore, it remains to be seen whether FDA’s rulemaking initiative will spur renewed congressional activity on these issues, including rejuvenating the previously stalled legislative efforts in Congress. In any case, however, this rule would mark a major shift in the regulation of laboratory testing and the entire in IVD industry.

FDA’s Proposal

The proposed rule is the latest chapter in FDA’s efforts to end its posture of generally exercising enforcement discretion with regard to LDTs, which the agency describes as IVDs “intended for clinical use and that [are] designed, manufactured, and used within a single laboratory that is certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and meets the regulatory requirements under CLIA to perform high complexity testing.” The agency describes this history in detail in the preamble to the proposed rule, and these efforts have been contested by portions of the laboratory community, which take the position that FDA lacks authority over LDTs and that additional regulation is not needed.

Compared to FDA’s previous attempts to bring LDTs under active regulation as medical devices, FDA’s proposed approach here is relatively simple. The agency indicates that it is “proposing to amend its regulations to make explicit that in vitro diagnostic products (IVDs) are devices” under the Food, Drug, and Cosmetic Act (FDCA), “including when the manufacturer of the IVD is a laboratory.” To do so, FDA proposes a relatively minimalistic change to its existing regulation at 21 CFR 809.3(a) defining in vitro diagnostic products (changes shown in underline below):

…. These products are devices as defined in section 201(h)(1) of the Federal Food, Drug, and Cosmetic Act (the act) and may also be biological products subject to section 351 of the Public Health Service Act, including when the manufacturer of these products is a laboratory.¹

Accompanying this rather straightforward change to regulations, however, is a proposed transition plan for the lifting of a default posture of enforcement discretion for LDTs. FDA is “proposing a gradual phaseout to occur in stages over a total period of 4 years,” which the agency “anticipates … should ultimately enable IVDs offered as LDTs that are supported by sound science to remain on the market.” The phaseout policy would:

• Apply to “LDTs by laboratories that are certified under CLIA and that meet the regulatory requirements under CLIA to perform high complexity testing, even if those IVDs do not fall within FDA’s traditional understanding of an LDT because they are not designed, manufactured, and used within a single laboratory”; in other words, the agency is proposing to take a broad view of what constitutes an LDT for these purposes.
• Not apply to certain LDTs “that have previously been outside of enforcement discretion,” such as laboratory tests for emergency use; these would continue to be subject to active regulation rather than receiving enforcement discretion during the proposed transition period.

Furthermore, “FDA is proposing to continue to apply the current general enforcement discretion approach going forward” for certain categories of LDTs, such as:

• “1976-Type LDTs” that feature use of manual techniques, are performed by laboratory personnel with specialized expertise without automation, use components legally marketed for clinical use and are designed, manufactured and used within a single CLIA-certified laboratory that meets the requirements under CLIA for high complexity testing.
• Human Leukocyte Antigen (HLA) tests that are designed, manufactured and used in a single laboratory certified under CLIA that meets the requirements to perform high-complexity histocompatibility testing.
• Tests intended solely for forensic (law enforcement) purposes.

FDA also noted that tests exclusively used for public health surveillance are distinct from other tests and would not be affected by the phaseout policy.

Transition Approach

LDTs subject to the enforcement discretion phaseout would be required with the following transition requirements, based on a timeline starting with the publication of the “final phaseout policy” (to be published in the preamble to the final rule):

• One Year Later: End of the general enforcement discretion approach with respect to medical device reporting (MDR) requirements and correction and removal reporting requirements.²
• Two Years Later: End of the general enforcement discretion approach with respect to requirements other than MDR, correction and removal reporting, Quality System (QS) and premarket review. In other words, at the end of the two-year mark, LDTs subject to the phaseout would be subject to, among other things, registration and listing, labeling requirements and investigational use requirements.³
• Three Years Later: End of the general enforcement discretion approach with respect to QS requirements.⁴
• Three and a Half Years Later: End of the general enforcement discretion approach with respect to premarket review requirements for high-risk IVDs. However, FDA caveats that in any case, this deadline would not occur before October 1, 2027. Furthermore, under the proposal, the agency “generally would not intend to enforce” against an LDT while a premarket approval application (PMA) submitted by the deadline is still under review.
• Four Years Later: End of the general enforcement discretion approach with respect to premarket review requirements for moderate risk and low risk IVDs that require premarket submissions (i.e., 510(k)s and De Novo classification requests). However, FDA caveats that in any case, this deadline would not occur before April 1, 2028. As with PMAs, FDA “generally would not intend to enforce” against an LDT while a marketing application submitted by the deadline is still under review.

