FDA Proposes to Actively Regulate Laboratory-Developed Tests After Years of Enforcement Discretion
Today the U.S. Food and Drug Administration (FDA or the Agency) published a long-awaited proposed rule to revise the regulatory definition of an in vitro diagnostic (IVD) product to explicitly capture IVDs manufactured by laboratories.1 The purpose of the proposed rule is to make clear that laboratory-developed tests (LDTs) are IVDs subject to regulation by FDA as medical devices under the Federal Food, Drug, and Cosmetic Act (FDCA) and, as applicable, the U.S. Public Health Service Act. In addition, the proposed rule describes a proposed phaseout policy under which FDA will gradually end its general LDT enforcement discretion policy — which has been in place for decades — in phases over a four-year period. The proposed rule is complex and will likely prompt a wide range of feedback ranging from support to threats of litigation to renewed calls for a legislative solution. We will continue to follow these issues closely.
How Did We Get Here?
This proposed rule is the culmination of a yearslong effort by FDA to reexamine its approach to the oversight of LDTs, which are tests manufactured within a single laboratory certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and performed by the laboratory as a service. The proposed rule articulates the history of FDA’s regulation of diagnostic testing, including LDTs, and provides a comprehensive legal and policy analysis to justify the Agency’s current attempt. Since the enactment of the Medical Device Amendments of 1976 (MDA), FDA has generally exercised enforcement discretion for most LDTs, although the Agency has reiterated throughout the years that it considers such tests to be devices under the FDCA. FDA’s prior attempts to regulate LDTs under the medical device requirements as a product class have been a source of controversy. After soliciting and analyzing stakeholder comments on two 2014 guidances articulating an LDT oversight framework, the Agency was unable to reconcile fundamental differences among key stakeholders and voiced support for a legislative solution to the issue. FDA’s views were ultimately released in a discussion paper on the subject in 2017, and the Agency declined to finalize the 2014 guidance documents. Since the release of that discussion paper, FDA voiced its support for legislative proposals that would expand the Agency’s authority over LDTs, and many stakeholders saw a potential window for passage of comprehensive LDT oversight legislation in the form of the standalone Verifying Accurate, Leading-Edge IVCT Development (VALID) Act and later in User Fee Reauthorization.2 According to FDA officials, the failure of these legislative efforts combined with the Agency’s experience reviewing LDT validation and performance information during the COVID-19 emergency required urgent regulatory action in the form of this proposed rule.3
Who Is Affected?
The proposed rule will phase out enforcement discretion for most tests currently developed and run as LDTs. As noted in the discussion below, LDTs currently certified as “high complexity” under CLIA are treated slightly differently than moderate- and low-complexity tests for certain aspects of the phase-out.
This means that if the rule is finalized, many clinical laboratories, including those owned or operated by medical centers, as well as many classes of software and hardware developers, reagent and chemical companies, and other diagnostics technology developers will find themselves subject to regulation along FDA’s medical device regulatory continuum for the first time.4 Owners of these businesses will likely need to recalibrate their business plans to account for new, comprehensive, phased-in regulation, which may require a need to conduct time- and resource-intensive data development and quality system building activities. Finally, there are likely to be downstream effects for researchers who collaborate with laboratories running LDTs, including biopharmaceutical companies who sometimes must invest in niche biomarker test development. Despite having a clearer sense of FDA’s regulatory expectations, a final rule will mean these LDT development collaborators may have to plan for additional development costs, time delays, and new compliance considerations.5
The proposed rule has immediacy for certain LDT developers. As FDA has stated elsewhere, the Agency considers its current medical device oversight authority to extend to the following types of tests, and, thus, FDA is not giving manufacturers of these test types the benefit of any gradual phaseout:
- Direct-to-consumer tests
- Blood donor screening tests or human cells, tissues, and cellular and tissue-based product donor screening tests required for infectious disease testing under 21 C.F.R. §§ 610.40 and 1271.80(c), respectively, or tests for the determination of blood group and Rh factors required under 21 C.F.R. § 640.5
- Tests intended for actual or potential emergencies or material threats declared under Section 564 of the FDCA
- IVD manufacturing activities occurring outside of a CLIA-certified laboratory (such as in a case where the same entity owns both the laboratory and a separate manufacturing facility, which FDA asserts were never within the scope of FDA’s general enforcement discretion policy for LDTs)
This means that companies who develop or offer these test types must consider what finalization of the proposed rule could mean for their business models as well as evaluate their current compliance with applicable FDA requirements.
