FDA’s Attempt to Regulate Lab-Developed Tests Struck Down in Federal Court

See American Clinical Laboratory Association v. FDA (E.D. Tex. No 4:24-CV-479-SDJ).

As we explained in our previous alert, LDTs are in vitro diagnostic tests (IVDs) that are designed, created, and used within a single laboratory. They generally are not commercially available to other laboratories or directly to consumers. Instead, health care providers send specimens to a clinical laboratory, where the laboratory personnel use the LDT to analyze the specimen. The results are then used to assist in diagnosis and treatment planning.

In the past, the FDA has sometimes taken the position that IVDs are subject to FDA regulation as medical devices. However, even under that position, the FDA stated that it would exercise enforcement discretion, allowing LDTs to be used for diagnostic purposes within the laboratory setting with very little regulation by the agency.

That position changed dramatically on May 6, 2024, when the FDA issued a final rule phasing out the agency’s general enforcement discretion approach. Under the new rule, the FDA announced that it would begin regulating LDTs in five phases over four years. The first phase, scheduled to begin on May 6, would have subjected many clinical laboratories to the FDA’s requirements governing post-marketing reporting for medical devices. With each subsequent phase, additional FDA requirements would be imposed, ultimately requiring premarket review for most LDTs by May 6, 2028.

The FDA’s LDT final rule provoked immediate legal challenges. In a consolidated case, the American Clinical Laboratory Association and the Association for Molecular Pathology challenged the rule as being an unprecedented regulatory overreach in which the FDA exceeded its legal authority under the FDCA. The crux of the plaintiffs’ argument was that LDTs do not fall within the definition of “device” under the FDCA, 21 U.S.C. § 201(h), and therefore are not subject to statutory requirements applicable to medical devices. Rather, LDTs are tests created by clinical professionals to analyze patient specimens for diagnostic purposes.

On March 31, the court agreed and entered a judgment in favor of the plaintiffs. The court held that the “FDA’s asserted jurisdiction over laboratory-developed test services as ‘devices’ under the FDCA defies bedrock principles of statutory, common sense, and longstanding industry practice.” Indeed, the court ruled that “[t]he more fundamental problem is that Congress has already considered the distinct issues raised by laboratory-developed test services in CLIA, and chose to address those issues by vesting regulatory authority in CMS, not in FDA.”

Accordingly, the court vacated the final rule and remanded the case to the FDA for further consideration in light of the court’s opinion. The immediate result of this vacatur is that the May 6 first phase of the final rule (when laboratories would have had to begin submitting safety reports under the medical device regulations) is no longer in effect. But the ultimate result of the court’s ruling is that the FDA may no longer regulate the nearly 80,000 existing LDTs offered in-house by almost 1,200 laboratories.

The court’s decision is but the most recent example of judicial adherence to the directive of the US Supreme Court in 62 Cases of Jam v. United States, 340 US 593, 600-601 (1951), that “in our anxiety to effectuate the congressional purpose of protecting the public, we must take care not to extend the scope of the statute beyond the point where Congress indicated it would stop.” As the court acknowledged, the Clinical Laboratory Improvement Amendments (CLIA), which the Centers for Medicare and Medicaid Services (CMS) enforces, is a distinct regulatory framework that marks the boundary of the FDA’s authority with respect to LDTs.

While this decision provides clinical laboratories a reprieve from the impending regulatory burdens that the FDA would have imposed under the LDT final rule, it highlights the necessity for laboratories to remain vigilant and informed about potential regulatory changes and to engage in advocacy efforts to ensure that any future regulatory actions align with statutory mandates. As the FDA considers its next steps, potentially including an appeal of the court’s decision, laboratories should continue to comply with existing CLIA requirements and be prepared for any further developments in this evolving regulatory landscape.

Our team will continue to monitor developments and provide updates as they become available. Please reach out to your ArentFox Schiff attorney contact or one of the authors with questions or concerns.