It was great news for clinical labs when a federal district court decided on March 31 to vacate the Food and Drug Administration’s (FDA’s) final rule that would have given the agency power to regulate laboratory developed tests (LDTs). The rule would have greatly increased regulatory requirements for labs offering LDTs. The decision in the court case, American Clinical Laboratory Association (ACLA) v. FDA, will prevent it from taking effect.
The Association for Diagnostics & Laboratory Medicine (ADLM, formerly AACC) applauded the decision, noting the important role LDTs play in diagnoses and patient care. “The FDA rule — which would have started to go into effect on May 6 — would have subjected these tests to duplicative, burdensome, and costly FDA-[Centers for Medicare and Medicaid Services] regulation. This would have forced many labs to stop offering these essential tests,” said ADLM President Anthony Killeen, MD, BCh, PhD, DABCC, FADLM, in a statement. Killeen is professor and vice-chair for clinical affairs, department of laboratory medicine and pathology at the University of Minnesota, Minneapolis.
However, questions about future regulation of the tests remain.
“We can all breathe a sigh of a relief, but it will be a short breath,” said Dennis Dietzen, PhD, DABCC, FADLM, division chief of pathology and laboratory medicine at Phoenix Children’s Hospital. The FDA and Congress may attempt to impose new oversight. Attorneys also noted that an FDA appeal is still a possibility.
The ruling
Following the release of the FDA’s final LDTs rule in May 2024, ACLA and its member organization, HealthTrackRx, sued the agency, asking that the court vacate the decision and prohibit the FDA from enforcing it. The Association for Molecular Pathology filed a similar lawsuit, and the two suits were consolidated.
Prior to issuing the final rule, the FDA had long argued that it had power to regulate LDTs but had merely declined to do so. However, the court decided that FDA regulation of LDTs does not fit into the pre-existing regulatory scheme for these tests. According to the decision, LDTs stand outside of FDA regulatory authority stipulated in the Federal Food, Drug, and Cosmetic Act (FDCA). That law pertains to medical devices, while LDTs are medical services provided by labs that are already regulated by CLIA. The decision deems the rule unlawful because it exceeds FDA authority.
After considering a piece of legislation that would have given FDA oversight over LDTs, Congress declined to pass it, the decision added. This bill was the Verifying Accurate Leading-edge IVCT Development (VALID) Act, which would have created a new regulatory pathway, separate from both drugs and devices, for FDA premarket review and the regulation of LDT services. “Under the circumstances, agencies cannot circumvent, and courts must enforce, the statutory framework Congress enacted as it exists under the FDCA and CLIA,” the decision said.
Reactions from labs and legal experts
Dietzen said the decision is especially important for children’s hospital labs, which rely heavily on LDTs. Because there is little financial incentive for diagnostic companies to develop tests for pediatric patients, children’s hospitals must create many of their own assays, he explained.
Dietzen added that the decision echoes wider laboratory community arguments that such tests — which require months of design and validation — are not medical devices. Had the court sided with the FDA, it would have given the agency authority “over the ability of highly trained professionals to practice their craft, not unlike regulating what a surgeon does with all of the different tools at his or her disposal.”
Legal experts representing the diagnostics industry are cautiously optimistic that the FDA will not appeal the decision, pointing to roadblocks.
One is that the Fifth Circuit Court of Appeals would decide an appeal. The Fifth Circuit frequently strikes down government rules, so the FDA would face “a court which has been very hostile to government regulation,” explained Jeff Gibbs, JD, director at Hyman, Phelps & McNamara in Washington, D.C.
Additionally, an appeal would be inconsistent with the Trump administration’s stated aim of reducing federal regulation of industry. “But the administration is not always consistent in its broader statements and what it actually does,” Gibbs said.
A practical problem is that the FDA slashed its workforce, noted Gibbs, Dietzen, and Megan Robertson of the firm Epstein Becker Green, also in Washington, D.C. “Implementing the rule would impose a large workload, and there simply aren’t enough people left at the FDA to do the work,” Gibbs said.