By contrast, FDA explained that it will continue to exercise general enforcement discretion for the following categories of tests:
- “1976-Type LDTs” (i.e., tests that use manual techniques without automation performed by laboratory personnel with specialized expertise, use components legally marketed for clinical use, and are designed, manufactured, and used within a single CLIA-certified laboratory meeting CLIA requirements for high complexity testing)6
- Human Leukocyte Antigen (HLA) tests that are designed, manufactured, and used within a single CLIA-certified laboratory meeting CLIA requirements for high complexity histocompatibility testing and used for HLA allele typing in connection with organ, stem cell, and tissue transplantation, HLA antibody screening and monitoring, or conducting real and “virtual” HLA crossmatch tests
- Tests intended solely for forensic or law enforcement purposes
- Tests used solely for public health surveillance when intended solely for use on systematically collected samples for analysis and interpretation of health data for disease prevention and control and the test results are not reported to patients or their healthcare providers
For Those Affected, When Do FDA Medical Device Requirements Come Into Effect?
FDA structured the proposed enforcement discretion phaseout policy into the following five stages:
Stage 1: FDA will end the general enforcement discretion policy as to medical device safety reporting and correction and removal requirements one year after FDA publishes a final phaseout policy, which is intended to be in the preamble of the final rule. Under these requirements, laboratories offering IVDs as LDTs would need to, among other things, report certain adverse events and malfunctions regarding such tests, as well as instances where they remove or correct a test to reduce a risk to health or remedy a violation of the FDCA, to FDA. FDA views this one-year period as adequate because laboratories should have existing processes in place for detecting quality and performance issues with their IVDs under CLIA. We expect the final rule to be published in late spring or early summer 2024, meaning that Stage 1 regulation would begin at approximately the same time in 2025.
Stage 2: FDA will end the general enforcement discretion policy as to all other medical device requirements, except for quality system and premarket review requirements, two years after FDA publishes a final phaseout policy.7FDA asserts that an advantage of the timing for phasing-in these requirements is that the submitted registration and listing information could provide the Agency with an initial understanding of IVDs offered as LDTs to facilitate their premarket review. We estimate that Stage 2 regulation could start as soon as late spring or early summer of 2026.
Stage 3: FDA will end the general enforcement discretion policy as to Good Manufacturing Practice requirements and Quality System Regulation requirements8three years after the final policy is published. Out of recognition of the existing laboratory quality compliance requirements imposed on high complexity CLIA-certified laboratories, FDA intends to require IVDs manufactured in such laboratories only to comply with the requirements for design controls (21 C.F.R. § 820.30), purchasing controls (21 C.F.R. § 820.50), acceptance activities (21 C.F.R. §§ 820.80 and 820.86), corrective and preventative actions (21 C.F.R. § 820.100), and records requirements (21 C.F.R. Part 820, Subpart M) because CLIA does not provide assurances relevant to these requirements. We estimate that Stage 3 could start in late spring or early summer of 2027.
Stage 4: FDA will end the general enforcement discretion policy as to premarket review requirements for high-risk IVDs (which appears to correspond to Class III IVDs) three and a half years after FDA publishes a final phaseout policy, which is estimated to be late 2027 or early 2028 based on the final rule’s likely publication date, but in any case not before October 1, 2027. FDA’s Premarket Approval (PMA) requirements (21 U.S.C. § 360e, 21 C.F.R. Part 814) would apply in this stage. The Agency aligned this stage with the start of fiscal year 2028, which coincides with the beginning of a new user fee cycle to provide an opportunity for industry participation in negotiations with the knowledge that laboratory manufacturers would be expected to comply with these requirements. FDA also explained that it would not intend to enforce against IVDs offered as LDTs after a PMA has been submitted within the three-and-a-half-year timeframe until FDA completes its review as the Agency does not want to disrupt patient access.
