On October 3, the US Food and Drug Administration (FDA) issued a proposed rule regarding the regulation of in vitro diagnostic products (IVDs). In this proposed rule, the FDA announced its intent to amend its regulations to provide that laboratory developed tests (LDTs) are medical devices under the federal Food, Drug, and Cosmetic Act (FDCA) and are subject to all accompanying regulations.

LDTs, often informally referred to as “home brews,” are in vitro diagnostic tests developed and used within a single laboratory. These tests are generally not sold to other laboratories. Rather, health care providers send a specimen to a laboratory where an LDT is utilized to help reach and provide a diagnosis.

Prior to the proposed regulation, the FDA had adopted a policy of enforcement discretion. Under that policy, the agency would take action against an LDT only if it was believed to have resulted in incorrect diagnoses. However, under the proposed regulation, laboratories that develop LDTs would initially be subject to medical device reporting requirements and, subsequently, all other requirements generally applicable to devices. In particular, these laboratories would need to secure either premarket clearance for the LDT under Section 501(k) of the FDCA, reclassification as a Class I device, or premarket approval under the premarket approval (PMA) provisions of the Act.

The FDA intends to phase out its general enforcement discretion approach for LDTs across five stages:

• Stage 1: End the general enforcement discretion approach with respect to medical device reporting (MDR) requirements and correction and removal reporting requirements one year after the FDA publishes its final phaseout policy.
• Stage 2: End the general enforcement discretion approach with respect to requirements other than MDRs, correction and removal reporting, quality system (QS), and premarket review requirements two years after the FDA publishes a final phaseout policy.
  
  • Per the FDA, these other requirements include registration and listing requirements under 21 U.S.C. 360 and Part 807 (excluding Subpart E), labeling requirements under 21 U.S.C. 352 and Parts 801 and 809, Subpart B, and investigational use requirements under 21 U.S.C. 360j(g) and Part 812.
• Stage 3: End the general enforcement discretion approach with respect to QS requirements three 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 years after the FDA publishes a final phaseout policy, but not before October 1, 2027.
• Stage 5: End the general enforcement discretion approach with respect to premarket review requirements for moderate-risk and low-risk IVDs (that require premarket submissions) four years after the FDA publishes a final phaseout policy, but not before April 1, 2028.

As the FDA itself appears to recognize, this new approach to LDTs is certain to substantially increase the costs of LDTs and could impede access to newly developed, useful diagnostic tests. Indeed, the agency estimates the following one-time costs to industry for undergoing the requisite premarket review:

• 510(k) with method comparison studies: $2.21 billion and $12.01 billion, with a primary estimate of $5.22 billion.
• 510(k) with a moderately complex clinical study: $3.19 billion and $14.98 billion, with a primary estimate of $6.94 billion.
• De novo: $469.91 million to $4.57 billion, with a primary estimate of $2.27 billion.
• PMA: $8.28 billion to $74.98 billion, with a primary estimate of $17.60 billion.

As such, the proposed regulation raises numerous questions that should be addressed before it is finalized.

First and foremost, there is a significant question of whether this regulation is necessary at all. In practice, laboratories that develop LDTs go through a robust process of evaluating the accuracy and reliability of the test before using it for diagnostic purposes without confirmatory testing. Laboratories engage in this process not only out of a desire to ensure proper diagnoses, but also because they are subject to significant malpractice risk if they provide incorrect diagnoses based on an IVD that had not been approved by the FDA. Moreover, these laboratories are already regulated by the Centers for Medicare & Medicaid Services (CMS) under the Clinical Laboratory Improvement Amendments of 1988 (CLIA).

