Lab-developed tests (LDTs) are laboratory tests where blood is drawn and placed in a test tube to help with identification, diagnosis, and treatment of diseases, conditions, and infections. Examples of LDTs are the COVID-19 test, HPV and HIV testing, blood glucose testing, lipid profiles, blood counts and coagulation studies, and culture testing to identify bacterial, fungal, and/or viral infections. Many of these tests have been in use for decades, and while there may be occasional errors, LDTs are generally accurate and are relied upon daily by millions of health care workers across the country.

Historically, the U.S. Food and Drug Administration (FDA) has generally exercised discretion not to regulate LDTs. Greater FDA oversight, however, is on the horizon. On April 29, 2024, the FDA “inked a final rule…that gives the agency broad authority over lab-developed tests by classifying them as medical devices.” To be phased in over the next four years, this new regulatory approach will generate substantial costs and a regulatory compliance burden. Notably, the laboratories that perform LDTs are already regulated by the Clinical Laboratory Improvement Amendments (CLIA). However, in adopting its new rule, the FDA made it clear that it intended to add FDA requirements, inspections, etc., on top of the oversight these laboratories are already subject to under CLIA standards.

Another consequence of this expanded regulation is higher monetary costs to LDT manufacturers and ultimately patients. LDT manufacturing facilities will be charged a Medical Device User Fee and an Establishment Registration Fee. In addition to these standard fees, manufacturers may incur other costs associated with the FDA’s new rule:

• Delays in the release and implementation of the product;
• Requirements to add equipment and/or personnel for manufacturing;
• Updated labeling of the products; and
• Heightened inspections of manufacturing facilities, potentially leading to seizure of any products that fail inspection and further enforcement actions.

These additional expenses can affect patients by raising their out-of-pocket costs, increasing their insurance premiums to cover the tests, or making the tests unavailable. If a rural medical center is unable to purchase additional equipment or hire a person with the expertise to interpret the test, the patient may be asked to travel to a larger facility for testing or the test may be collected and sent out to be interpreted. In either case, this may prolong the start of proper treatment.

These additional expenses can affect patients by raising their out-of-pocket costs, increasing their insurance premiums to cover the tests, or making the tests unavailable.

The new FDA rule on LDTs has already resulted in litigation. The American Clinical Laboratory Association (ACLA) and the Association for Molecular Pathology (AMP) have challenged the new rule in court. Organizations of professionals who perform the testing, such as the American Society of Clinical Pathology (ASCP) and College of American Pathologists (CAP) have supported these lawsuits. These organizations believe that the new FDA rule will hinder the development of new tests, increase the costs of tests, and decrease the accessibility of these tests for patients. Their legal challenge is grounded in an assertion that the new rule is arbitrary and capricious under the Administrative Procedures Act. They also question the appropriateness of the new rule given current CLIA oversight of the laboratories that perform LDTs. With the U.S. Supreme Court overturning the Chevron Doctrine this past June, courts will not give the FDA’s new rules on LDTs the substantial deference it would have been afforded under the Chevron Doctrine.

What is the future for LDTs? More regulation? Higher costs? Reduced availability? The outcome of the ACLA and AMP cases will be telling. In addition, the outcome of these cases should give some insight into the deference that the FDA will be given in future rule making. New incoming leadership at the FDA could also impact the ultimate fate of the FDA’s new rule on LDTs. 2025 should bring some interesting developments in the regulation of LDTs.