Stage 5: FDA may end the general enforcement discretion policy as to premarket review requirements for moderate risk (essentially Class II IVDs) and low-risk IVDs (essentially Class I IVDs) (that require premarket submissions) in late spring or early summer of 2028, but in any case not before April 1, 2028. Such requirements include those applicable to 510(k) submissions (21 U.S.C. §§ 360(k) and 360c(i), 21 C.F.R. Part 807, Subpart E) as well as De Novo requests (21 U.S.C. § 360c(f)(2), 21 C.F.R. Part 860, Subpart D). Similar to its approach to pending PMAs, FDA would not intend to enforce against IVDs offered as LDTs after a 510(k) or De Novo request has been submitted within the four-year timeframe until FDA completes its review. FDA also noted that for both PMAs and 510(k) clearances, laboratories could avoid the submission of a PMA supplement or new 510(k) if a change to an IVD is consistent with an FDA-approved or cleared predetermined change control plan. Further, FDA anticipates that laboratories may seek to utilize FDA’s Third Party review program and is aware of certain CLIA accreditation organizations that may be interested in potentially becoming Third Party reviewers, which, together with the Agency’s current work in enhancing the program, may further entice laboratories to use the program. Notably, FDA estimates that approximately 50% of IVDs offered as LDTs would not require premarket review.
How Does This Compare to the VALID Act and Other Similar Legislative Proposals?
It is clear that FDA, as well as many stakeholders supporting FDA having a role in the regulation of LDTs, would have preferred a legislative solution. The proposed rule’s gradual phase-in of regulatory requirements, prioritization of high-risk tests for premarket review, and recognition of Third Party review and predetermined change control plans reflect some aspects of the proposals for risk-based regulation which surfaced during the VALID Act negotiations but without the same level of nuance. Because this framework is based on one which already exists for conventional medical devices (including for developers who have chosen to seek FDA clearance or approval), FDA’s descriptions serve more as reminders and not as statements of novel policy. The proposed rule offers few details as to how FDA would classify LDTs based on risk, and gone is any “grandfathering” of developers who lawfully marketed LDTs in good faith reliance on FDA’s 25+ years of enforcement discretion policy. The concept of “mitigating measures” also does not appear in the draft rule. Notably, FDA tied the phase-in of PMA requirements with user fee negotiations reinforcing that the Agency is relying on existing premarket review pathways and cannot yet adequately model and trend the burden on Agency resources based on this dramatic expansion of FDA authority. However, we think it likely that, if FDA were to finalize the proposed rule in its current form, the Agency would issue classification regulations and/or guidance defining specific types of IVDs and their risk categorization.
When Are Comments Due?
Comments must be submitted by December 4. The proposed rule was announced on September 29 and published today (October 3).
FDA is requesting feedback on several specific questions, including regarding the public health rationale for exercising enforcement discretion for certain LDTs, whether certain LDTs should be subject to longer phaseout periods, and whether academic medical center laboratories should be subject to a different policy. Rather than recopying all of those here, we call your attention to pages 68023-68024 of the proposed rule preamble for the full list of questions.
How Will Congress Respond?
The Republican leaders of the House and Senate Committees with jurisdiction over FDA were quick to criticize the proposed rule. Sen. Bill Cassidy (R-LA), the top Republican on the Senate Health, Education, Labor and Pensions Committee, said the Agency was exceeding its statutory authority and ignoring lessons from the pandemic. Rep. Cathy McMorris Rodgers (R-WA-5), Chair of the House Energy and Commerce Committee, expressed concerns about the impact on innovation, particularly for rare-disease patients, and called on FDA to rescind the proposed rule so Congress can consider the matter.