Second, there is a significant issue as to whether an LDT that is developed by a laboratory and never sold has sufficient nexus with commerce to support the assertion of jurisdiction by the FDA. The agency has invoked cases which hold that it has jurisdiction over a drug under Section 301(k) of the FDCA when an ingredient in the drug has been sent in interstate commerce and the developer of the drug is holding the drug for resale. See, e.g., Baker v. United States, 932 F.2d 813, 814 (9th Cir. 1991); United States v. Regenerative Scis., LLC, 741 F.3d 1314 (D.C. Cir. 2014).

Here, by contrast, an LDT is not being held for resale. To the contrary, specimens are sent to the laboratory, the LDT is utilized within the laboratory, and the laboratory reports the diagnosis. The LDT is never sold or held for sale. Moreover, there is a question of whether the expansive scope of the Commerce Clause relied upon by the FDA survives recent cases. See, e.g., Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012) (holding that the Affordable Care Act (ACA) is not within the scope of congressional power under the Commerce Clause). In this connection, it should be recognized that the FDCA gives the agency jurisdiction over devices that are in commerce or held for sale after being in commerce. Notably, however, it does not give the agency jurisdiction over devices (or any other article) that may “affect” commerce.

Third, the FDA proposes that certain “high-risk” IVDs may require premarket approval. However, the agency offers no guidance on what IVDs may be considered “high-risk” And it does not opine on the specific proof of safety and efficacy required to obtain a PMA for an LDT.

Fourth, the FDA suggests that moderate and low-risk IVDs might be subject to premarket clearance under Section 510(k) of the FDCA. But, assuming that an IVD is used to diagnose a disease for which there was no previous test, it is unclear what the predicate device would be for purposes of Section 510(k).

In addition, FDA proposes to continue exercising general enforcement discretion for LDTs falling within the below categories:

• “1976-Type LDTs” that use manual techniques (without automation) performed by laboratory personnel with specialized expertise; use components legally marketed for clinical use; and are designed, manufactured, and used within a single CLIA-certified laboratory that meets the requirements under CLIA for high complexity testing.
• Human Leukocyte Antigen (HLA) tests that are designed, manufactured, and used in a single laboratory certified under CLIA that meets the requirements to perform high-complexity histocompatibility testing.
• Tests intended solely for forensic (law enforcement) purposes.
• Tests exclusively used for public health surveillance, which are distinct from other tests where: (1) they are intended solely for use on systematically collected samples for analysis and interpretation of health data in connection with disease prevention and control, and (2) test results are not reported to patients or their healthcare providers.

Yet, this proposal raises questions of its own.

While there are numerous questions regarding the proposed rule, the FDA specifically seeks comment on the following:

• Whether specific enforcement discretion policies would be appropriate for IVDs offered as LDTs for other public health scenarios.
• What, if any, unintended consequences may result from the proposed phaseout policy to certain patient populations (for example, Medicare beneficiaries, rural populations, etc.) and what steps could be taken to mitigate those consequences.
• Any implications of continued enforcement discretion with regard to LDTs used for law enforcement purposes and any factors that the FDA should consider — particularly as it relates to civil rights and equity — related to the scientific validity and accuracy of these tests.
• Whether there is a public health rationale to have a longer phaseout period for IVDs offered as LDTs by laboratories with annual receipts below a certain threshold (e.g., $150,000).
• The characteristics of academic medical centers (AMC) and whether the FDA should continue the general enforcement discretion approach with respect to any requirements, such as premarket review requirements, for tests manufactured by AMC laboratories.
• Whether it would be appropriate to continue the general enforcement discretion approach, such that the FDA generally would not enforce any applicable device requirements, where outside programs (such as the New York State Department of Health Clinical Laboratory Evaluation Program (NYSDOH CLEP) or those within the Veterans Health Administration (VHA)) can be leveraged.

In summary, the proposed new regulation of LDTs, or “home brews,” raises fundamental questions regarding both its desirability and its implementation. Persuasive answers to these questions should be provided before the regulation is finalized. The FDA will be holding a webinar on the proposed regulation on October 31, 2023. Comments on the proposed rule are due by December 4, 2023.