A Test of Patience: FDA Moves Forward with Controversial Final Rule on Laboratory Developed Tests

On April 29, 2024, the U.S. Food and Drug Administration (“FDA”) issued its final rule affirming the Agency’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”) (the “Final Rule”).¹ The Final Rule also describes the phaseout of the general enforcement discretion policy that FDA has historically applied to most LDTs, as well as targeted enforcement discretion policies that will apply to certain categories of LDTs going forward (collectively, the “Phaseout Policy”).

The Final Rule comes just seven months after the issuance of the proposed rule on which FDA received more than 6,500 comments. Although FDA made no changes to the brief text of the rule itself in response to these comments, the rule’s preamble describes several changes to the Phaseout Policy, including grandfathering of certain tests first offered prior to the rule’s publication date, tests for “unmet needs” manufactured and performed by a laboratory integrated within a healthcare system (including academic medical centers), and LDTs approved by the New York State Department of Health Clinical Laboratory Evaluation Program. FDA also for the first time describes an additional requirement it intends to impose, involving submission of test labeling, that it believes will help it in identifying “problematic” tests that it can prioritize for enforcement action.

The Final Rule represents the latest salvo in a long-running regulatory and legislative saga regarding FDA’s authority over LDTs, as Ropes & Gray has previously chronicled, including in an Alert and two podcasts regarding the proposed rule. This Alert summarizes our initial key takeaways on the final rule for clinical laboratories, healthcare institutions that rely on laboratory testing, and other industry stakeholders.

1. The Final Rule implements the same change to the definition of IVDs as originally proposed.

Mirroring the proposed rule, the Final Rule amends 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 change, which will take effect on July 5, 2024, codifies FDA’s long-standing position that LDTs fall squarely within the FDCA definition of a “device” and are therefore subject to FDA’s regulatory authority and oversight.

2. FDA largely retains the same structure, sequencing, and timelines of the Phaseout Policy as proposed.

For those LDTs subject to the Phaseout Policy, FDA intends to implement a five-stage phaseout process over a period of four years, as shown in the table below. Changes or additions from the proposed rule are underlined:

Stage	Requirements for Which Enforcement Discretion Ends	Timing
Stage 1	Medical device reporting (“MDR”) Correction and removal (recall) reporting Quality system (“QS”) requirements related to complaint files under 21 CFR 820.198	May 6, 2025, one (1) year after publication of the Final Rule and Phaseout Policy.
Stage 2	Device registration and listing Labeling requirements Investigational use requirements Requirements not covered during other stages of the phaseout	May 6, 2026, two (2) years after publication of the Final Rule and Phaseout Policy.
Stage 3	QS requirements, other than complaint file requirements addressed in Stage 1. However, for tests that meet FDA’s historic definition of LDT, FDA will expect compliance only with the following QS requirements: (i) design controls, (ii) purchasing controls, (iii) acceptance activities, (iv) corrective and preventive action (“CAPA”), and (v) records requirements.	May 6, 2027, three (3) years after publication of the Final Rule and Phaseout Policy.
Stage 4	Premarket review for high-risk IVDs offered as LDTs. However, the Agency will not take action against unauthorized tests for which a premarket submission has been received by this date and intends to exercise enforcement discretion for the pendency of its review.	November 6, 2027, three and a half (3.5) years after publication of the Final Rule and Phaseout Policy.
Stage 5	Premarket review for moderate- and low-risk IVDs offered as LDTs that require premarket submissions. However, the Agency will not take action against unauthorized tests for which a premarket submission has been received by this date and intends to exercise enforcement discretion for the pendency of its review.	May 6, 2028, four (4) years after publication of the Final Rule and Phaseout Policy.

3. FDA will continue to apply enforcement discretion as to all FDA regulatory requirements for limited categories of tests. 

