The U.S. Food and Drug Administration's (FDA) plan to tighten oversight of laboratory-developed tests (LDTs) appears to have stalled—which is undoubtedly good news for clinical laboratories.

Multiple attorneys who handle regulatory matters said in interviews that the FDA is unlikely to appeal the federal court order issued on March 31. That orderoverturned the FDA's final rule asserting jurisdiction over LDTs. However, Congress could still pursue a comprehensive overhaul of the diagnostic testing regulatory framework in the future, but any new legislative effort could take considerable time, as the issue has not previously been a priority for lawmakers.

"The concept of LDT is a bit like a vampire—it has 'come back to life' multiple times in the past," said Jeff Gibbs, a director at the law firm Hyman, Phelps & McNamara, which represented the Association for Molecular Pathology (AMP) in the lawsuit against the FDA. "This time it hasn't been a true stake through the heart."

The FDA's final rulewas designed to strengthen oversight of laboratories that develop, produce, and use their own diagnostic tests, proposing to regulate LDTs as medical devices. Under the plan, the rule would have phased in adverse event reporting, premarket review, registration, labeling, and other requirements over four years.

Concerned that high compliance costs would force laboratories to discontinue some testing services, thereby harming patients, the American Clinical Laboratory Association (ACLA) and AMP filed suit to block the FDA from enforcing the rule and ultimately prevailed. U.S. District Judge Sean Jordan of the Eastern District of Texasvacated the rule—which had been scheduled to take effect next month.

Whether it's large hospital laboratories performing complex tests or community laboratories focused on routine care, most laboratories use LDTs to address specific clinical needs when commercial in vitro diagnostic (IVD) tests are insufficient. Sheldon Campbell, a professor at Yale School of Medicine, said LDTs are "any test that is not performed exactly as approved by the FDA."

With the FDA rule's implementation halted, "these laboratories can basically continue operating with their existing staff," said Campbell, who also serves as laboratory director at the VA Connecticut Healthcare System. "This is a real benefit for patients."

As established by Congress, LDTs are currently regulated by the Centers for Medicare & Medicaid Services (CMS) under the Clinical Laboratory Improvement Amendments (CLIA) program. The FDA regulates tests it has authorized for use as medical devices but has applied an enforcement discretion policy to LDTs over the past several decades.

The FDA's position

In seeking to expand regulatory requirements for LDTs, the FDAarguedthat modern versions of the tests pose higher risks and require more aggressive oversight.

"The FDA is aware of numerous instances where IVDs offered as LDTs have been inaccurate, unsafe, ineffective, or of poor quality and have caused or could cause patient harm, including tests used to select cancer treatments, aid in the diagnosis of COVID-19, assist in managing patients with rare diseases, and identify patients' cancer risk," the agency said when it announced the final rule last year.stated。

Then-FDA Commissioner Robert Califf said the agency could not "stand by" while Americans relied on these widely used tests "without ensuring they are effective."

Campbell and others said LDTs are already subject to rigorous scrutiny under CLIA, a comprehensive system that can address problems with LDTs. "Moving forward incrementally and evolutionarily within the CLIA framework makes more sense than building an entirely new regulatory apparatus in the laboratory space," Campbell said.

The U.S. district court remanded the matter to newly appointed Secretary of Health and Human Services Robert F. Kennedy Jr. and ruled that the rule exceeded the FDA's authority under the Federal Food, Drug, and Cosmetic Act of 1938. The court's opinioncited the Supreme Court's ruling last year in Loper Bright Enterprises v. Raimondo, finding that the FDA lacked the statutory authority to regulate LDTs as medical devices.

Despite the FDA's intent to strengthen oversight of these tests, attorneys said they believe the agency will not appeal the district court's ruling, even though it has the authority to do so.

"The government certainly has the right to appeal and could do so," said Chad Landmon, an attorney at Polsinelli. "But many people—including myself—believe the more likely outcome is that they won't appeal and will let this lie for now, until Congress acts or a new administration takes office in four years."

The FDA did not respond to MedTech Dive's inquiry about whether it would appeal.

Landmon said any commentary or other response to the court's opinion—such as formally withdrawing the final rule—could be slowed byrecent FDA staff reductions, including cuts in communications departments. He added: "I do think that given how significant this matter is, we will likely see some form of statement or clarification."

"The concept of LDT is a bit like a vampire—it has 'come back to life' multiple times in the past. This time it hasn't been a true stake through the heart."

—Jeff Gibbs, Director at Hyman, Phelps & McNamara

Ben Wolf, a partner at Alston & Bird, said under the new Republican administration, the FDA may not challenge the court's ruling given the rule's unpopularity within the industry. "I would say that for now, the industry should be satisfied with the status quo because they no longer have to do compliance work to meet FDA requirements," he said.

As the FDA considers its next steps, one area to watch is whether the agency will begin taking action against products that were not previously targets of active enforcement. "They could choose to direct enforcement resources elsewhere, but it's certainly a possibility," Wolf said.

As for the preparation laboratories did for the FDA rule before it was halted, "it wasn't entirely wasted effort," said Yale's Campbell, because laboratories continually evaluate their test menus.

Calls for reform

Zach Rothstein, executive director of AdvaMedDx, the diagnostics division of the medical device industry association AdvaMed, said having two regulatory roles for the same product—one at CMS and one at the FDA—is not an efficient use of government resources.

"Given the issues raised by the court's ruling, it is in everyone's interest for Congress to act and ultimately decide how we as a country should treat LDTs, because what could happen now is that two different tests for the same patient could be governed by two different regulatory programs," Rothstein said. "That's not an efficient way for us to review these products, and it's not in the public's best interest."

TheVerifying Accurate, Leading-edge IVCT Development (VALID) Act, aimed at reforming the IVD regulatory framework, has failed to gain sufficient support in Congress despite multiple attempts in recent years.

"Given the issues raised by the court's ruling, it is in everyone's interest for Congress to act and ultimately decide how we as a country should treat LDTs."

—Zach Rothstein, Executive Director of AdvaMedDx

Multiple attorneys said that although diagnostic regulatory reform is necessary, they do not expect the current Congress—with Republicans controlling both chambers—to pass LDT legislation in the near term. One reason is that the VALID Act's Republican sponsor, Larry Bucshon of Indiana, retired from the House in January.

Matt Wetzel, a partner at Goodwin, said state-level regulators could step in to fill the gap. He noted that New York and Washington state already have infrastructure to regulate multiple aspects of laboratory operations. "Regulatory compliance requirements, I don't think, are going away," Wetzel said. "I think this will remain a significant cost for companies."

However, attorneys said that at some point, renewed efforts to push legislation to modernize diagnostic testing regulation and clarify the FDA's role in LDT oversight are likely to emerge.

"The issue of whether LDTs should be regulated, I don't think, is going away. The question now shifts to Congress, not the FDA," said Gibbs of Hyman, Phelps. "Unless an appeal succeeds, the battlefield moves entirely to Congress."