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Changing Legal Environment Adds Uncertainty to ACLA Lawsuit Against FDA Over LDT Rule

Lawsuit

This story has been updated to note that ACLA has not asked for a preliminary injunction in its suit against FDA.

NEW YORK – The American Clinical Laboratory Association's lawsuit last month against the US Food and Drug Administration and its final rule on laboratory-developed tests (LDTs) came as little surprise as many had expected the agency to face a court challenge.

Perhaps equally unsurprising are ACLA's arguments against the FDA rule, which are largely familiar after several decades of wrangling over the matter and which, some legal experts noted, were in many cases anticipated by the agency in its response to public comments issued in response to the proposed rule.

But if the arguments are familiar, they are still unresolved, and lawyers interviewed by 360Dx suggested that recent shifts in the legal landscape may put the FDA in a less advantageous position than it might have enjoyed in the past.

At the core of ACLA's challenge is its contention — one the organization has long held — that laboratory-developed tests are "professional healthcare services," not medical devices, and as such do not fall under the FDA's authority as spelled out by the Federal Food, Drug, and Cosmetic Act (FDCA).

"That is really the crux of what ACLA is trying to get at," said Benjamin Zegarelli, an attorney with law firm Mintz focused on medical device compliance.

He noted what he viewed as the key elements of the organization's argument: the fact that LDTs are services, not things, and as such are not devices; the fact that Congress has never given the FDA specific authority to regulate LDTs; and the fact that Congress has already provided for regulation of clinical labs via the Clinical Laboratory Improvement Amendments (CLIA).

The FDA largely addressed these points in the preamble to its final rule, Zegarelli said.

For instance, regarding the question of whether LDTs are services or devices, the agency highlighted that it has long regulated "device systems," which are, similar to LDTs, combinations of medical devices and manual techniques designed to produce a clinically relevant result.

Regarding Congress and the agency's legal authority over LDTs, the FDA argued that it has authority to regulate these tests under the FDCA and that Congress has never specifically excluded LDTs from its oversight.

With regard to the role of CLIA, Zegarelli said that the FDA has argued that while CLIA covers certain aspects of lab operations like personnel requirements and proficiency testing, it has not historically covered the design and clinical validity of LDTs themselves, and as such there is no overlap between the regulatory functions of CLIA and the FDA.

James Boiani, an IVD, drug, and medical device life sciences attorney at Epstein, Becker & Green in Washington, D.C., noted that in the run-up to the release of the final rule, the FDA and the Centers for Medicare & Medicaid Services (CMS), which oversees CLIA, issued a joint statement supporting FDA regulation of LDTs — likely in response to longstanding industry arguments that LDT regulation should be handled solely through CLIA and anticipation of future legal arguments like those made by ACLA in its complaint.

Likewise, highlighting the medical device-services distinction at the core of the dispute, Mahnu Davar, co-chair of the life sciences and healthcare regulatory practice at law firm Arnold & Porter suggested that the FDA will likely contend that regulating the people and processes involved in the provision of LDTs is akin to holding a medical equipment manufacturing facility accountable for the quality of the products it produces.

He said, however, that while the FDA has in the past threatened that labs developing and running LDTs could be subject to enforcement as manufacturers for the activities conducted within the lab, actual enforcement has focused on the physical components of an LDT that are involved in interstate commerce being used for uncleared or unapproved intended uses.

"In the final rule, FDA doesn't — I think in ACLA's view and the view of many — do enough to satisfy from the legal standard how it is that it can regulate the people and the processes and the service part of this," Davar said, noting that he does not represent ACLA or HealthTrackRx, the plaintiffs in the suit.

Davar also said the large number of carve-outs in the FDA rule could raise vulnerabilities for the FDA’s legal position, a point the ACLA complaint makes, as well. In the rule, the agency said it plans to continue some level of enforcement discretion for a variety of test types, including LDTs on the market before the rule came into effect, and LDTs offered by a laboratory within a healthcare system solely for patients in that system.

Boiani, on the other hand, said that he does not believe the carve-outs weakened the FDA's position, noting that such an approach "is not uncommon in situations where there are changing regulatory requirements."

He added that many of the carve-outs were established in response to public comments from organizations opposed to or concerned about the rule.

Zegarelli likewise said he does not believe the carve-outs weaken the FDA's case, calling it a "disingenuous argument," given that many of the carve-outs were included to address industry concerns.

Despite the familiarity at this point of both sides' arguments, how a court might rule is difficult to predict, Zegarelli said. "It could come out a number of different ways."

He noted that while the FDA made a "very comprehensive analysis" of the regulatory and statutory history supporting its authority to regulate LDTs, there is, nonetheless, no definitive instance the agency can point to where it was given explicit authority over these tests.

That being the case, "there is definitely a space there for a court to step in and say that this specific authority was never granted," Zegarelli said.

Boiani similarly noted that the FDA can point to a number of older cases unrelated to LDTs establishing, for instance, its ability to regulate products that never leave a given facility as being involved in interstate commerce, but, he added, many of these cases were decided decades ago "when courts were a lot more receptive to FDA arguments than they are now."

Zegarelli raised the question of whether the US Supreme Court's ongoing reconsideration of the legal principle known as the "Chevron doctrine," under which the courts have generally deferred to regulatory agencies' interpretations of ambiguously written laws, might affect the outcome of the case.

The Supreme Court is currently hearing two cases involving Chevron, and many observers expect the court will rule in ways that either overturn or limit the doctrine, which could curtail regulators' authority to interpret unclear statutes and implement regulations according to those interpretations. Legal experts disagree on the potential impact such a ruling might have on LDT regulation specifically, but Zegarelli suggested it could be a factor.

"My perspective on it is that the case for judicial deference to FDA under the current system without any changes would probably favor FDA's position to a certain extent," he said. "I'm not saying it would be a total slam dunk for FDA … but the idea would be that under normal circumstances, as we've seen in the current state of jurisprudence, we should see courts deferring to FDA."

That said, "we've [recently] seen the Supreme Court make some pretty major decisions and rule against and abolish certain well-established positions … so it's all sort of up in the air," Zegarelli said.

One other factor that could impact how the case proceeds is ACLA's decision to file its suit in the  US District Court for the Eastern District of Texas, which Zegarelli said has historically "been more receptive to these arguments of regulatory overreach."

He suggested that by bringing the action "in a sympathetic jurisdiction," ACLA aims to get an injunction against the rule immediately in hopes of trying to draw out implementation as long as possible. In an email to 360Dx, an ACLA spokesperson noted that the organization has not asked for a preliminary injunction but declined to comment on any future actions it may take.

Boiani said that given the timeline for deciding the initial case and likely appeals, Congress could find itself taking up the issue before it is settled in the courts. While Congress has not meaningfully moved to revisit LDT regulation since the failure of the VALID (Verifying Accurate Leading-edge IVCT Development) Act to pass in 2022, he noted that the Medical Device User Fee Amendments is up for renewal in 2027. Clinical labs will now be a part of those negotiations, as well, which Boiani said could lead to a reconsideration of the LDT question, assuming Congress has not tackled it in the meantime. ACLA has participated in previous MDUFA negotiations.

"Congress will be getting involved through the user fee process even if they don't want to take care of it now," he said.