FDA carves out certain categories of IVDs offered as LDTs from the Phaseout Policy based on the Agency’s view that such tests are “unlikely to pose significant risks or are conducted in circumstances that themselves will mitigate the risks.” Mirroring the proposed rule, the Final Rule identifies the following categories of tests for which it does not intend to enforce any applicable FDA requirements: (1) “1976-Type LDTs,” meaning LDTs that have certain characteristics common among LDTs offered in 1976 (e.g., use of manual techniques without automation, using components legally marketed for clinical and not research use); (2) certain Human Leukocyte Antigen tests; (3) tests solely for forensic (law enforcement) purposes; and (4) tests exclusively used for public health surveillance that meet certain criteria. The Final Rule adds to this list tests that meet FDA’s historic definition of LDTs that are manufactured and performed within the DOD or VHA for patients that are being tested and treated within the DOD or VHA. FDA is establishing this DOD/VHA exemption because of these agencies’ unique expertise, as well as the fact that the agencies are “taking steps in consultation with FDA to track all LDTs in their systems and to ensure” analytical and clinical validity, quality, and the central reporting of adverse events.

4. FDA has established several additional targeted enforcement discretion policies (meaning that FDA will not apply certain FDA regulatory requirements) for specific categories of tests. FDA will request the submission of labeling for these types of tests.

The preamble to the Final Rule identifies categories of tests for which FDA intends to take a more narrowly tailored approach to enforcement discretion as outlined below.² For tests offered pursuant to each of the enforcement discretion policies described below, FDA intends to request copies of test labeling pursuant to its existing device listing authority.³ While FDA has long had discretion to request labeling submissions for all medical devices in this manner, FDA does not routinely exercise this authority, and FDA’s insistence on labeling submissions for LDTs was not telegraphed in the proposed rule. FDA notes that test labeling “will provide information on test performance and a summary of the supporting validation, among other things” and will facilitate FDA surveillance over LDTs. 

a. Currently Marketed IVDs Offered as LDTs That Were First Marketed Prior to the Final Rule (i.e., May 6, 2024) 

FDA intends to exercise enforcement discretion with respect to premarket review and QS requirements (except for QS requirements under 21 CFR Part 820, Subpart M (Records)) for currently marketed IVDs offered as LDTs that were marketed prior to the issuance of the Final Rule so long as they are not modified in a significant way (i.e., a way that would prompt the need for premarket review) following the issuance of the Final Rule. FDA’s review of public comments led the Agency to conclude that enforcing premarket review and QS requirements for currently marketed IVDs offered as LDTs may be more harmful than helpful to the public because the added compliance costs might prompt laboratories to stop offering tests altogether, rather than take on the burdens of pursuing premarket review by FDA. FDA acknowledges that this concern is particularly acute where patients, healthcare providers, and the laboratory industry may have made, or are making, patient care or business decisions in reliance on continued access to currently marketed tests.

FDA has carefully tailored this exemption, however, emphasizing that significant modifications to a currently marketed test would effectively remove the test from this carve-out and prompt the need for premarket review and compliance with QS requirements. The types of modifications that would, individually or in aggregate, cross this threshold, include (1) changes in the indications for use; (2) alterations of the operating principle; (3) inclusion of significantly different technology (e.g., addition of artificial intelligence or machine learning); and (4) adverse changes to the performance or safety specifications.

Although FDA would not apply premarket review and most QS requirements to tests within the scope of this exemption, it intends to enforce all other applicable regulatory requirements. FDA intends to require laboratories to submit product labeling as described above, and enforce QS records requirements, medical device reporting requirements, and correction and removal reporting requirements. The Agency believes these tools are sufficient to enable it to effectively monitor for inaccurate or unreliable tests and take action where necessary.

b. LDTs for Unmet Needs Manufactured and Performed by a Laboratory Integrated Within a Healthcare System

FDA intends to exercise enforcement discretion and generally not enforce premarket review and QS requirements (except for QS requirements under 21 CFR Part 820, Subpart M (Records)) for LDTs manufactured and performed by a laboratory integrated within a healthcare system to meet an unmet need of patients receiving care within the same healthcare system. Compliance with all other FDA regulatory requirements will still be required.

