The Food and Drug Administration (FDA) published its final rule on laboratory developed tests (LDTs) in the Federal Register on May 6, marking a watershed moment in the agency’s arduous decade-plus-long journey toward winding down its historical enforcement discretion posture for LDTs. But FDA’s crusade is far from over. It will have much to do to implement the four-year phase-out period described in the final rule and those efforts may be delayed by litigation seeking to enjoin implementation of the rule altogether. While we wait for the litigation shoe to drop, let’s take a look at what the final rule says and the changes FDA made in these highly significant policy decisions since the Notice of Proposed Rulemaking was published on October 3, 2023 (see our previous posts on the NPRM here and here).

What Stayed the Same: The Regulatory Language, the Definition of LDT, and the Phase-Out Process

Unsurprisingly, the actual regulatory language affected by the final rule is identical to the language proposed in the NPRM. Namely, the rule amends the definition of the existing term “in vitro diagnostic products” (or IVD) codified at 21 C.F.R. 809.3(a) to explicitly include laboratories that manufacture reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions. This change, although arguably not strictly necessary to reverse FDA’s long-standing policy of enforcement discretion for LDTs, officially marks the turning point in the agency’s approach to LDTs and was promulgated through the notice-and-comment rulemaking process to avoid a backlash similar to the situation FDA faced in 2014, which ultimately led to the jettisoning of the agency’s draft guidance Framework for Regulatory Oversight of Laboratory Developed Tests (see our background on LDTs in this prior post).

Furthermore, one bit of language has not changed throughout the entirety of FDA’s quest to begin actively regulating LDTs as medical devices (even though it’s not codified): the definition of LDT. The agency’s long-held position is that an LDT is any IVD intended for clinical use that is designed, manufactured, and used within a single laboratory that is certified under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, to perform high complexity testing. Importantly, FDA makes clear that it suspects some clinical laboratories have been offering clinical diagnostic assays as LDTs when, in fact, such assays do not meet the agency’s LDT definition (e.g., because the laboratory uses technology developed or manufactured outside of the laboratory, such as specialized reagents, as part of the assay, or because the test is offered direct to consumers without the need for medical professional oversight). Assays that are offered as LDTs but do not meet the relevant definition were never subject to enforcement discretion and are fully regulated IVDs, notwithstanding FDA’s lack of widespread enforcement action against such products. To cast the net of regulatory modernization as wide as possible and to put all clinical laboratories manufacturing any type of IVD on notice that they may want to assess their offerings against the agency’s new comprehensive policy framework, FDA uses the term “IVDs offered as LDTs” throughout the final rule.

In addition, each stage of the gradual phase-out of enforcement discretion follows what was proposed in the NPRM:

Notably, the timing of the staged phase-in of these device regulatory requirements for laboratories is based on the publication date of the final rule (May 6, 2024), not the subsequent 60-day effective date established for the amended regulation (July 5, 2024). 

What Changed: Exceptions to FDA’s Enforcement Discretion Phase-Out

FDA articulated only three exceptions to its enforcement discretion phase-out in the October 2023 proposed rule. Specifically, the agency stated that the following categories of tests would not become subject to device regulatory controls per the proposed rule, and they continue to fall under the rubric of “full” enforcement discretion under the final rule as well:

• “1976-type LDTs,” which are assays that use manual techniques performed by laboratory technicians with specialized expertise, only use components legally marketed for clinical purposes, and that otherwise meet FDA’s LDT definition
• Human leukocyte antigen (HLA) tests that meet FDA’s LDT definition and are used in connection with organ, stem cell, and tissue transplantation to perform HLA allele typing, antibody screening or monitoring, or real/virtual crossmatch testing
• Tests intended solely for forensic purposes in law enforcement

The final rule further expands the exceptions to include some major and somewhat unexpected categories of IVDs manufactured by laboratories, but unlike the original three listed above, not all of these enjoy “full” enforcement discretion in light of the distinct public health considerations applicable to each. FDA elaborates upon its rationale for each new exception in the final rule and offers detailed explanations of its process for considering the public comments recommending such exceptions. The additional categories of IVDs offered as LDTs that receive full or partial continued enforcement discretion under the final rule consist of:

• LDTs manufactured and performed in laboratories within the Veterans Health Administration or Department of Defense. Such LDTs remain under full enforcement discretion.
• LDTs approved under the New York State Department of Health Clinical Laboratory Evaluation Program (NYS CLEP), which includes tests that are approved, conditionally approved, or within an NYS CLEP-approved exemption from full technical documentation. FDA enforcement discretion for these IVDs only applies with respect to premarket review requirements, due to similarities between premarket review processes of FDA and NYS CLEP for IVDs. Thus, all other device general controls will become applicable to such tests according to the final rule’s phased-in timeline as New York State has not established other similar controls for the clinical laboratory industry. The agency also intends to request labeling from laboratories that produce NYS CLEP-approved tests to evaluate their compliance more generally.
• LDTs manufactured and performed by any laboratory that is integrated within a health care system and designed to address an unmet medical need of patients receiving care at within such system. FDA enforcement discretion for these tests only applies with respect to premarket review and the bulk of the quality system requirements (the exception being medical device records requirements under 21 C.F.R. Part 820, Subpart M, which must be met). This particular policy should be reviewed carefully, as it is somewhat limited in scope, and FDA has created new criteria for what constitutes an “unmet medical need” in this context. Critically, the agency notes that this policy does not apply when a patient is being treated at a hospital that may be “affiliated” with a laboratory that is under different corporate ownership than the hospital. Nor does it apply when the ordering physician is not on staff (or subject to privileges) at a hospital that is under the same ownership as the laboratory in question. FDA’s justification for each of its decisions regarding the scope of this “integrated health care system” exception is derived from the extent of risk mitigation measures that are available to protect patients and the health care decision-making process.
• LDTs first marketed prior to issuance of the final rule (May 6, 2024). FDA enforcement discretion for these tests only applies to premarket review and the bulk of the quality system requirements (the exception again being medical device records requirements). We describe this significant carve-out by the agency a bit more below. 
• LDTs for rare red blood cell antigens that are manufactured and performed in blood establishments, such as transfusion services and immunohematology laboratories, when there is no alternative available testing to ensure compatibility for blood transfusion. FDA enforcement discretion for these tests only applies to premarket review and the bulk of the quality system requirements (the exception again being medical device records requirements).

