A Closer Look At FDA's Controversial Rule On Laboratory Developed Tests

By Kayla J. Cristales and Luke W. Nguyen, Haynes and Boone LLP

FDA’s recent issuance of a final rule¹ (the “rule”) on laboratory developed tests (LDTs) ended the agency’s long-standing policy of exercising enforcement discretion with regard to medical device regulations that would, otherwise, apply to any labs that prepare and/or market LDTs. The rule is also a clear indication of FDA’s final answer to the question of whether it has the authority to regulate LDTs under the Food, Drug, and Cosmetic Act (the FD&C Act). Spoiler alert: It’s “yes.” Unsurprisingly, given the well documented back-and-forth between FDA and industry on this very issue over the last three decades, the rule was immediately met with lawsuits from industry stakeholders challenging FDA’s authority to regulate LDTs, which the lawsuits contend (among other things), do not fall within the FD&C Act’s definition of “device.” Congressional opposition to FDA’s enforcement of the rule and an incoming presidential administration promising to overhaul FDA policies viewed as unduly restrictive have contributed to industry uncertainty regarding the rule’s viability. Nonetheless, unless/until something changes, the rule is effective. Potentially affected stakeholders should, thus, understand what the rule requires (and when), how it applies to them, what steps are required to comply by the applicable deadlines, and the likely associated costs, as well as the potential risks of noncompliance.  

How Did FDA Regulate LDTs Before The New Rule?

In vitro diagnostics (IVDs) are clinical tests performed on samples taken from the human body, which are generally classified — and regulated — as medical devices under the FD&C Act. LDTs are a subset of IVDs that are (1) intended for clinical use and (2) designed, manufactured, and used within a single CLIA-certified laboratory. Prior to the rule, FDA exercised enforcement discretion with regard to all LDTs and all otherwise applicable device regulations.

What Does The Rule Require?

FDA’s new framework phases out enforcement discretion for applicable LDTs in five stages, with specified carveouts for certain categories of tests (discussed further below).

• Stage 1: By May 6, 2025, FDA expects LDTs to comply with regulations governing medical device reporting (MDR) requirements, correction and removal reporting, and complaint files.
• Stage 2: By May 6, 2026, FDA expects compliance with registration and device listing, labeling, and investigational use requirements.
• Stage 3: By May 6, 2027, FDA expects LDTs to comply with its Quality System Regulation (QSR) requirements relating to design controls, purchasing controls, acceptance activities, corrective and preventive actions, and records.
• Stage 4: By November 6, 2027, FDA expects compliance with premarket review requirements for high-risk LDTs (which, in most cases, means the completion of the premarket approval (PMA) process).
• Stage 5: By May 6, 2028, FDA expects compliance with premarket review requirements for moderate and low-risk LDTs. For most LDTs, this will require a 510(k) notification or a De Novo request before the compliance date.

Will FDA Enforce The Rule Against All LDTs?

While the new framework implicates all LDTs, FDA plans to exercise complete or partial enforcement discretion for LDTs that fall into certain categories.

Complete Enforcement Discretion

For LDTs that fall into one of the following categories, the FDA’s historical enforcement discretion policy for LDTs will continue to apply.

• 1976-Type LDTs — FDA will exercise complete enforcement discretion on “1976-type LDTs.” An LDT falls under this category if the test: (i) uses manual techniques performed by a lab specialist, (ii) uses components marketed for clinical use, and (iii) is designed, manufactured, and used within a CLIA-certified laboratory. For example, lateral flow tests — commonly used in rapid COVID-19 tests — fall within this category of LDTs. Tests falling within this category mimic the techniques common in LDTs available in 1976 (when FDA initiated its enforcement discretion policy for LDTs). These tests pose minimal safety risks.
• Human Leukocyte Antigen (HLA) Tests for Transplantation — FDA’s complete enforcement discretion policy also applies to HLA tests designed, manufactured, and used within a single laboratory certified under CLIA for testing a patient’s crossmatch with a potential organ, stem cell, or tissue donor.
• LDTs within Department of Defense (DoD) or Veterans Health Administration (VHA) — FDA will exercise enforcement discretion for LDTs manufactured and performed within the DoD or VHA for patients being treated within the DoD or VHA.