The potential for new LDT legislation
New bills might attempt to change the current regulatory scheme, the attorneys noted.
Gibbs believes that the current Congress has little appetite for major, complex legislation involving groups with vastly different views. But he predicted lobbying for more LDT regulation will continue.
“Should the FDA decline to appeal, it does renew the opportunity for Congress to establish a framework tailored to support innovation and high-quality performance for all diagnostic tests,” said Jeff Allen, PhD, president and CEO of Friends of Cancer Research (FCR) in Washington, D.C.
FCR is one of a group of organizations, including the consumer advocacy nonprofit Public Citizen, that supported the FDA final rule. Gibbs doubts any Public Citizen-backed legislation would go far during the current congressional session, given the organization’s multiple lawsuits against the Trump administration.
Meanwhile, Robertson theorized that future LDT legislation could take the form of a revised VALID Act or could even be incorporated into a second version of the 21st Century Cures Act.
Legal and regulatory questions remain
The decision leaves questions for labs and openings for FDA action.
Jonathan Genzen, MD, PhD, MBA, chief medical officer at ARUP Laboratories in Salt Lake City, pointed to uncertainty about regulation of lab software. A footnote in the decision notes that the final rule’s preamble asserts that computer software can qualify as a medical device despite being “an intangible thing.”
“What the FDA can do with software in labs is a very real question,” Gibbs added. He noted that before Congress passed the 21st Century Cures Act in 2017, the FDA said it could regulate software, but Congress ultimately said software was no longer considered a medical device if the software met certain criteria.
Another area to watch is companion diagnostics. Gibbs said he reads the court decision to mean that the FDA can no longer require labs to obtain premarket approval for a companion diagnostic LDT. This raises complicated legal questions and the possibility that the FDA might potentially require a sponsor with a companion diagnostic to show that a patient is an appropriate candidate for the test, even if the FDA cannot regulate that test. A related question is which FDA center would conduct ongoing regulation of the test, Gibbs noted. He imagined a scenario where the agency might ask labs to voluntarily submit applications for review of LDTs. Some labs might do so to ensure reimbursement. Another question is what happens to approved drugs with LDT companion diagnostics.
The FDA could also try to more closely regulate companies offering LDTs with unapproved specimen collection kits, known as “convenience kits,” Robertson added. The kits enable patients to collect samples at home and ship them to labs. The FDA might require companies selling these kits, including labs, to show that each kit component is appropriate for the purpose it’s sold for. However, the FDA currently lacks the resources for a new, broader way to regulate the diagnostics industry, she added.
The importance of staying engaged
Lawyers and lab experts agree: The LDT story isn’t over. Labs should not expect the current regulatory scenario to remain unchanged in the long-term, Genzen emphasized. “This is an important moment in the history of our community.”
“Things under any new administration can change pretty quickly, and it’s possible that we might end up back where we were, facing a new regulatory framework, either during this administration or the next one, depending on shifting priorities,” Robertson warned.
While Genzen has long criticized the FDA’s approach to LDT regulation and applauded the court decision, he acknowledged that the final rule pushed labs to take steps — such as auditing existing LDTs and their uses — that could provide helpful information when the LDT legal or regulatory framework changes. He believes that future legislation could focus on enhancing LDT oversight under CLIA, for example.
This would be in line with ADLM’s position. The association supports modernizing LDT regulation to ensure that these tests are of the highest quality without limiting patient access or innovation, but has long advocated that any updates to LDT oversight should be made through the existing CLIA framework.
“Moving forward, ADLM will continue to engage collaboratively with regulatory agencies and Congress to ensure that the regulatory framework for [LDTs] always fosters the best possible outcome for patients,” said Killeen in his statement.
As for the rest of the lab community, Dietzen stressed that laboratorians should remain engaged in legal, regulatory, and legislative developments. He urged hospital labs — especially those in academic medical centers — to harness their political and professional influence as vital operations at major employers.
“We are all stronger as a community when we’re all working together and sharing our opinions about regulatory proposals. These perspectives are incredibly important,” Genzen emphasized.
