Regulation Without Legislation: FDA Proposes Rule to Regulate Laboratory Developed Tests and End Historical Enforcement Discretion Policy

Introduction

On September 29, 2023, the U.S. Food and Drug Administration (“FDA”) released a proposed rule that would affirm FDA’s position that laboratory developed tests (“LDTs”) are in vitro diagnostic products (“IVDs”) regulated as medical devices under the Federal Food, Drug, and Cosmetic Act (“FDCA”). In conjunction with this proposed rule, FDA intends to phase out the enforcement discretion policy it has historically applied to most LDTs.

The proposed rule is the latest development in a years-long regulatory and legislative saga regarding FDA’s regulatory authority over LDTs. In 2014, FDA issued a proposed LDT regulatory framework, but abandoned it in the waning days of the Obama Administration. During the COVID-19 pandemic, FDA’s authority to require premarket review of LDTs was the subject of shifting policies and legal interpretations by FDA and its parent agency, the Department of Health and Human Services (“HHS”). Throughout this period, Congress has considered, but has not yet enacted, legislation to establish a new legal framework for FDA regulation of LDTs. Ropes & Gray has chronicled these developments in the following prior Alerts:

• New FDA Reform Legislation: Congress Gifts a “FDORA” for the Holidays (January 9, 2023)
• Congress Enacts Clean Reauthorization of FDA User Fees, Leaving Uncertain Future for Important Policy Reforms (September 30, 2022)
• HHS Reverses Course on LDTs: COVID-19 LDTs Again Require FDA Premarket Review (December 3, 2021)
• FDA Indefinitely Delays Action on Regulating Laboratory Developed Tests (November 23, 2016)

This Alert summarizes the new proposed rule and FDA’s proposed phaseout of enforcement discretion for LDTs, and what may happen next.

Overview of the Proposed Rule

FDA has historically considered LDTs to be a subset of IVDs designed, manufactured, and used within a single clinical laboratory certified under the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) to perform high complexity testing. Although it has asserted the legal authority to regulate such articles as medical devices, FDA has historically exercised enforcement discretion not to regulate most LDTs.

The clinical laboratory industry has pushed back on FDA’s legal interpretation, however, questioning whether FDA’s statutory authority extends to the regulation of LDTs as well as whether such regulation would best serve the public health. The American Clinical Laboratory Association, for example, has long argued that laboratories that develop, validate, and use LDTs are providing a service as part of the practice of medicine, not manufacturing or commercially distributing FDA-regulated IVD products.¹  

FDA’s proposed rule would formally amend the definition of “in vitro diagnostic products” in FDA regulations to clarify that IVDs are medical devices under the FDCA, “including when the manufacturer of these products is a laboratory.” This position flatly repudiates the clinical laboratory industry’s argument.

In addition to codifying FDA’s legal position in regulations, the preamble to the proposed rule discusses the Agency’s plans to phase out its enforcement discretion policy for LDTs and the reasons for doing so. Echoing arguments it made when it published its proposed regulatory framework in 2014 and a later discussion paper published when it withdrew the proposed framework in January 2017, FDA explains that, in its view, the LDT testing landscape has evolved significantly over time, such that public health is no longer served by the existing enforcement discretion policy. FDA states that many modern LDTs are functionally the same as tests made by traditional IVD manufacturers and are often used interchangeably by healthcare providers and patients. Such tests, according to FDA, involve the same materials and technologies, are intended for the same or similar purposes, are developed by and for individuals with similar expertise, and are marketed to the same patients, sometimes on a national scale. These tests rely increasingly on high-tech instrumentation and software and are more frequently used to guide critical healthcare decisions, FDA explains. In addition, FDA expresses concern that some have come to view LDTs as an alternative pathway to market clinical diagnostic test systems without FDA review, with tests being “launched as LDTs” with no assurance that they meet FDA requirements. Finally, FDA asserts that scientific data collected in recent years has raised questions about whether IVDs offered as LDTs provide accurate and reliable results to patients. As examples, FDA cites IVDs offered as LDTs that could have led to patients being over- or under-treated for heart disease; patients with cancer being exposed to inappropriate therapies or not getting effective therapies; and incorrect diagnoses of rare diseases, autism, and Alzheimer’s Disease. FDA further states that its recent experience reviewing COVID-19 diagnostics revealed LDT performance “far worse than we expected,” even with well-established techniques such as polymerase chain reaction (PCR) testing.

Proposed Phaseout of Existing Enforcement Discretion Policy

While FDA reiterates throughout the preamble the need for increased oversight of LDTs, the Agency states that it intends to phase out its existing enforcement discretion approach “in a manner that accounts for the level of public health concern and the importance of avoiding undue disruption of the testing market, including undue disruption to the provision of care.”

Scope of the Phaseout Policy

FDA’s phaseout policy would apply not only to tests that fall under FDA’s narrow historic definition of an LDT, but also 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 . . . are not designed, manufactured, and used within a single laboratory.” In so doing, FDA acknowledges the reality that it has not strictly enforced its interpretation of the law, allowing a significant market to develop of tests offered as “LDTs” despite not meeting FDA’s narrow criteria. FDA’s definition of what constitutes an LDT, however, had previously been described only in preamble statements (e.g., FDA’s 1997 preamble on Analyte Specific Reagents), policy framework and discussion paper documents, and other non-binding sources.

FDA also asserts that tests that it never intended to be governed by the existing enforcement discretion policy—such as direct-to-consumer tests without meaningful involvement by a licensed healthcare professional, and tests intended for public health emergencies—will continue to be regulated as before and would not benefit from any phaseout period. Some may view this assertion as sleight of hand, however, given the oblique nature by which FDA had previously addressed these matters.

