FDA LDT Regulation Is Dead – Now What?
A Texas federal court ruled that FDA has no authority to regulate laboratory developed tests (LDTs)
o What happened?
First, a rough definition: an LDT is a diagnostic test designed, made, and used by a lab. Imagine that you’re sick and a doctor sends you to a lab for a test. If the lab develops and makes your test, that’s an LDT.
FDA regulation of LDTs is fraught. For decades, the agency exercised enforcement discretion for LDTs. Enforcement discretion is when FDA says, “we have authority over your product, but we’re not going to take action for now.” FDA exercised discretion because LDTs were typically small-volume products for patients who needed tests that weren’t commercially available. Plus, even with FDA enforcement discretion, labs making LDTs weren’t unregulated; other federal laws govern their operation (although these laws direct lab practice, not device safety and effectiveness).
But over time, enforcement discretion failed. Some labs grew huge, looking like commercial device makers. Plus, FDA learned of inaccurate and ineffective LDTs, putting patients at risk.
FDA spent years working with stakeholders on legislation clarifying agency regulatory authority, while recognizing that LDTs are different from, and can’t be regulated as, traditional devices. Draft law was on the cusp of passage when, for many reasons, it died.
Then FDA decided to go it alone. The agency issued a regulatory model to be rolled out over about half a decade, starting soon. The plan ended with most LDTs being FDA regulated, which means premarket review and postmarket oversight.
FDA was sued almost immediately by lab groups claiming that LDTs are not devices and that FDA can’t regulate them. Last month, a Texas judge agreed, ruling that FDA LDT regulation was overbroad and outside the agency’s authority.
The court vacated the LDT rule and sent it back to HHS. There’s 0% chance that HHS appeals the court’s decision. Trump in his first term said that FDA has no authority over LDTs. Biden vacated that policy and Trump no question will return to it. So, FDA LDT oversight is dead with a capital “D”.
o What does this mean for MedTech firms?
Imbalance. There are big diagnostic firms making tests. FDA and these firms treat the tests as devices, meaning rigorous FDA premarket review and postmarket oversight. That’s expensive, time-consuming, and complex. Meanwhile, labs making LDTs can ignore these requirements, and insurers and the government sometimes pay for their tests. This disparity creates a disincentive for IVD makers. Why spend time and money developing and selling tests while competing with labs that do similar work, but cheaper and with less oversight?
Dismissal of FDA authority. Citing a recent Supreme Court ruling, the Texas judge rejected FDA’s argument that it has authority for LDTs. Instead, the court substituted its own view that FDA can’t regulate these products. This is huge and goes against decades of court deference to federal regulators, which is exactly what the Supreme Court authorized. Expect more of this, meaning that, like here, parties can shop for favorable courts and challenge FDA’s positions. Judges then substitute their own views for FDA’s, despite the agency’s technical expertise and history with the disputed matters. And these rulings apply nationwide, even when they come from a court in east Texas. Such scenarios extend to all medical devices, not just LDTs.
o What should MedTech firms do?
Watchful waiting (except for IVD makers). For firms that don’t make IVDs, the Texas ruling may be less urgent and worrisome. But the effect of the ruling – a court ignoring long-standing FDA policy and reaching its own conclusion – creates risk for all device firms. So MedTech stakeholders must be on guard for similar cases and then decide when and how to intervene (more on that below). For IVD makers, the die’s been cast. The question now is whether there’s a business case for making IVDs when labs can make competing products cheaper and with less regulation. The fact that LDTs can look like commercial products and may not work is beside the point. But it may be possible to un-ring this bell. Stakeholders came close to a legislative fix that established FDA authority over LDTs. Reviving that strategy could be effective but will require successful negotiation with labs and their advocates.
Other cases (possibly/hopefully) will consider FDA’s authority over LDTs. Stakeholders supporting FDA controls need to get involved, for example with court briefs explaining why FDA can regulate these products. Stakeholders can join groups with aligned interests to make this case but, when that’s unworkable, they must decide if backing FDA is important enough to go it alone.
For more information, see Laboratory Developed Tests; FDA defends LDT final rule, while critics fear it upends lab industry; Texas judge overturns FDA’s lab developed test regulation
Steve, excellent post. I wonder if the IVD manufacturers, especially the big ones like Abbott or BD would really give up and let labs take over their growing market share. This could certainly deter smaller startups wanting to get to market quickly. It will certainly slow down innovation, as you correctly point out, that labs could do this quickly and more cheaply compared to IVD manufacturers.
On a second note, do you think there might be more challenges to FDA's authority related to medical devices, just because someone doesn't like the way the agency exercises their regulatory authority. I am thinking of Chevron doctrine as that one also has been thrown out of the window!