Proposal to Phase Out FDA Enforcement Discretion for Lab Developed Tests: More Than 6,500 Weigh In

The US Food and Drug Administration (FDA) received thousands of comments on its recently proposed rule that would make clear the FDA’s authority to regulate laboratory developed tests (LDTs) as medical devices by adding 10 words to the definition of in vitro diagnostic products (IVDs): “including when the manufacturer of these products is a laboratory.” The proposed rule also includes an up to four-year phase-out policy of enforcement discretion historically provided to LDTs from compliance with the Federal Food, Drug, and Cosmetic Act (FFDCA).

The comment period for the proposed rule closed on December 4, 2023, despite requests for the comment period to be extended. The FDA received more than 6,500 comments during the three-month comment period, which the agency will now need to consider as it moves toward publishing a final rule.

Notable comments included the following:

• The American Clinical Laboratory Association stated that the “proposed rule would have dramatic implications on access to patient care, the cost of health services, future innovation in diagnostic testing, and numerous other issues” as well as “raise[] significant legal considerations.”
• The Pan American Society for Clinical Virology wrote that although it “agrees that regulatory oversight of LDTs is essential to ensure quality and patient safety,” the FDA should “consider the impact that this proposed regulation will have on patients and the entire field of clinical virology” bearing in mind that “the proposed regulation will likely cause many laboratories to discontinue current offerings as well as future development of infectious disease tests, critically reducing access to accurate and timely test results.”
• The Consumer Healthcare Products Association requested that the final rule not apply to “laboratory tests that are general wellness products and that are either carved out from the device definition [of the FFDCA] or are subject to enforcement discretion under [the FDA Center for Devices and Radiological Health’s] general wellness policy for low risk wellness products.”

The White House has indicated that it intends to publish the final rule by April 2024—leaving the FDA with not much time to review the thousands of comments it has received.

FDA History of Regulating LDTs

Historically, the FDA has not actively regulated most LDTs under a longstanding policy of enforcement discretion, although the agency has long maintained it can regulate LDTs in the same way as commercial IVDs. The FDA defines an LDT as an IVD test that is designed, manufactured, and used within a single clinical laboratory certified for high complexity testing under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). FDA’s historic enforcement discretion of LDTs has not been absolute. For example, the FDA previously has taken enforcement action against LDTs intended for pharmacogenomic testing. Notably, the FDA has previously tried to implement a regulatory regime[1] over LDTs but has not succeeded.

In its September 29 press release, the FDA explained that it is moving forward with the proposed rule due to the greater risks associated with most modern LDTs. Specifically, the agency is concerned by a perceived lack of regulatory compliance, performance, and accuracy associated with certain LDTs. The FDA believes that, as a result of inaccurate test results, “patients could initiate unnecessary treatment, or delay or forego [sic] proper treatment altogether . . . which could result in harm, including worsening illness or death.”

Proposed Phase-Out Policy

Recognizing the negative effects to patients and industry from a sudden change in regulatory status, the FDA has proposed a gradual phasing out of the enforcement discretion from compliance with the FFDCA afforded to LDTs. Interestingly, the proposed phase-out policy applies to (1) LDTs that meet what the FDA traditionally considers to be an LDT (i.e., those designed, manufactured, and used within a single laboratory) and (2) IVDs that are promoted as LDTs but do not meet the FDA’s traditional definition.

Accordingly, the proposed phase-out policy provides entities that are marketing tests in this latter category that should already have to comply with the FFDCA additional enforcement discretion to come into compliance with the FFDCA over the course of up to four years.

The FDA’s intent is that, following the up to four-year phase-out period, LDTs (or those being promoted as LDTs but which do not meet the FDA’s traditional definition) would be expected to meet the FDA requirements as IVDs already do.

The five key stages of the phase-out policy, which would go into effect the day the phase-out policy is published in the preamble to the final rule, are as follows:

LDTs Not Affected by the Proposed Phase-Out Policy

Certain LDTs that were already excluded from FDA enforcement discretion are not within the scope of this phase-out policy and are expected to continue to comply with the FFDCA and its implementing regulations.

These LDTs include

• tests that are intended as blood donor screening or human cells, tissues, and cellular and tissue-based products (HCT/Ps) donor screening tests required for infectious disease testing;
• tests intended for emergencies, potential emergencies, or material threats declared under Section 564 of the FFDCA (e.g., authorized via an Emergency Use Authorization (EUA)); and
• direct-to-consumer tests.

The FDA will also continue to exercise enforcement discretion for

• LDTs that have certain characteristics that were common among LDTs offered in 1976;
• Human Leukocyte Antigen (HLA) tests that are designed, manufactured, and used in a single, CLIA-certified laboratory that performs high complexity histocompatibility testing for transplantation, HLA antibody screening and monitoring, or for real and “virtual” HLA crossmatch testing purposes;
• tests intended solely for law enforcement purposes; and
• tests used exclusively for public health surveillance.

Next Steps & Actions to Consider Now

Despite the relatively short comment period, we are not surprised by the number of comments received on the proposed rule considering the potential ramifications it will have on the diagnostic testing industry. We suspect that the FDA will move expeditiously through the comments as it seeks to publish a final rule before a potential presidential administration change resulting from the 2024 election.

We anticipate that a final rule will ultimately be litigated by the courts, and it appears so does the FDA considering the extensive discussion and justification for the proposed rule drafted by the agency that accompanied the publication of the proposed rule.

Moreover, it is possible that with the FDA’s renewed efforts to regulate LDTs directly under its current FFDCA, this may cause the US Congress to pass the Verifying Accurate, Leading-edge IVCT Development (VALID) Act. Having narrowly been defeated in the prior Congress and introduced within the first months of the current Congress, there may be a renewed interest on Capitol Hill for passing the VALID Act. The VALID Act would establish an FDA regulatory framework specific to IVDs that may impose less regulatory burdens when compared to the FDA’s authority under the FFDCA.

Although we may be years away from active regulation of LDTs, we advise laboratories (or those promoting LDTs) to begin compiling their portfolio of LDTs and perform regulatory diligence to determine the potential pathways for marketing the product under today’s FDA product classifications.

Understanding the regulatory pathway and associated testing that may need to be included in a premarket submission can help the laboratory make decisions about what LDTs it wants to continue promoting after any enforcement discretion has elapsed. Moreover, laboratories can start to think about what resources (financial and personnel) may be required to stand up operations.

How We Can Help

Morgan Lewis guides and provides strategic counseling to IVD manufacturers and laboratories on bringing novel technologies to market utilizing the least burdensome FDA regulatory approach. Morgan Lewis lawyers prepare marketing applications (e.g., EUA, 510(k), De Novo) and interact with the FDA to help ensure timely review and authorization of applications.