Background

Since the 1990’s, FDA has maintained the position that LDTs are medical devices over which the agency exercises enforcement discretion, except in some limited cases (e.g., when certain higher risk factors are present). Although the agency has never promulgated a regulation defining LDT, the agency has generally considered an LDT to be an IVD that is intended for clinical use and that is 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.[1] Yet, the public health need for FDA oversight of LDTs, and even its statutory authority to regulate these tests, have been hotly debated among stakeholders for just as long. Proponents of additional oversight assert that such tests are no different from currently regulated IVDs manufactured and commercialized by entities other than licensed or accredited clinical laboratories that are already subject to pre- and post-market oversight to ensure accuracy and validity, while others claim that FDA lacks the statutory authority to regulate LDTs and that such efforts would only harm the public health by limiting the availability of such tests.

During a public meeting held in 2010 to discuss how LDTs should be regulated, FDA raised many of the same arguments as it does in the proposed rule for why greater FDA oversight of LDTs is needed. These prior efforts culminated in 2014 when the agency issued two draft guidance documents that, when finalized, would have imposed a new LDT framework modeled after FDA’s regulation of traditional IVDs. By 2016, however, FDA was forced to halt its efforts to regulate LDTs through guidance due to push back from industry stakeholders and members of Congress, with all parties generally accepting that the pre-guidance status quo would continue until Congress clarified the scope of FDA’s authority with respect to LDTs through legislation. FDA announced its decision not to finalize the 2014 guidance[2] documents in a white paper that detailed its case for why greater regulatory oversight of LDTs was needed.

A few promising bills were put forward by members of Congress after 2016, with the Verifying Accurate, Leading‑edge IVCT Development (VALID) Act having enjoyed the broadest consensus after incorporating technical assistance from several government entities. Despite being introduced into multiple congressional sessions,[3] however, the proposed VALID Act has failed to garner enough support to be enacted (most recently this occurred in December 2022 when the VALID Act was not included in the omnibus spending bill). At the same time, however, alternate legislative approaches limiting FDA oversight with respect to LDTs, proposed as the VITAL Act, also failed to advance.

Against this backstop of false starts and failed legislative overhauls that have maintained an uneasy status quo of FDA enforcement discretion for most LDTs, the proposed rule is intended to establish a new baseline for FDA’s oversight of such tests by explicitly stating LDTs are medical devices under the FDCA and phasing out the general enforcement discretion approach that FDA has historically applied to LDTs.

Proposed rule

FDA has issued a proposed rule that would amend the definition of “in vitro diagnostic products” in 21 CFR 809.3 to make explicit that IVDs are medical devices under the FDCA, “including when the manufacturer of the IVD is a laboratory.” According to FDA, this change is necessary because LDTs have evolved from simple, manual tests intended to serve local communities that warranted enforcement discretion, to much more complex tests that resemble traditional IVDs more closely in terms of complexity and broader use. FDA notes, for example, that novel treatments often require use of a specialized test to identify patients likely to benefit from them, and recent drug approvals to treat diseases in their early stages make accurate and early diagnosis the primary driver for therapeutic decisions. Many LDTs increasingly rely on high-tech or complex instrumentation and software to generate results and clinical interpretations, and often are produced in high volume and used widely by large and diverse populations. In addition, FDA cited to multiple complaints, adverse event reports, and other allegations of inaccurate test results and LDT performance issues leading to serious, irreversible harm to patients. FDA also notes its concern that some industry players appear to be exploiting the existing bifurcated IVD/LDT model by creating a business connection to a laboratory in order to offer its tests without FDA regulatory oversight. FDA asserts that such activities have both led to the stifling of investment and innovation by fully IVD manufactures, and have resulted in harm to the public health when poorly validated tests are used in medical care.

As discussed in more detail below, FDA proposes to gradually transition from enforcement discretion to requiring compliance with all applicable FDA regulatory requirements over the course of several years, following publication of the final rule. Notably, FDA is proposing to apply its enforcement discretion phaseout plan to IVDs that are manufactured and offered as 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.

Likely in an effort to preempt arguments, FDA discusses its legislative authorities and court decisions recognizing that laboratory manufacturing or articles manufactured by medical professionals fall within FDA’s jurisdiction. The agency asserts that the definition of “device” in the FDCA encompasses test systems regardless of where or by whom they are manufactured. According to the agency, in the context of today’s LDTs often relying on highly specialized components with complex functionalities involving bioinformatics, software development, and underlying specialties such as genetics for next generation sequencing (NGS) test systems, FDA clarifies that such tests systems are devices and thus require FDA’s oversight to safeguard the public health. Moreover, the agency notes that this interpretation is not inconsistent with CMS’s parallel role in regulating the activities of laboratories, and clarifies that it is the lab’s manufacturing of the test that subjects it to FDA’s oversight, which is distinct from the lab’s performance of the test. FDA draws parallels to physician’s who may or may not be an FDA regulated entity depending on whether they are simply treating patients with a legally marketed device (i.e., practice of medicine) versus manufacturing a device to use in treating patients.

Tests not affected by proposed rule

FDA’s proposed rule would not apply to certain tests that have been historically excluded from its general enforcement discretion approach, including:

1. Tests that are intended as blood donor screening or human cells, tissues, and cellular and tissue-based products (HCT/Ps) donor screening tests required for infectious disease testing, or for determination of blood group and Rh factors.

2. Tests intended for emergencies, potential emergencies, or material threats.

3. Direct-to-consumer tests intended for consumer use (without meaningful involvement by a licensed healthcare professional).

4. Tests intended solely for forensic (law enforcement) purposes, regardless of whether they are offered as an LDT.

5. Tests exclusively used for public health surveillance where: (1) they are intended solely for use on systematically collected samples for analysis and interpretation of health data in connection with disease prevention and control, and (2) test results are not reported to patients or their healthcare providers.