Justification for the Proposed Rule

In contrast with the relatively minimalistic proposed change to the regulations themselves, the proposed rule features an extensive legal and public health justification for FDA to take this action. This extensive effort is clearly intended by the agency to lay the foundation for a defense against anticipated legal challenges, as well as to provide a broader policy rationale given the agency’s position that comprehensive legislative reform of IVD regulation is still needed.

Legal Basis

The preamble to the proposed rule contains FDA’s rationale for interpreting LDTs to constitute devices under the FDCA. The analysis is extensive; this section provides key points. FDA’s analysis begins with an analysis of the statutory device definition and provides the agency’s reasoning as to why FDA has long interpreted the term to include test systems. The analysis then turns to test systems “manufactured by laboratories,” and FDA concludes that the device definition “contains no exception or limitation for devices manufactured by laboratories.” FDA also cited case law holding that “articles manufactured by medical professionals fall within FDA’s jurisdiction.” Among other arguments against FDA jurisdiction over LDTs, FDA rejected the argument that the practice of medicine exempts LDTs from regulation and contended that CLIA’s jurisdiction over laboratories does not preempt FDA’s complementary role in regulating IVDs manufactured by a laboratory.

FDA’s analysis also confronted contentions that the FDCA’s provisions relating to interstate commerce preclude regulation of LDTs. The agency indicated that “[t]here is no overarching requirement in the [FDCA] that FDA-regulated activities have a particular nexus with interstate commerce. Interstate commerce is not a prerequisite to FDA jurisdiction (beyond the constitutional minimum).” The agency also noted numerous references to “for commercial distribution” within device provisions of the FDCA but concluded that the agency’s longstanding interpretation of that phrase “does not require the physical transfer of an object, as some commentators have argued” (emphasis in original). The interstate commerce issue could be one of the legal challenges lodged against the rule, for example by laboratories that operate exclusively within one state.

Public Health Rationale

The proposed rule also provides an extensive rationale for why the agency intends to take this action now, after a long period of LDTs being subject to enforcement discretion. FDA indicated that it had consistently taken the position that LDTs constituted devices:

Over 25 years ago, FDA explained that clinical laboratories that develop tests are acting as manufacturers of medical devices…. FDA reiterated that position in a citizen petition response a year later … , and in the preamble to a final rule 3 years after that…. In 2006, FDA again cited its prior statement that clinical laboratories that develop tests are acting as manufacturers of medical devices …. In 2014, FDA expressly considered and rejected arguments that LDTs are not devices under the [FDCA], stating in a citizen petition response that “LDTs are devices within the plain language of the [statutory] definition”…. Five years later, FDA issued a warning letter stating that “FDA has not created a legal ‘carve-out’ for LDTs such that they are not required to comply with the requirements under the Act that otherwise would apply….” Although FDA has generally exercised enforcement discretion for LDTs, the Agency always retains discretion to take action when appropriate, such as when it is appropriate to address significant public health concerns….

The agency further detailed the number of LDTs that have been cleared, approved or granted De Novo classification requests since 2017, “under authorities in the [FDCA] specifically reserved for ‘devices,’” and also the number of LDTs granted emergency use authorizations (EUAs), “also limited to ‘devices’ or other FDA-regulated medical products.”

In explaining its justification for seeking to jettison its existing policy of enforcement discretion for LDTs, FDA juxtaposed the nature of LDTs when Congress passed the Medical Device Amendments of 1976 (MDA) and LDTs today.

At the time of passage of the MDA, LDTs were mostly manufactured in small volumes by laboratories that served their local communities. They were typically intended for use in diagnosing rare diseases or for other uses to meet the needs of a local patient population, or were generally similar to well-characterized, standard tests. They also tended to employ manual techniques (and did not use automation) performed by laboratory personnel with specialized expertise; to be used and interpreted by physicians or pathologists in a single institution responsible for the patient (and who were actively involved in patient care); and to be manufactured using components legally marketed for clinical use ….