FDA is adopting this policy in response to the concern of multiple commenters that the lack of financial incentives to develop LDTs for unmet needs coupled with the cost of compliance with premarket review and QS requirements might impede the development of LDTs for unmet needs (e.g., tests for patients with rare diseases) altogether. FDA is clear, however, that this enforcement discretion policy is limited in scope to LDTs (1) for unmet needs (i.e., there is no available FDA-authorized IVD that meets the patient’s needs); (2) for patients receiving care within the same healthcare system in which the laboratory offering the LDT is integrated, as defined by shared corporate ownership (e.g., a patient cannot be receiving treatment at an affiliated hospital with different corporate ownership than the laboratory); (3) that are ordered by a healthcare practitioner on the staff or with credentials and privileges at a facility owned and operated by the same healthcare system that employs the laboratory director and performs the LDT; and (4) that are validated.

FDA intends to issue additional guidance on this LDTs for unmet needs policy and will consider whether issuing additional guidance on test validation, including for rare diseases, would be helpful. In the proposed rule, FDA had sought comment on whether it should continue its general enforcement discretion approach with respect to tests manufactured by academic medical center (“AMC”) laboratories. While the preamble to the Final Rule does not include any enforcement policy specific to AMC laboratories, FDA notes that it anticipates that many LDTs manufactured by AMC laboratories will fall within the unmet needs policy.

c. LDTs Approved by the New York State Department of Health Clinical Laboratory Evaluation Program (“NYS CLEP”)

FDA also intends to exercise enforcement discretion and generally not enforce premarket review requirements for LDTs that are fully or conditionally approved by NYS CLEP. Compliance with all other FDA regulatory requirements, including all QS requirements,⁴ will still be required. NYS CLEP’s regulatory framework is not, as FDA emphasizes in the Final Rule, “a substitute for FDA premarket review” or a “stand in for FDA regulation,” but FDA believes that the program will sufficiently guard against the risk of harm from inaccurate and unreliable LDTs about which FDA is concerned. The program generally reviews moderate- and high-risk LDTs for analytical and clinical validity, which, FDA believes, helps reduce the risk of harm posed by inaccurate and unreliable LDTs.

5. The Final Rule signals FDA’s intent to take steps to address “problematic” IVDs offered as LDTs.

Regardless of whether an IVD offered as an LDT falls within a category for which FDA intends to exercise enforcement discretion, FDA expressly notes in the preamble to the Final Rule that it “retains discretion to pursue enforcement action at any time against violative IVDs when appropriate.” FDA emphasizes that it will use a range of regulatory tools to identify and take steps to address IVDs offered as LDTs that are problematic (e.g., that are inaccurate, poorly validated, or unsafe). For example, FDA intends to use product labeling, manufacturer records, medical device reporting, and industry reporting with respect to potentially problematic competitor IVDs to help point FDA towards problematic tests. Because FDA does not view all laboratory-manufactured IVDs as problematic, it aims to take a targeted approach to monitor for poorly performing tests that raise concerns.

6. Concurrent with the Final Rule, FDA is issuing two draft guidance documents addressing enforcement discretion considerations for IVDs offered as LDTs for emergency use.

During a declared emergency (i.e., when there is an Emergency Use Authorization declaration under Section 564 of the FDCA (an “EUA Declaration”)), FDA has generally not applied enforcement discretion to LDTs. In the preamble to the Final Rule, FDA expressly states that it is not changing its existing approach to tests for emergency use. But considering the Final Rule and the Phaseout Policy, FDA has issued two draft guidance documents to elaborate on its expectations regarding IVDs offered as LDTs for emergency use. Its draft guidance entitled “Enforcement Policy for Certain In Vitro Diagnostic Devices for Immediate Public Health Response in the Absence of a Declaration under Section 564” lays out a new, limited enforcement discretion approach for unauthorized IVDs for immediate response to chemical, biological, radiological, or nuclear agents before an EUA Declaration is issued. Its draft guidance entitled “Consideration of Enforcement Policies for Tests During a Section 564 Declared Emergency” outlines factors that FDA intends to consider in deciding whether to adopt enforcement discretion for the unauthorized use of tests during public health emergencies after an EUA Declaration has issued. These draft guidance documents are subject to public comment through July 5, 2024.