In addition, the proposed rule notes that the manufacturing of test components outside of a laboratory — for example, when the same entity owns both the laboratory and a manufacturing facility separate from the lab — does not fall within FDA’s general enforcement discretion approach; FDA has long expected that IVD manufacturing activities occurring outside of a CLIA-certified laboratory comply with applicable device requirements.

On the other side, falling within the scope of FDA’s enforcement discretion approach in the proposed rule would be:

• “1976-Type” LDTs: tests with the following characteristics common among LDTs offered in 1976, including the use of manual techniques (without automation) performed by laboratory personnel with specialized expertise; use of components legally marketed for clinical use; and design, manufacture, and use 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 when used in connection with organ, stem cell, and tissue transplantation to perform HLA allele typing, for HLA antibody screening and monitoring, or for conducting real and “virtual” HLA crossmatch tests.

LDT enforcement discretion phaseout timeline

FDA estimates that approximately one-half of IVDs offered as LDTs would requirement premarket review. In addition to applicable premarket review requirements, through the phaseout approach, FDA would enforce for LDTs:

• the Quality System (QS) regulation’s good manufacturing practice (GMP) requirements, and registration and listing requirements for these tests,

• medical device reporting (MDR) requirements (i.e., reporting of adverse events),

• correction and removal reporting requirements, and,

• other requirements applicable to such tests.

FDA has structured the phaseout policy to contain five key stages:

1. End the general enforcement discretion approach with respect to MDR requirements and correction and removal reporting requirements 1 year after FDA publishes a final phaseout policy, which FDA intends to issue in the preamble of the final rule.

2. End the general enforcement discretion approach with respect to requirements other than MDR, correction and removal reporting, QS, and premarket review requirements 2 years after FDA publishes a final phaseout policy.

3. End the general enforcement discretion approach with respect to QS requirements 3 years after FDA publishes a final phaseout policy.

4. End the general enforcement discretion approach with respect to premarket review requirements for high-risk IVDs 3.5 years after FDA publishes a final phaseout policy, but not before October 1, 2027.

5. End the general enforcement discretion approach with respect to premarket review requirements for moderate risk and low risk IVDs (that require premarket submissions) 4 years after FDA publishes a final phaseout policy, but not before April 1, 2028.

Under FDA’s proposed policy, FDA generally would not intend to enforce against IVDs offered as LDTs after a PMA has been submitted (within the 3.5-year timeframe) until FDA completes its review of the application.

FDA is seeking input from stakeholders to offer alternative enforcement approaches, such as maintaining the current enforcement discretion approach with respect to premarket review and QS requirements for low and moderate risk LDTs currently on the market (i.e., a grandfathered provision). In addition, FDA is soliciting comments on whether LDTs performed at academic medical centers (AMCs) should be exempted from the regulation. Speaking at a press briefing Friday, FDA Commissioner Rob Califf noted concerns of academic medical centers:

Some of my colleagues in academic medical centers have expressed concern that FDA oversight would cause them to stop making tests and that it’s not necessary because there are no problems. I respectfully disagree based on my experiences at the FDA, in academia and in leadership roles in health systems. And to the extent that academic medical center labs may need sufficient funding to assure the right safeguards are in place. I sincerely hope that the leadership of these academic institutions will provide the necessary support to best protect patients.

FDA seeks public comment on whether specific enforcement discretion policies would be appropriate for IVDs offered as LDTs for public health scenarios, given the issues that occurred with regulating LDTs during the COVID-19 pandemic.

High hurdles on the horizon

There exist multiple hurdles that FDA would need to overcome before they could enforce any changes based on this rule, including:

• Overcoming pushback from industry stakeholder during the notice and comment period;

• Successfully defending against lawsuits that would challenge the agency’s authority to regulate LDTs (i.e., lawsuits contending that the FDC Act does not grant FDA the authority to regulate LDTs); and

• Avoiding Congressional action to affirmatively remove LDTs from FDA’s oversight, or passing the VALID Act that would render the proposed rule moot (as IVDs would be considered diagnostic devices subject to a new regulatory framework).

• Inadequate agency resources to launch a new oversight program and to implement the phaseout policy, and anticipated challenges with Congress for increased appropriations or user fee authorization.

Already since Friday’s release of the proposed rule, policymakers have come out in opposition FDA’s jurisdictional imposition, including Sen. Bill Cassidy (R-LA), who said that “FDA does not have the authority to unilaterally expand its regulatory jurisdiction,” citing how “[we] saw during the pandemic how too much government interference and red tape could do more to delay lifesaving care.”

As discussed above, FDA’s attempt in 2014 to implement a new LDT regulatory framework by guidance was scuttled due to push back by industry and several members of Congress. The failure was largely due to a lack of consensus around how LDTs should be regulated, as well as threats to challenge FDA’s authority through Administrative Procedure Act (APA)-based litigation (the premise being that Congress did not grant FDA authority to regulate LDTs under the FDCA). Following the recent U.S. Supreme Court ruling on the scope of delegation of authority to agencies, FDA must also contend with a Court that is more hostile to perceived agency overreach, while still facing well-organized and well-funded industry opponents. No matter what steps FDA takes next, be it issuing a final rule or trying to informally expand enforcement against LDTs, we foresee protracted litigation on this issue.

FDA has invited comments on the proposed rule through December 2. We are continuing to review the proposal and its implications on medical product development and manufacturing, and will provide more in-depth analysis in the coming weeks. If you may wish to submit a comment, or have any questions about regulatory requirements for laboratory developed tests, feel free to contact any of the authors of this alert or the Hogan Lovells attorney with whom you regularly work.