Federal Court Strikes Down LDT Final Rule

Key takeaways from the court’s ruling include the following:

• The court struck down the LDT final rule because it exceeded FDA’s authority under the Food, Drug, and Cosmetic Act (FDCA). The court concluded FDA’s authority to regulate “devices” extends to tangible, physical products that are commercially distributed – not professional services that use such products. In addition to a detailed analysis of the FDCA text, the court offered several bases for this conclusion, including that:
  • Congress enacted separate regulatory frameworks for clinical laboratories (e.g., the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and the Social Security Act) and medical devices (the FDCA).
  • Congress refused to grant FDA explicit authority over LDTs on several occasions in the last 20 years (e.g., the VALID Act).
  • FDA did not claim jurisdiction over LDTs for several decades after Congress initially gave it authority to regulate “devices” in 1938.
  • FDA did not adequately explain how or why it had allowed thousands of clinical laboratories to operate for “decades in open and direct violation of the law.”
  • FDA did not adequately respond to plaintiff’s claim that under FDA’s line of reasoning, any medical procedure (e.g., surgery) involving the use of a device could itself be considered a device.

• The court’s order sets aside the LDT final rule nationwide. As a result, clinical laboratories offering LDTs will not be required to comply with any of the phases of the final rule unless FDA successfully appeals the court’s ruling.
• The ruling reinstates the LDT oversight process that has historically been in place. Laboratories wishing to develop and use LDTs for patient care purposes will need to establish performance specifications for the tests consistent with CLIA requirements and successfully complete the New York State Clinical Laboratory Evaluation Program test approval process if offering to patients in the state (as applicable). Because LDTs are considered CLIA high-complexity tests, after validating the test, laboratories must ensure that they comply with all CLIA regulations applicable to high-complexity laboratories.

The court’s ruling offers an answer to an important (and long-standing) legal question regarding FDA’s authority to regulate LDTs under the FDCA. However, several important questions remain unanswered. For example:

• Will the FDA appeal? Despite speculation that the Trump administration may not appeal, neither the administration nor the US Department of Health and Human Services/FDA has announced its position on a potential appeal.
• Will the ruling affect the FDA’s enforcement posture, and if so, how? The court’s ruling is based in no small part on its conception of an LDT as a service offered by a single clinical laboratory:

A “laboratory-developed test” is a methodology or process by which a laboratory generates biochemical, genetic, molecular, or other forms of clinical information about a patient specimen for use by the treating physician. Each laboratory uses its own unique knowledge of the protocols, performance characteristics, and means of analysis to develop such methodologies and processes. Laboratory-developed tests are offered as services. Unlike a drug or device, which is a manufactured and packaged article of commerce with user instructions, a laboratory-developed test service is a proprietary methodology performed by only the developing laboratory. That service generates information from test results and transmits that information to the ordering physician. The testing service is not sold as a kit, and the protocol is not transferred in any manner to other laboratories, hospitals, or other facilities outside the developing laboratory entity. No physical product is sold, and no article of personal property is transferred such that title passes from one party to another.

It is unclear whether FDA would consider taking enforcement action if certain tests offered as LDTs fall outside this fairly narrow conception.

It is also unclear how FDA might seek to change its approach to oversight of tangible items that the litigants agreed remain subject to at least some degree of FDA oversight, such as “research use only” equipment and reagents, and/or specimen collection kits.

• How will the ruling affect FDA’s – and external stakeholders’ – willingness to consider legislative action (e.g., the VALID Act)? Congress tried and failed to pass the VALID Act on several occasions in recent years. In congressional hearings held last year, several laboratory stakeholders expressed a preference for a legislative solution to diagnostics oversight rather than FDA’s approach in the LDT final rule. Will those stakeholders continue to be open to some form of FDA oversight? Or will they now oppose such efforts in light of the court’s ruling?
• What will happen to clinical laboratories that might voluntarily seek FDA clearance or approval for tests offered as LDTs? Several laboratories have obtained FDA authorization for proprietary tests run and offered solely at a single location. Can laboratories continue to “opt in” to FDA oversight in light of the court’s ruling?