These new exceptions added by the agency at the final rule stage show that FDA is listening closely to stakeholders and is willing to change its policy for certain types of tests when accommodations are adequately justified and the public health benefits of such policies are defensible.

The Exception for Previously Marketed LDTs

Let’s take a closer look at the most surprising exception to enforcement discretion phase-out announced by the agency with its final rule publication. By way of background, we note that one of the most significant differences between FDA’s rulemaking process to phase out enforcement discretion for LDTs and the Verifying Accurate Leading-edge IVCT Development (VALID) Act was that the VALID Act included broad regulatory exceptions for all LDTs marketed prior to the date the act would become effective (and although re-introduced this session, the VALID Act has not been enacted or even come to the floor of either chamber of Congress for a vote to date). However, FDA’s proposed rule contained no such exception, and in fact, FDA appeared to staunchly resist recommendations to include any sort of “grandfathering” in its rulemaking on LDTs. 

Demonstrating its willingness to listen to reasonably supported arguments in response to the proposed rule, FDA nonetheless revisited its view on this issue. The agency explains in the final rule that it received a large number of comments stating that many laboratories would choose to stop manufacturing and offering their LDTs “due to the administrative and financial burdens of the regulations” and that the loss of such tests would result in harm to patient care, not to mention physician reliance on the availability of such tests. The agency took those comments seriously and acknowledges in the final rule that many LDTs offered today enhance patient care and that smaller labs may cease to operate if the regulatory burdens placed on them are too high in the short-term. In response to this category of comments, FDA says that it explored alternative options, such as extending the phase-out period for such LDTs or requiring quality system compliance only for such LDTs that are high-risk. Ultimately, however, the agency decided that establishing a partial exception to the phase-out was the only viable option given the need to protect the public health and enhance regulatory oversight generally over IVDs offered as LDTs. As with the NYS CLEP-approved test exception summarized above, this exception is also limited in that the continued enforcement discretion only applies with respect to premarket review and the bulk of quality system requirements (other than the quality system records regulations).

Additionally, and of critical importance to laboratories that intend to rely on this “currently marketed tests exception,” this exception will apply only so long as the laboratory does not modify the LDT in any way that would change the test’s indications for use, alter the test’s operating principles, add significantly different technology to the test, or change the performance or safety specifications of the test. Any modifications to the test, whether individually or in the aggregate, that have any such effect(s) would result in the modified test becoming fully subject to the medical device regulations. FDA also states explicitly in the final rule that it will be requesting product labeling from laboratories offering LDTs on the market as of May 6, 2024 so that the agency can review the performance and validation information for the tests and determine whether they are otherwise compliant with LDT requirements. Of course, new tests coming to market after the May 6, 2024 date will not have the benefit of this enforcement discretion policy.

Although some stakeholders may consider the “currently marketed tests exception” to be a complete vindication of the position that LDTs should be grandfathered under the new rules, FDA is imposing some significant limitations with respect to its application. Specifically, as noted above, material modifications to an existing LDT that a laboratory may develop and market after such date will render that LDT fully regulated under FDA’s medical device regulations, unless another exception applies. Such new LDTs must fully comply with applicable quality system requirements, meaning that the laboratory must expend the same time, money, and effort to develop a compliance system even if it has some LDTs under partial enforcement discretion and some not. Regardless of a laboratory’s intent to modify its current LDTs or develop any new LDTs, the laboratory must nonetheless implement a regulatory compliance system to assess any proposed changes or updates to an existing LDT to ensure that the changes will not exceed the enforcement discretion limitations.

Conclusion

The final rule is a monumental step towards FDA’s introduction of a more active regulatory regime for LDTs. Of course, there are many practical questions relating to the actual methods of compliance laboratories must employ as the enforcement discretion phase-out process begins, especially as some of the medical device regulations, even those specific to IVDs, are not a good fit for either LDTs or the laboratories that develop and offer them. FDA has indicated that further guidance on various aspects of the new oversight regime are forthcoming, and we expect the agency will release many additional guidance documents explaining its expectations for laboratory compliance with the medical device regulations.

Right now, though, all eyes are on the laboratory stakeholders and certain health care providers that have indicated that the final rule will harm patients and the provision of health care that relies on input from diagnostic testing. Will they file a complaint challenging FDA’s authority to issue the final rule? Will a court impose an injunction on the implementation of the final rule, effectively pushing out the compliance dates if the rule eventually becomes effective? We shall see.