The U.S. Food and Drug Administration's (FDA) plan to tighten oversight of laboratory-developed tests (LDTs) appears to have come to an end, much to the relief of clinical laboratories. According to several regulatory attorneys, the FDA is unlikely to appeal a federal court ruling from March 31, whichset aside the final rule asserting FDA jurisdiction over LDTs。

Although Congress could still overhaul the regulatory framework for diagnostic tests, any new legislative effort could take a long time, as the issue is not a priority for lawmakers.

"The concept of LDTs is a bit like a vampire; it has been resurrected many times before," said Jeff Gibbs, a director at the law firm Hyman, Phelps & McNamara, which represented the Association for Molecular Pathology (AMP) in the lawsuit against the FDA. "This is not the final blow."

Rule Background and Court Ruling

The FDA'sfinal ruleaimed to strengthen oversight of laboratories that develop, manufacture, and use their own diagnostic tests, regulating LDTs as medical devices. The rule planned to phase in requirements for adverse event reporting, premarket review, registration, and labeling over four years.

The American Clinical Laboratory Association (ACLA) and AMP, concerned that high compliance costs would force laboratories to discontinue some testing services and harm patients, sued to block the FDA from enforcing the rule and ultimately won. Judge Sean Jordan of the U.S. District Court for the Eastern District of Texasvacated the rule, which was scheduled to take effect next month.

Most laboratories—whether in large hospitals performing complex tests or in community settings focused on routine care—use LDTs to meet specific clinical needs, especially when no commercial in vitro diagnostic (IVD) test is available. Sheldon Campbell, a professor at Yale School of Medicine, said an LDT is "any test that is not performed exactly as approved by the FDA."

With the FDA rule's implementation halted, "these laboratories can basically continue to operate with their existing staff," said Campbell, who also serves as laboratory director for the VA Connecticut Healthcare System. "This is a real benefit for patients."

LDTs are currently regulated under the Clinical Laboratory Improvement Amendments (CLIA) program of the Centers for Medicare & Medicaid Services (CMS), established by Congress. The FDA regulates tests it has authorized for use as medical devices and has maintained a policy of enforcement discretion over LDTs for decades.

The FDA's Position

In expanding requirements for LDTs, the FDAarguedthat modern test formats pose higher risks and require more aggressive oversight. When the agency announced the final rule last year, it said: "The FDA is aware of many IVDs offered as LDTs that may be inaccurate, unsafe, ineffective, or of poor quality, leading or potentially leading to patient harm, including tests used to select cancer treatments, aid in the diagnosis of COVID-19, assist in managing patients with rare diseases, and identify patients' risk of cancer."

Then-FDA Commissioner Robert Califf said the agency could not "stand by" and let the American public rely on these widely used tests "without ensuring they are effective."

Campbell and others said LDTs are already subject to rigorous scrutiny under CLIA, a comprehensive system that can address problems with LDTs. "Handling this incrementally and evolutionarily within the CLIA framework is wiser than creating a second, complete regulatory system for laboratories," Campbell said.

The U.S. district court remanded the matter to the new Secretary of Health and Human Services, Robert F. Kennedy Jr., and ruled that the rule exceeded the FDA's authority under the Federal Food, Drug, and Cosmetic Act of 1938. The opinion cited the Supreme Court's ruling last year in Loper Bright Enterprises v. Raimondo, finding that the FDA lacked the statutory authority to regulate LDTs as devices.

Despite the FDA's determination to tighten oversight of these tests, attorneys said they do not believe the agency will appeal the district court's ruling, although it has the right to do so.

"The government certainly has the right to appeal and could do so," said Chad Landmon, an attorney at Polsinelli. "But many people think, including myself, that the more likely outcome is they won't appeal and will let this matter rest for now, until Congress acts or a new administration takes office in four years."

The FDA did not respond to MedTech Dive's inquiry about whether it would appeal the case.

Landmon said any comment on the court's opinion or other response, such as formally withdrawing the final rule, could be slowed by recent FDA staff reductions, including in communications. He added, "I do think this is a very important issue, and we might get some kind of statement or clarification."

Ben Wolf, a partner at Alston & Bird, said under the new Republican administration, given the rule's unpopularity in the industry, the FDA may not challenge the court's decision. "I would say, for now, the industry should be satisfied with the status quo because they don't have to comply with FDA requirements," he said.

As the FDA considers its next steps, one area to watch is whether the agency will begin taking action against products that were not previously targets of active enforcement. "They might direct enforcement resources elsewhere, but it's certainly a possibility," Wolf said.

As for the work laboratories did to prepare for the FDA rule before it was halted, "it's not entirely useless," said Yale's Campbell, because laboratories continually evaluate their test menus.

Calls for Reform and Legislative Prospects

Zach Rothstein, executive director of AdvaMedDx, the diagnostics division of the medical device trade group AdvaMed, said having dual regulatory roles for the same product—one at CMS and one at the FDA—is not a good use of government resources.

"Given the issues raised by the court ruling, it is in everyone's interest for Congress to act and ultimately decide how our country should treat LDTs, because currently the same patient could have two different tests regulated under two different regulatory programs," Rothstein said. "This is not an effective way to review these products and is not in the best interest of the public."

The Verifying Accurate, Leading-edge IVCT Development (VALID) Act, aimed at reforming the IVD regulatory framework, has made several attempts in recent years but has failed to gain support in Congress.

Several attorneys said that although diagnostic regulatory reform is necessary, they do not expect the current Republican-controlled House and Senate to pass legislation on LDTs anytime soon. One reason is that the VALID Act's Republican sponsor, Larry Bucshon of Indiana, retired from the House in January.

State regulators may step in to fill the gap, said Matt Wetzel, a partner at Goodwin. He noted that New York and Washington state already have infrastructure regulating many aspects of laboratory operations. "I don't think regulatory compliance is going away," Wetzel said. "I think it will remain a significant cost for companies."

However, attorneys said that at some point, a renewed push for legislation to modernize diagnostic test regulation and clarify the FDA's role in LDT oversight is possible.

"The question of whether LDTs should be regulated will not go away. The issue now lies with congressional action, not the FDA," said Gibbs of Hyman, Phelps. "Unless an appeal succeeds, the battlefield will shift entirely to Congress."