Enforcement Discretion Exercised for QSR and Premarket Review Requirements

LDTs falling under one of the following categories will only be expected to comply with Stages 1 and 2 of the phaseout policy and the QSR’s device master record, device history record, and quality system record requirements.

• LDTs for Unmet Needs — FDA will exercise limited enforcement discretion for LDTs manufactured and performed by a laboratory within a healthcare system to meet patients’ unmet needs, that is, when there is no available FDA-authorized IVD for the applicable disease/condition that is indicated for use on, and able to meet the needs of, the patient.
• Currently Marketed LDTs — This category includes LDTs marketed prior to May 6, 2024, provided that no such LDT has since been modified in a way that (i) changes its indications for use, (ii) alters its operating principle, (iii) includes significantly different technology, or (iv) adversely changes its performance or safety specifications.
• Non-Molecular Antisera LDTs for Rare Red Blood Cell (RBC) Antigens — Non-molecular antisera LDTs for rare RBC antigens will be eligible for enforcement discretion when (i) manufactured and performed by a blood establishment (including transfusion services and immunohematology labs) and (ii) no alternative IVD is available to meet the patient’s needs for a compatible blood transfusion.

Enforcement Discretion Exercised for Premarket Review Requirements

The following categories of tests will be eligible for enforcement discretion with respect to premarket review requirements (but will remain subject to all other device regulations, as applicable under the rule).

• LDTs Approved by the New York State Clinical Laboratory Evaluation Program (NYS CLEP) — LDTs are eligible for this enforcement discretion policy if approved, conditionally approved, or within an approved exemption from full technical documentation by NYS CLEP.
• Laboratory Modification of Another Manufacturer’s IVD — This enforcement discretion policy will apply when a CLIA-certified high-complexity-testing laboratory modifies another manufacturer's 510(k)-cleared or De Novo-authorized test (i) following design controls and other QSR requirements for which FDA expects compliance; (ii) in a manner that could not significantly affect the safety or effectiveness of the test and does not constitute a major change or modification in intended use; and (iii) where the modified test is performed only in the laboratory making the modification. FDA will only require compliance with premarket review requirements in instances where the modifications, if made by the original manufacturer, would require a new 510(k) clearance (or De Novo reclassification).

What Questions Should Stakeholders Be Asking As The First Compliance Deadline Approaches?

Enforcement of Stage 1 under the rule is set to begin in May 2025. Those who may be affected by the rule should consider the following preliminary questions to assess the extent to which compliance with Stage 1 may be required:

1. Does the test in-question meet the FDA’s definition of an LDT?

To qualify as an LDT, the test must: (1) be intended for clinical use and (2) designed, manufactured, and used within the same CLIA-certified laboratory. The FDA considers any tests that do not meet this limited definition to be “traditional” IVDs, which are, and have been (at all times since such tests have been on the market), subject to all applicable device regulations. For example, FDA has expressly identified donor screening tests and direct-to-consumer tests as traditional IVDs that do not meet the definition of LDTs.

​​2. My LDT was marketed prior to the issuance of this rule. Does the rule still apply?  

Yes. While LDTs marketed prior to May 6, 2024 (i.e., “currently marketed LDTs”) are eligible for enforcement discretion under the rule, such discretion does not extend to all applicable requirements. FDA expects currently marketed LDTs to comply with Stages 1 and 2 and certain QSR obligations under Stage 3. Accordingly, labs with currently marketed LDTs should assess existing systems and processes to determine what action steps must be taken to achieve compliance with FDA’s MDR, correction and removal reporting, and complaint file regulations by May 6, 2025.  