In contrast, in FDA’s view,

Today, many LDTs rely on high-tech or complex instrumentation and software to generate results and clinical interpretations. They are often used in laboratories outside of the patient’s healthcare setting and are often manufactured in high volume for large and diverse populations. Many LDTs are manufactured by laboratory corporations that market the tests nationwide, as they accept specimens from patients across the country and run their LDTs in very large volumes in a single laboratory. Today’s LDTs are also more commonly manufactured with instruments or other components not legally marketed for clinical use and are more often used to inform or direct critical treatment decisions, to widely screen for common diseases, to predict personal risk of developing certain diseases, and to diagnose serious medical conditions such as cancer and heart disease.

The agency then provided a section summarizing “Current Information Raises Serious Questions About Whether Patients Can Rely on IVDs Offered as LDTs.” The agency concluded that regulation of LDTs would “better protect the public health by helping to assure the safety and effectiveness of LDTs” and might also “foster the manufacturing of innovative IVDs….” FDA also noted that “increased oversight may help to advance health equity. FDA is aware of concerns that IVDs offered as LDTs may exacerbate health inequities due to higher rates of inaccurate results among underrepresented patient populations, particularly racial and ethnic minorities undergoing genetic testing….”

Economic Analysis

FDA provided a Preliminary Economic Analysis of Impact in the propoed rule, accompanied by the full analysis in the docket. In summary, FDA concluded that the proposed rule is a significant regulatory action under Executive Order 12866 Section 3(f)(1) and will have a significant economic impact on a substantial number of small entities.

FDA Requests Information on Specific Issues

The proposed rule does not address certain categories of LDTs that received special treatment under the VALID legislation. For some of these, FDA specifically requested comment, including:

• If there is a public health rationale for granting enforcement discretion from premarket review and some Quality System requirements for currently marketed LDTs (i.e., what VALID termed “grandfathered” tests).
• If there is a general definition of an academic medical center (AMC) laboratory and is there a public health rationale for adopting a different policy for LDTs offered by AMC laboratories.
• If there is a public health rationale for providing a longer phaseout period to LDTs offered by laboratories with lower receipts.
• Whether specific enforcement discretion policies would be appropriate for LDTs “for other public health scenarios” beyond COVID-19 and Mpox tests.
• Unintended consequences from the proposed phaseout policy for particular patient populations (e.g., Medicare beneficiaries or rural populations).
• If it would be appropriate to exercise enforcement discretion for LDTs that have been reviewed by programs such as the New York State Department of Health Clinical Laboratory Evaluation Program (NYSDOH CLEP) or those within the Veterans Health Administration (VHA).

Issues to Watch and Next Steps

Although FDA has signaled an intention to prioritize finalizing this rule, while continuing to support comprehensive reform for the regulation of IVDs, LDT regulation is highly contested with many stakeholders holding diverse views. The proposed rule is a very significant step for the agency, but any large-scale change to LDT policy remains uncertain, and will be dependent on the Administration, Congress and in all likelihood, the courts. We will be particularly watching the following issues as stakeholders scrutinize and react to the proposed rule:

• What types of comments will FDA receive on the proposed rule itself and the Economic Analysis and how will FDA address such comments in any final rule?
• How will Congress react to the proposed rule, or to a final rule?
• Will FDA succeed in issuing a final rule prior to the beginning of the Congressional Review Act period and the 2024 election?
• How will the final rule address “grandfathering” of LDTs and other open questions, such as LDTs offered by academic medical centers?
• What are the grounds and timing for any lawsuits filed against the policy?
• How will the next user fee cycle handle IVDs and LDTs, given FDA’s indication that more review resources will be needed?
• Will FDA provide further guidance to laboratories on what constitutes an LDT, how LDTs will be classified as devices for purposes of the transition, and how other regulatory requirements will specifically apply to LDTs?

^{1 The proposed change from section 201(h) to section 201(h)(1) is due to a change in section 201 of the Food, Drug, and Cosmetic Act such that the device definition is now codified in section 201(h)(1). It was previously in section 201(h), a change in law moved this provision to a new paragraph (1) in order to add a definition of “counterfeit device” as paragraph (2).}

^{2 See 21 CFR Parts 803 (MDRs) and 806 (Corrections and Removals).}

^{3 See 21 C.F.R. Parts 807 (Registration and Listing); 801 and 809 (Labeling); and 812 (Investigational Device Exemptions).}

^{4 See 21 C.F.R. Part 820.}