The U.S. Food and Drug Administration (FDA or the Agency) issued a Final Rule on May 6, 2024 (89 FR 37286) that will, over the next four years, radically alter the landscape for laboratory developed tests (LDTs). This action follows FDA's Proposed Rule issued on October 3, 2023 (88 FR 68006, Oct. 3, 2023). Unfortunately, the calendar prevented publication in the Federal Register on Saturday May the 4th, but the Final Rule nonetheless puts an exclamation point on the Agency's decades-long goal to "correct the imbalance" between in vitro diagnostics (IVDs) marketed outside a laboratory and those IVDs manufactured by a laboratory.
Bringing "Balance" to FDA's In Vitro Diagnostic (en)Force(ment)
In brief, LDTs are in vitro diagnostics (IVDs) that are intended for clinical use and are designed, manufactured, and used within laboratories that are certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and meet the regulatory requirements under CLIA to perform high-complexity testing. The Final Rule amends the definition of IVDs at 21 CFR §809.3(a) to make explicit that IVDs, including IVDs manufactured by laboratories, are devices under the Federal Food, Drug, and Cosmetic Act (FD&C Act). This amendment reflects that the device definition in the FD&C Act and its IVD regulations do not differentiate between entities manufacturing the device. Accordingly, IVDs offered as LDTs are subject to FDA regulation as medical devices.
This is a big deal! For decades, FDA has exercised enforcement discretion and has not enforced applicable device requirements for most LDTs. The Final Rule sets out an approach to "phase out" enforcement discretion for most LDTs, which include IVDs that are manufactured and offered as LDTs by laboratories that are certified under CLIA and meet the regulatory requirements under CLIA to perform high-complexity testing, and are used within such laboratories, even if those IVDs do not fall within FDA's traditional understanding of an LDT because they are not designed, manufactured, and used within a single laboratory. Practically speaking, the "phase-out" of enforcement discretion really means a "phase-in" of key regulatory tools the Agency has always used in regulating other IVDs, such as adverse event reporting, registration and listing, investigational controls for clinical research, labeling, compliance with the quality system regulations at 21 CFR Part 820, and, in some cases, pre-market review.
In case you missed it, please refer to our in-depth summary of the Final Rule here.
Disturbance in the Force?
By phasing out the general enforcement discretion approach for LDTs, FDA is correcting the imbalance in its oversight between non-laboratory and laboratory IVD manufacturers - an imbalance that FDA asserts is placing patients at risk. On one hand, compliance with basic device requirements that protect and promote public health—adverse event reporting, establishment registration and device listing, labeling standards, investigational use requirements, and, as new IVDs enter the market or are significantly modified, the QSR and premarket review—should allow patients to have confidence in IVDs, regardless of where they are manufactured. To some, FDA will have achieved "balance" in its enforcement approach for LDTs.
Others, however, see this step as a major "disturbance in the Force." The Final Rule will likely be challenged in a number of ways, given the high cost of implementation and the perspective, shared by many in the clinical laboratory and patient community, that the CLIA framework is more than adequate to ensure validity of these tests (note: this perspective is offered notwithstanding CMS's plain statements that it welcomes FDA's involvement in regulating LDTs). So, what do we see on the horizon? There are several items to monitor if you are an IVD manufacturer offering traditional IVDs or IVDs offered as LDTs in a clinical laboratory. We review a few major issues below.
Litigation is Probable.
There are likely to be challenges to FDA's LDT Final Rule on the grounds that, either under 5 USC §553 of the Administration Procedure Act (APA) that its process of notice-and-comment rulemaking was flawed and limited participation—a hard sell with 6,500+ comments and a strong, integrated Final Rule resolving those comments and incorporating elements of the longer Proposed Rule from October 2023—or under 5 USC §706(2)(C) as "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right." For those not convinced that FDA is rightly defining LDTs in a laboratory as an IVD or that the CLIA overlapping jurisdiction issue cannot be resolved without additional congressional action, this is the likely challenge: FDA's interpretation of the FD&C Act and its IVD regulations are overbroad to include LDTs. Given the four-year "phase-out," it appears unlikely that we will see an enforcement action for a violation for at least a year, in which case it could be a while before any litigation from specific laboratories would follow. However, clinical laboratories and their trade organizations may seek to stay the Final Rule on APA or other grounds.