3. If my LDT is subject to Stage 4 or 5, what premarket review process will likely be required?

To determine what type of premarket authorization is required, labs should determine whether their LDTs are low-, moderate-, or high-risk under FDA’s device classification guidelines. If the LDT is high-risk, the rule requires submission of a PMA by November 6, 2027. If the LDT is low- or moderate-risk, the lab-manufacturer will likely need to obtain clearance or reclassification via the 510(k) or De Novo pathway, respectively, by May 6, 2028. Labs seeking to classify their LDTs to pursue the appropriate premarket pathway are encouraged to consult with regulatory counsel and maintain documentary support for any decisions made with regard to device classification and/or the appropriate premarket pathway, as, in most cases, a manufacturer does not become aware that FDA disagrees with its classification/premarket review determination until after substantial time and expenses have been incurred to conduct any necessary clinical testing and prepare the applicable premarket application.

4. If my LDT is subject to premarket review requirements under the rule, can I continue marketing it while my application is pending?

Yes, as long as the requisite premarket application for such LDT is received by FDA by or before the applicable compliance deadline, FDA intends to continue to exercise enforcement discretion for the pendency of its review.  

5. Does FDA intend to enforce the new rule against LDTs produced and developed by small laboratories?

Yes. FDA intends to enforce the new rule against all LDTs, regardless of the size of the laboratory producing the test. However, small laboratories may fall into certain enforcement discretion categories, such as LDTs for unmet needs or 1976-type LDTs. And, as discussed in the final section below, smaller labs may decide that the costs of coming into compliance with the rule outweigh the risks of continuing to operate under the FDA’s prior enforcement discretion policy, at least until there is a final judgment on the rule’s legality.

But... Will This Rule Actually Be Enforced?

Since the rule was issued, two lawsuits have been filed challenging FDA’s legal authority to regulate LDTs.² The plaintiffs — the American Clinical Laboratory Association and the Association for Molecular Pathology — argue that FDA does not have authority to regulate LDTs because the tests are not “devices” under the FD&C Act. This is an issue that has been unofficially litigated and relitigated between FDA and industry, beginning with a 1992 citizen petition.³ In other words, the odds of the now-consolidated case reaching a clear resolution in the near future are . . . not good. While the rule remains in effect in the meantime, Congress added another layer of confusion for any labs trying to decide whether to move forward with the necessary steps to comply with the phaseout policy while the rule’s legality remains in-question, as the U.S. House Appropriations Committee Report accompanying the FY 2025 FDA appropriations bill “directs the FDA to suspend its efforts to implement the rule and continue working with Congress to modernize the regulatory approach to LDTs.”⁴ The report noted further that implementing the rule may “greatly alter[] the laboratory testing infrastructure and reduc[e] patient access to information that informs their healthcare decision making.”

With the above-referenced lawsuit and appropriations bill both pending as of the date of this article’s publication, FDA may begin enforcing Stage 1 as of May 6, 2025, but it is unclear to what extent any such enforcement actions will be upheld unless/until a final judgment on the pending case is rendered in FDA’s favor. It is also possible that FDA will officially suspend enforcement in connection with congressional mandates (e.g., if the pending appropriations bill is signed into law) and/or the federal government’s transition to the new administration. Accordingly, labs that are potentially subject to the rule should assess what would be needed to comply with all applicable LDT requirements and the associated expenses and other burdens, as compared to the potential risks of noncompliance if the Rule is ultimately enforceable in accordance with the phaseout policy. Consider areas of “indirect” risk, such as, for example, existing contractual obligations and any representations and warranties relating to compliance with laws that may be implicated if the rule remains intact as of the applicable compliance deadlines. Maintain detailed documentation of any action steps, analyses, and decision-making relating to the rule. Actively monitor the various moving parts that may impact the enforceability of the rule and make adjustments to plans along the way as needed.

References

1. See 89 FR 37289 (May 6, 2024).
2. Complaint, Am. Clinical Laboratory Ass’n. v. U.S. Food & Drug Admin., No. 4:24-cv-00479 (E.D. Tex. May 29, 2024); Complaint, Ass’n. for Molecular Pathology et al. v. U.S. Food & Drug Admin., No. 3:24-cv-00241 (S.D. Tex. Aug. 19, 2024).
3. Citizen Petition to FDA from Hyman, Phelps & McNamara, P.C., Oct. 22, 1992.
4. H. Rep. 118-583 (2024).