7. FDA plans to issue guidance clarifying how laboratories should develop their quality systems in light of the Quality Management System Regulation (“QMSR”) final rule.

Under the Final Rule’s Phaseout Policy, compliance with the lion’s share of QS requirements will be required by May 6, 2027. At present, applicable QS requirements are laid out in the Quality System Regulation (“QSR”) in 21 CFR Part 820. However, on February 2, 2024, FDA published a final rule⁵ to amend and harmonize the QSR with ISO 13485:2016, the international consensus standard for device quality management systems used by global regulatory authorities. Additional information regarding the QMSR final rule can be found in a prior Ropes & Gray Alert. The revised requirements, referred to as the Quality Management System Regulation ("QMSR"), will become effective on February 2, 2026—before compliance with QS requirements under the Final Rule will be expected. In response to industry comments expressing concern about the timeline, FDA stated that it “anticipates providing to all its stakeholders, including laboratories, timely guidance on compliance with the regulatory requirements” applicable under the QMSR Rule.

8. FDA rejects concerns that the Phaseout Policy will result in an unmanageable workload for the Agency.

FDA takes the position in the preamble to the Final Rule that it will have sufficient resources to review all the premarket submissions for IVDs offered as LDTs resulting from the Final Rule and Phaseout Policy. FDA notes that the Phaseout Policy timing aligns with the next Medical Device User Fee Amendments reauthorization (MDUFA VI in 2027), allowing FDA and industry to negotiate goals and user fees knowing that laboratories will need to comply with premarket review requirements. FDA also believes that its targeted enforcement discretion policies, under which it does not intend to enforce premarket review requirements for various types of LDTs, as well as use of FDA’s Third Party 510(k) review program, will substantially reduce the total number of tests needing to be reviewed by FDA personnel. Additionally, as was announced in January 2024, FDA intends to reclassify many Class III IVDs into Class II, which FDA believes will reduce the number of tests requiring a more complex premarket approval application.

9. FDA addresses long-standing concerns that LDT regulation is beyond its authority—previewing its arguments in the legal challenges that are likely to follow.

As anticipated, FDA received numerous comments regarding its authority to regulate LDTs. Comments focused on, among other things, whether Congress has actually granted FDA authority to regulate LDTs; whether LDTs appropriately qualify as “medical devices,” as the term is defined in the FDCA; whether LDTs can be understood as introduced into “interstate commerce,” “held for sale,” or “in commercial distribution,” and therefore within the scope of FDA’s authority; and whether FDA oversight of LDTs is warranted given the role of other regulators, including the Centers for Medicare and Medicaid, in regulating laboratories. FDA continues to hold firm that LDTs fit within the scope of its regulatory authority and that FDA regulation is necessary to ensure the safety and efficacy of LDTs—an assessment which FDA views itself as uniquely qualified to undertake. Despite FDA’s reiteration of its long-standing view, various stakeholders, including industry trade associations like the American Clinical Laboratory Association, made swift statements questioning the legality of the Final Rule, setting the stage for likely legal challenges to come.

Next Steps

The regulation of LDTs has been a long-standing topic of debate between industry and FDA; the Final Rule represents FDA’s most recent—and most significant—effort to end this debate. It is unlikely, however, that this will be the end of the story, given the high likelihood of litigation as noted above or the potential for overriding legislation. The issuance of the Final Rule prompted nearly immediate reactions from various members of Congress, including Sen. Bill Cassidy (R-LA), the ranking Republican on the Senate Committee on Health, Education, Labor and Pensions, and House Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-WA), both of whom asserted that the Final Rule exceeds FDA’s existing regulatory authority and congressional action would be needed to support such a change.^6,7 Though Congress has in recent years been unable to pass proposed legislation to modernize LDT oversight (e.g., the Verifying Accurate, Leading-edge IVCT Development Act), the issuance of the Final Rule may provide added motivation for Congress to draft and pass workable legislation. 

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.