Legislation is Anticipated.
What is more likely than litigation is a congressional response. For two Congresses, the Verifying Accurate Leading-edge IVCT Development (VALID) Act has been introduced in some form or another to resolve this ongoing saga of FDA's jurisdiction over LDTs. The VALID Act would create a modernized risk-based framework for "in vitro clinical tests" (IVCTs) that would include LDTs and IVDs under a single diagnostic-specific regulatory scheme. This legislation would also clarify the authority between FDA and CMS in this matter. While the VALID Act is currently introduced in the 118th Congress as H.R. 2369, the "VALID Act of 2023" (it resembles the 117th Congress's attempts via S. 2209 and H.R. 4128, the "Valid Act of 2021"), there are many hurdles to moving forward. Both the Senate Health, Education, Labor and Pensions (HELP) and House Energy & Commerce Committees have shown little interest in pushing for these reforms, and it raises the question: will Congress defer to FDA and eventually codify the Agency's work into statute (it's always a sign of approval when Congress steals FDA's ideas and bakes them into the FD&C Act), or will Congress act to "fix" FDA's Final Rule? Two members of Congress have already shown strong disapproval of FDA's action, and have introduced Senate and House resolutions "[p]roviding for congressional disapproval under chapter 8 of title 5, United States Code," which starts the process of attempted repeal using the Congressional Review Act (CRA). While we believe a CRA repeal is unlikely – it requires a simple Congressional majority and signature by the President, which can only be overridden by a two-thirds majority of Congress – these Members see the Final Rule as both unnecessary and harmful as they predict it will undermine both medical innovation and patient care. Given the level of interest, we may see additional action in this Congress and the next, so stay tuned!
Timelines Matter.
The four-year, escalating "phase-out" of enforcement discretion includes several dates that traditional IVD and clinical laboratories offering LDTs will need to monitor. For example, the most onerous of the initial compliance obligations in the first three stages of the Final Rule timeline—namely, QSR compliance—will be triggered in May 2027. Importantly, the process of reauthorizing the Medical Device User Fee Act (MDUFA) will be the backdrop to the phase-out, as MDUFA V is set to expire in FY 2027 with negotiations and public meetings for MDUFA VI beginning a year or more before then. This convergence of timelines would give Congress an opportunity to act in some way to confirm or alter FDA's approach. What does this mean for an IVD manufacturer or a clinical laboratory regulated under CLIA offering LDTs? You will have to constantly monitor the compliance deadlines while simultaneously monitoring Hill activity to judge the cost of implementation versus the probability that Congress will take action to augment the regulatory framework for LDTs.
Enforcement Discretion is Uncomfortable.
FDA's LDT Final Rule includes several reminders to industry that, despite all the plans for gradually "phasing out" its enforcement discretion approach, enforcement discretion still means that FDA finds your activities outside compliance with the FD&C Act and the Agency's implanting regulations for registration and listing, labeling, QSR compliance, investigational use compliance, and in many cases, pre-market review. Any one of these could trigger an adulteration or misbranding charge under the FD&C Act if FDA decides that it should intervene and take a compliance action against an LDT manufacturer. The Final Rule makes clear that "FDA retains discretion to pursue enforcement action for violations of the FD&C Act at any time and intends to do so when appropriate."1 So, industry will need to consider the relative discomfort of knowing that FDA could take a compliance action against LDT activity, notwithstanding the program outlined in the Final Rule.
This is the Way (Forward)
Industry partners should take seriously FDA's LDT Final Rule and consider how to lay the groundwork for future commercial success through compliance activities that will keep testing practices out of FDA's crosshairs. It is important not only to consider how to comply with the Final Rule, but also to monitor congressional and litigation developments that could shape strategic thinking. Venable's Food & Drug Law Team is ready to help you understand and implement the Final Rule requirements and help you monitor the horizon for key developments.
1. LDT Final Rule at 89 Federal Register 37295 (May 9, 2024).
Footnote
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.