Additionally, FDA proposes that certain other categories of LDTs and IVDs would not be subject to the phaseout at all, and instead would continue to be subject to enforcement discretion, including:

• “1976-Type LDTs,” which are tests that have the following characteristics common among LDTs offered in 1976: 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 that meet FDA’s definition of an LDT, when used in connection with organ, stem cell, and tissue transplantation to perform specific activities;
• Tests solely for forensic (law enforcement) purposes; and
• Tests exclusively used for public health surveillance that meet certain criteria, including that test results are not reported to patients or their healthcare providers.

Stages of the Phaseout Policy

For those LDTs that would be subject to the phaseout of enforcement discretion, FDA is proposing a five-stage phaseout process over a period of four years, as shown in the table below: 

Stage	Description	Timing
Stage 1	End the general enforcement discretion approach with respect to (i) medical device reporting (“MDR”) and (ii)correction and removal (recall) reporting	One (1) year after the issuance of a final phaseout policy, which FDA intends to issue in the preamble to the final rule
Stage 2	End the general enforcement discretion approach with respect to (i) device registration and listing requirements, (ii)device labeling requirements, (iii)investigational use requirements, and (iv) other requirements not covered during other stages of the phaseout policy	Two (2) years after FDA publishes a final phaseout policy
Stage 3	End the general enforcement discretion approach with respect to quality system regulation (“QSR”) requirements. However, for tests that meet FDA’s historic definition of LDT, FDA will expect compliance only with certain elements of the QSR: (i) design controls, (ii) purchasing controls, (iii) acceptance activities, (iv) corrective and preventive actions (“CAPAs”), and (v) records requirements.	Three (3) years after FDA publishes a final phaseout policy
Stage 4	End the general enforcement discretion approach with respect to premarket review requirements for high-risk IVDs	Three and a half (3.5) years after FDA publishes a final phaseout policy, but not before October 1, 2027 (which would coincide with the beginning of a new user fee cycle under the Medical Device User Fee Amendments)
Stage 5	End the general enforcement discretion approach with respect to premarket review requirements for moderate- and low-risk IVDs that require premarket submissions	Four (4) years after FDA publishes a final phaseout policy, but not before April 1, 2028

In Stages 4 and 5 as discussed above, FDA would generally not intend to enforce against IVDs offered as LDTs after a timely premarket submission has been made until FDA completes its review of the submission. In other words, only the laboratory/manufacturer’s premarket submission, and not FDA’s review, would have to be completed by the applicable Stage 4 or 5 deadline.

Requests for Comment

Although FDA does not propose that any currently marketed LDTs will be “grandfathered” or that there will be any exceptions for LDTs offered by academic medical centers (“AMCs”)—two areas that have been the subject of much debate in prior legislative proposals—FDA is soliciting comments on potential grandfathering approaches, potential exceptions from regulation for LDTs from AMCs, and other potential changes to the proposed rule. Specifically, FDA has proactively requested comments addressing the following:

• Whether there is data or information supporting a public health rationale for FDA maintaining the current approach for currently marketed LDTs (i.e., “grandfathering”);
• Whether there is data or information to support a public health rationale to have a longer phaseout period for IVDs offered by small laboratories (i.e., laboratories with annual receipts below a certain threshold);
• How to appropriately define and characterize an AMC laboratory, whether there are any considerations to support continuing enforcement discretion for AMC laboratories, and any data or information supporting a public health rationale for such an approach; and
• Whether and how FDA might leverage programs such as the New York State Department of Health Clinical Laboratory Evaluation Program or those within the Veterans Health Administration to allow continuation of the enforcement discretion approach for certain tests.

Next Steps

Comments on the proposed rule will be due December 4, 2023, unless FDA grants a request for an extension of the comment period. Consistent with reactions to prior LDT-related pronouncements by FDA and the significant lobbying of Congress when LDT-related legislation has been considered, we anticipate there will be significant pushback from the clinical laboratory industry, AMCs, and others on fundamental issues including whether FDA has the statutory authority over this class of products in the first place, whether grandfathering should apply to currently marketed LDTs, and whether there should be exemptions from FDA regulation for lower-risk LDTs or other categories of LDTs where the benefits of heightened regulation will not outweigh the harms.

The proposed rule is also likely to rejuvenate discussion of LDT legislation in Congress. FDA’s pursuit of regulatory action comes on the heels of Congress dropping proposed LDT reforms from the Food and Drug Administration Omnibus Reform Act enacted at the end of 2022. FDA had been working to provide technical input on that legislation, and presumably would have preferred a legislative solution to the legally and politically arduous process of asserting regulatory authority under existing law. In publishing the proposed rule, FDA has signaled its unwillingness to wait indefinitely for a legislative solution. Although Dr. Jeffrey Shuren, Director of FDA’s Center for Devices and Radiological Health (CDRH), stated during a September 29 press briefing that the proposed rule was independent of legislative efforts, FDA’s action clearly challenges Congress to accelerate the legislative process. Most likely, Congress will determine that a legislative solution is preferable to FDA’s regulatory approach. Already, in response to FDA’s issuance of the proposed rule, Rep. Cathy McMorris Rodgers, the Chair of the Energy and Commerce Committee in the House of Representatives, asserted in a press release that “[a]ny LDT policy should go through the legislative process” and urged FDA to rescind the proposed rule. FDA certainly will not do so, however, absent a change in presidential administration following the 2024 elections.

Given the longstanding and well-defined debate regarding the scope of FDA’s authority as it relates to LDTs, any final rule from FDA on this issue is likely to trigger litigation from various stakeholders.

Ropes & Gray will continue to monitor developments in this area. If you have any questions about this Alert, please contact any member of our FDA regulatory practice or your usual Ropes & Gray advisor.