FDA’s New Proposed Rule to Regulate Laboratory-Developed Tests

By: Max Mashal, Juris Doctor Candidate (Class of 2025), Sandra Day O’Connor College of Law at Arizona State University

Introduction

On September 29, 2023, the U.S. Food and Drug Administration (FDA) announced a proposed rule that would classify laboratory-developed tests (LDTs) as “devices” under the Federal Food, Drug, and Cosmetic Act (FDCA) by amending the definition of in vitro diagnostic products (IVDs) under 21 C.F.R. § 809.3(a).[1] If this rule is implemented, LDTs will now have to meet the same regulatory standards as other FDA-regulated medical devices.[2]

Laboratory-Developed Tests

Laboratory-developed tests are in vitro diagnostic products that are designed, manufactured, and used within a single clinical laboratory which meets certain laboratory requirements (including CLIA certification).[3] Until recently, LDTs were mainly used for rare diseases and low-volume testing.[4] Now, they are widely-used by a more diverse population, thanks to high-tech instrumentation and software.[5] LDTs can now be used to diagnose and treat complex diseases, act as companion diagnostics for personalized medicine, and can be rapidly adapted to address emergency responses.[6]

However, unlike other IVDs, LDTs have not historically been subject to the FDA’s regulatory oversight.[7] The FDA has exercised enforcement discretion over LDTs for decades, allowing them to enter the market without FDA approval or clearance.[8] This has created a regulatory gap that poses significant risks to public health, as some LDTs may be inaccurate, unsafe, or ineffective.[9]

Phasing Out the FDA’s Enforcement Discretion Policy

Under the proposed rule, the FDA would implement a phased approach to end its enforcement discretion policy over a period of one to four years after the publication of the final rule.[10] The transition period would vary depending on the risk level of the LDTs, with high-risk tests being subject to premarket review earlier than moderate-risk or low-risk tests.[11] The FDA estimates that about 50% of the current LDTs are low-risk tests that may be exempt from premarket review under the new regulations.[12]

Under the proposed rule, the FDA has structured the phaseout policy as follows:

One Year After Publication: The FDA’s general enforcement discretion approach would end with respect to Medical Device Reporting (MDR) requirements, as well as correction and removal reporting requirements.
Two Years After Publication: Enforcement discretion would also end for other requirements. This would exclude MDR, correction and removal reporting, Quality System (QS) regulations, and premarket review. LDTs will then need to comply with FDA regulations related to registration, listing, labeling, and investigational device exemptions.
Three Years After Publication: Enforcement discretion would end for QS requirements.
Three and a Half Years After Publication:[13] Enforcement discretion would end for premarket review requirements for high-risk IVDs, subjecting Class III LDTs to full Pre-Market Approval requirements under the FDCA.
Four Years After Publication:[14] Enforcement discretion would end with respect to premarket review requirements for moderate and low risk IVDs needing premarket review. Class II and certain Class I LDTs would need to meet full 510(k) premarket and de novo requirements under the FDCA. The proposed rule suggests the FDA will not enforce actions against LDTs for which 510(k)s and de novo applications are submitted within this four-year period until the FDA review concludes.

Closing the Theranos Loophole

The FDA’s proposed rule aims to ensure the safety and effectiveness of LDTs, foster innovation, and align with evolving healthcare needs. It also intends to close a loophole which has been exploited by companies like Theranos, a startup that claimed to offer revolutionary blood tests that could perform hundreds of analyses with a single drop of blood.[15] Theranos’ tests were found to be unreliable, inaccurate, and fraudulent, putting patients at risk of misdiagnosis and mistreatment.[16] The company was able to market its tests without FDA approval by exploiting this regulatory loophole for LDTs.[17] The FDA’s proposed rule is intended to prevent such cases from happening again by requiring all LDTs to comply with the same regulatory standards as other medical devices.[18]

Conclusion

The FDA’s proposed rule is expected to face challenges and legal disputes from stakeholders who may oppose the agency’s authority over LDTs or fear the impact of the proposed regulations on their businesses.[19] The public comment period for the proposed rule closed on December 04, 2023.[20]

[1] Medical Devices; Laboratory Developed Tests, Federal Register (2023), https://www.federalregister.gov/documents/2023/10/03/2023-21662/medical-devices-laboratory-developed-tests (last visited Oct 11, 2023).

[2] Harsh Parikh et al., FDA proposes new regulations to increase oversight of Laboratory Developed Tests, Nixon Peabody LLP, https://www.nixonpeabody.com/insights/alerts/2023/10/11/fda-proposes-new-regulations-to-increase-oversight-of-laboratory-developed-tests (last visited Dec 18, 2023).

[3] Center for Devices and Radiological Health, Laboratory Developed Tests, FDA (2023), https://www.fda.gov/medical-devices/in-vitro-diagnostics/laboratory-developed-tests (last visited Oct 11, 2023).

[4] Office of the Commissioner, FDA Proposes Rule Aimed at Helping to Ensure Safety and Effectiveness of Laboratory Developed Tests, FDA (2023), https://www.fda.gov/news-events/press-announcements/fda-proposes-rule-aimed-helping-ensure-safety-and-effectiveness-laboratory-developed-tests (last visited Oct 11, 2023).

[5] Federal Register, supra note 1, at 3.

[6] An introduction to diagnostic testing in laboratories—US, https://www.thermofisher.com/us/en/home/clinical/clinical-genomics/molecular-diagnostics/diagnostic-testing-laboratories-intro.html (last visited Dec 18, 2023).

[7] Federal Register, supra note 1, at 3.

[8] Office of the Commissioner, supra note 4.

[9] Id.

[10] Federal Register, supra note 1, at 19.

[11] Id.

[12] Id. at 8; See also Inside FDA’s Proposed Rule to Regulate LDTs, https://www.thefdagroup.com/blog/fda-proposed-rule-ldt (last visited Dec 18, 2023).

[13] But no earlier than October 1, 2027.

[14] But no earlier than April 1, 2028.

[15] Kezia Parkins, The Theranos saga: a wake-up call for the lab-developed test market, (2022), https://www.medicaldevice-network.com/features/theranos-ldt-regulation/ (last visited Oct 11, 2023).

[16] Id.

[17] Id.

[18] See Office of the Commissioner, supra note 4.

[19] Gregory Levine, Joshua Oyster & Michael Purcell, Regulation Without Legislation: FDA Proposes Rule to Regulate Laboratory Developed Tests and End Historical Enforcement Discretion Policy | Insights | Ropes & Gray LLP, (2023), https://www.ropesgray.com/en/insights/alerts/2023/10/regulation-without-legislation-fda-proposes-rule-to-regulate-laboratory-developed-tests (last visited Oct 11, 2023).

[20] Federal Register, supra note 1, at 2; Center for Devices and Radiological Health, supra note 4.