NEW YORK – With the US District Court for the Eastern District of Texas decision Monday vacating the US Food and Drug Administration's (FDA's) final rule on laboratory-developed tests (LDTs), a measure of clarity has been provided on the question of the FDA's authority with regard to these tests — for decades a point of dispute between the agency and the clinical lab industry.
Writing that the "text, structure, and history" of the Federal Food, Drug, and Cosmetic Act (FDCA) and CLIA "make clear that FDA lacks the authority to regulate" LDTs, the court echoed arguments long held by the large majority of lab stakeholders and many segments of the broader healthcare space.
However, how such tests will be regulated moving forward could remain up in the air, and while the ruling clearly establishes that the FDA does not have the legal authority to oversee LDTs, it could also call into question the agency's authority over certain other items it currently regulates, said Benjamin Zegarelli, an attorney with law firm Mintz focused on medical device compliance. This consideration might lead the agency to appeal the court's decision, he said, even though the Trump administration has in the past countered FDA plans to regulate LDTs.
The FDA issued its rule on LDTs on May 6, 2024, following years of agency efforts to assert control of these tests through routes including guidance and support for legislative action. Several weeks later, the American Clinical Laboratory Association (ACLA) and its member organization HealthTrackRx filed a lawsuit against the agency, requesting that the court vacate the rule and enjoin the agency from enforcing it. In August, the Association for Molecular Pathology (AMP) filed its own lawsuit against the FDA over the rule. The two suits were later consolidated into one.
This week, the court sided with the plaintiffs, ruling to vacate and set aside the LDT rule in its entirety and to remand the matter to the US Department of Health and Human Services (HHS). The decision prevents the FDA rule from going into effect. Enforcement of the initial requirements under the rule had been scheduled to begin in May.
The ruling also provides clarity on what for decades has been the unresolved question of whether the FDA has the legal authority to regulate LDTs. While the agency long insisted it did have this authority and that it had largely declined to exert it due to a policy of "enforcement discretion," most lab industry stakeholders maintained that LDTs fell outside the agency's authority.
In its decision, the court cited several rationales for its determination that the FDA does not have the legal authority to regulate LDTs. It noted the legislative history of the FDCA and CLIA, arguing that they demonstrated that "Congress understood medical-device safety and the accuracy of laboratory-developed test services as distinct areas for regulatory oversight." It also noted that for much of its history the FDA did not claim oversight of LDTs and that while it has claimed this power in recent decades, it has generally declined to exercise it.
The court also cited the fact that Congress has several times considered but chosen not to enact legislation that would have given the FDA oversight of LDTs, most recently the Verifying Accurate Leading-edge IVCT Development (VALID) Act, which Congress took up but did not pass in 2022.
Additionally, the court made explicit that LDTs are not medical devices and that therefore they are not subject to FDA regulation under the FDCA. This question has been core to arguments on both sides, with the FDA arguing that LDTs are devices and, as such, are subject to its oversight. Opponents of FDA regulation of LDTs, on the other hand, have maintained that LDTs are not devices but rather medical professional services akin to those offered by providers like surgeons or radiologists. The court in its decision sided with the latter argument.
"The court seems to have adopted the joint plaintiffs' views lock, stock, and barrel," Zegarelli said. "There's not really much consideration of FDA's counterpoints. Everything we see in the opinion was essentially in ACLA's briefs."
The court "really shut the door on FDA's ability to regulate [LDTs]," said James Boiani, an IVD, drug, and medical device life sciences attorney at Epstein, Becker & Green in Washington, D.C.
Zegarelli said he believed, however, that the court in its decision did not draw a clear distinction between the components and systems used to perform a laboratory-developed test and the actual performance of the test, lumping both under the category of a medical service.
The ruling "conflates the manufacture, design, and planning of that assembly of things that is going to be used to perform the test and the performance of the test," he said. This could create problems in that it calls into question the FDA's authority to oversee certain other items that it currently regulates.
"FDA regulates a lot of device systems currently that are created and sold by manufacturers that aren't just single, tangible devices, that are multiple things strung together, including things like software that lives in the cloud," Zegarelli said.
"Software itself also gets thrown into question here," he added. "Software isn't tangible, and it also isn't subject to some of the regulations the judge cites as necessary for being a medical device."
Zegarelli said the ruling's potential to undermine the FDA's authority in areas outside LDTs could lead the government to appeal even though the prior Trump administration was generally unsupportive of the agency's efforts to regulate these tests.
Trump's election in 2016 effectively ended the FDA's efforts to regulate LDTs by guidance. In 2020, in the midst of the COVID-19 pandemic, his administration determined that the FDA would not require premarket review of LDTs without notice-and-comment rulemaking. Zegarelli noted, however, that the administration continued to defend the FDA rule in the suit brought by ACLA and AMP after taking over from the Biden administration in January.
Boiani said that while "the way the decision is written, [FDA] doesn't necessarily want it out there unchallenged completely," the agency has options short of an appeal. He suggested it might instead issue a notice that it is construing the decision narrowly as applying only to LDTs. He noted that it took a similar approach several years ago following the decision in Catalyst Pharms., Inc. v. Becerra, in which it said it would set aside a particular orphan drug approval as instructed by the court but that it would otherwise continue applying its existing regulations on orphan drug exclusivity.
Jonathan Genzen, chief medical officer and medical director of automation at ARUP Laboratories, said that he and ARUP "obviously very much support the decision that was reached," though he also noted that the ruling raises questions around future regulation of certain medical device components — software in particular.
Genzen said he hopes the ruling will provide space for more serious discussions of CLIA modernization as a route for LDT regulation going forward. Some lab stakeholders, perhaps AMP most prominently, have advocated for such an approach, but HHS and the US Clinical Laboratory Improvement Advisory Committee (CLIAC), which provides guidance on clinical laboratory standards and practices, have maintained that LDTs should fall under the FDA's authority.
Previously, "anyone who tried to come to the table and say that a CLIA-centric solution might be more appropriate was ultimately not fully incorporated into the broader conversation that was happening at the federal level," Genzen said. "I think we are all waiting to see if a CLIA-centric proposal now evolves based on this really definitive decision that LDTs are not devices."
He cited several areas for focus in future discussions of LDT oversight, including improving the visibility of the LDT landscape, perhaps through a database, and consideration of approaches to pre- and post-market surveillance of tests.
Genzen also cited the New York State Department of Health's Clinical Laboratory Evaluation Program as a potential model of test regulation within what he said is "essentially a CLIA structure."
The ruling "will hopefully create an opportunity for a more thorough discussion not of how the FDA should regulate LDTs but of how LDTs should be regulated," Genzen said.
Legislation giving the FDA authority over LDTs also remains an option, though such efforts might find less support with the threat of unilateral FDA action now gone. Members of Congress are reportedly working on new legislation tackling the LDT issue, and late last year a new organization, the Coalition for Effective Diagnostics (CED), called on lawmakers to pass legislation revamping diagnostics regulation, including oversight of LDTs.
The ruling "will likely slow down the movement to find a legislative solution to the LDT regulation question," said Donald Karcher, president of the College of American Pathologists, one of the organizations leading the CED. He added, though, that CAP doesn't think the effort will halt entirely. "There are many stakeholders who will likely continue to push for legislation to settle the question of LDT oversight."