Meanwhile, Congress has been slow to reconsider the VALID Act, or successor legislation, this year. A House version was introduced with little fanfare in March, and a Senate companion has yet to be reintroduced. The proposed rule may eventually breathe new life into those legislative efforts, but we expect more immediate activity to focus on oversight of FDA’s proposal while stakeholders consider potential litigation.
Finally, depending upon the timing of the release of the final rule and the outcome of the 2024 elections, Congress may have an opportunity to negate the rule using the Congressional Review Act (CRA). For this reason, we expect the administration to work to finalize the rule by late spring or early summer of 2024, at the latest, in order to escape the CRA’s lookback window in the next Congress.
When Do We Expect FDA Will Publish the Final Rule?
FDA proposes that the final rule will become effective 60 days after its publication date in the Federal Register. Based on the time needed to review and address comments following the December 4 deadline and the administration’s desire to avoid the aforementioned CRA lookback window, we anticipate publication of the final rule in late spring or early summer 2024.
© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.
The published proposed rule is available here.
The 2014 draft guidance documents can be found here and here. The 2017 discussion paper, which was released at the start of the Trump administration, can be found here. The Diagnostic Accuracy and Innovation Act (DAIA) was released for public comment later that year; however, consensus could not be reached among legislators, stakeholders, and FDA. Congressional representatives subsequently built on the DAIA experience and released the VALID Act for public comment in late 2018, while first introducing it in 2020. The VALID Act was reintroduced in 2021 but not passed; an attempt was made to attach the bill to the Food and Drug Administration Safety and Landmark Advancements Act of 2022 (the user fee reauthorization package) but that attempt was not successful. The 2021 versions of the VALID Act as introduced by the House and Senate can be found here and here. Following passage of the reauthorization and failure of the VALID Act, FDA officials indicated in January that they would move forward with drafting LDT oversight regulations.
In sum, FDA’s decision to reexamine its enforcement discretion policy was largely spurred by developments in LDTs since the enactment of the MDA from originally being small-scale, manual tests to highly complex, automated, and widely available tests. FDA’s position — greatly informed by the Agency’s experience during the COVID-19 emergency — is that most modern LDTs present much greater risk than those available at the time of the MDA’s enactment and are similar to IVDs currently regulated as devices. In support of its position, FDA described a number of risks it views as associated with LDTs, including high variability in performance, the lack of adequate validation studies, and inaccurate results (e.g., false positives, false negatives) particularly for critical tests (e.g., non-invasive prenatal screening, oncology). FDA also references a number of public controversies, including recent negative press about non-invasive prenatal screening tests.
For example, it is yet unclear whether FDA intends to continue the enforcement discretion approach outlined in the Agency’s November 2013 guidance for manufacturers of “research use only” products. Many companies that manufacture reagents, software, and specimen analysis equipment and have relied on this guidance may now have to rethink the extent to which FDA medical device requirements may apply to them.
Many biopharmaceutical companies and research institutions have entered into collaboration arrangements with clinical laboratories for a variety of research and testing services, such as development of niche biomarker LDTs. Additional legal and business diligence on these arrangements may be necessary should FDA finalize the proposed rule.
To our knowledge, FDA has not previously identified this subcategory of test as subject to enforcement discretion. This is one of several issues that stakeholders may want to seek to clarify in their comments to FDA.
Requirements that would begin to apply in this stage include device establishment registration and device listing requirements (21 U.S.C. § 360, 21 C.F.R. Part 807), labeling requirements (21 U.S.C. § 352, 21 C.F.R. Parts 801 and 809), and investigational use requirements (21 U.S.C. § 360j(g), 21 C.F.R. Part 812).
21 U.S.C. § 360j(f) and 21 C.F.R. Part 820 would now apply. Notably, FDA addressed its pending proposed rule revising the Quality System Regulation explaining that it intends to finalize such revisions expeditiously so the revised requirements will be in effect before this stage begins.