Final FDA Rule Regulating Laboratory Developed Tests

On May 6, 2024, the Food and Drug Administration (FDA) issued its long-anticipated final rule regulating laboratory developed tests (LDTs). For approximately two decades, the FDA has been signaling its intent to regulate LDTs as a category of medical devices known as in-vitro diagnostics (IVDs). During this timeframe, the FDA has taken the position that it has the authority to regulate LDTs as IVDs, but has exercised "enforcement discretion" not to subject LDTs to FDA regulatory controls. On October 3, 2023, the FDA published a proposed rule that would have subjected all LDTs to a phase out of this enforcement discretion, so that all LDTs would have been subject to full FDA regulatory control at the end of the phase‑out period. The FDA received over 6,500 comments regarding the proposed rule, many of which expressed significant concerns regarding the adverse impact of the rule upon patient care, as the proposed rule would limit the availability of many medically necessary laboratory tests.

In the May 6, 2024, final rule, the FDA appears to have considered the concerns regarding the adverse impact upon patient care and outlined several categories of full and partial enforcement discretion, as described in more detail below.

It is critical for laboratories to understand that the FDA's use of enforcement discretion is not the same as an "exception" or "grandfathering" under the final rule. Rather, the FDA's enforcement discretion can be altered or withdrawn at any time unilaterally by the FDA. In addition, the three most significant categories of partial enforcement discretion (certain LDTs performed by health systems, LDTs with New York State CLEP approval and currently marketed LDTs) remain subject to significant FDA regulation, as explained below.

Phase-out process

Pursuant to the new rule, the FDA will phase out its historic enforcement discretion over a four‑year period. All LDTs (with the exception of four very limited categories of LDTs that are eligible for full enforcement discretion) will be subject to the first three transition deadlines in the table below: (a) medical device reporting system requirements, (b) registration, class-based listing, labeling and investigational use standards, and (c) at least some of the quality systems requirements. Those LDTs that are not eligible for any enforcement discretion will be subject to premarket review requirements, which include premarket application submissions for high-risk tests and premarket review for low and moderate-risk LDTs, as outlined in the fourth and fifth transition deadlines in the table.

LDTs Subject to Full Enforcement Discretion

The FDA indicated in the final rule that four categories of tests will be subject to full enforcement discretion, meaning that they will not be subject to any of the FDA's regulatory controls (at least for so long as the FDA deems it appropriate to continue its full enforcement discretion). These four tests are:

1. 1976-type LDTs, which are assays that use manual techniques performed by laboratory technicians with specialized expertise and only use components that are legally marketed for clinical purposes. These tests must also otherwise meet the FDA's LDT definition.
2. Human leukocyte antigen tests that meet the FDA's LDT definition.
3. Tests intended solely for forensic purposes in law enforcement.
4. LDTs manufactured and performed in laboratories within the Veterans Health Administration or the Department of Defense.

New York CLEP Approved Tests

The FDA indicated that it will exercise partial enforcement discretion for LDTs that have been approved under New York State's Clinical Laboratory Evaluation Program ("NYS CLEP") given the FDA's determination of the rigor of the NYS CLEP and the similarities between NYS CLEP and the FDA's premarket review process. LDTs that are approved under the NYS CLEP will be exempt from the premarket review processes of the FDA (the fourth and fifth boxes in the table above), but will still be subject to the phase-out of the FDA's enforcement discretion for the medical device reporting requirements, registration class based listing and labeling, and quality system requirements (the first three boxes in the table above).

Certain Health System LDTs

A second category for which the FDA has indicated its intent to exercise partial enforcement discretion are LDTs manufactured and performed by a laboratory that is integrated within a health system and designed to address an unmet medical need of patients receiving care within such system. The FDA will continue to exercise enforcement discretion with respect to the premarket review requirements (the fourth and fifth boxes in the table) as well as the medical records standards of the quality systems requirements (the third box in the table). In addition, the testing must be for an unmet need, which the FDA considers to be a situation where there is no available FDA authorized test that meets the patient's needs. Importantly, the FDA stated that potential improvements and performance or lower cost in comparison to an FDA authorized test that meets the patient's needs would not fall within the exemption.

Furthermore, the FDA indicated that its enforcement discretion is only applicable when the laboratory is owned by the health system (it does not include testing performed by a laboratory that is under different corporate ownership), the patient is a patient of the health system, and the ordering physician must be on staff at the health system. This means that LDTs performed by health system laboratories for "outreach" patients would be subject to the full phase out of the FDA's enforcement discretion, unless the LDTs fall within another enforcement discretion exception.

Currently Marketed LDTs

Perhaps the most important new category of partial enforcement discretion announced by the FDA is for tests that are currently marketed as LDTs. The FDA announced that it intends to exercise enforcement discretion and not enforce the premarket review (the fourth and fifth boxes in the table above) and most of the quality system requirements (except for records requirements) (the third box in the table) for tests that were first marketed prior to the issuance of the rule (May 6, 2024), and currently are marketed as LDTs. These tests remain subject to all other FDA requirements under the phase-out policy (the first and second boxes in the table). As explained in more detail below, these remaining requirements under the phase-out policy are still significant for many laboratories, and could present a significant burden.

It is critical to note that these LDTs will only remain eligible for enforcement discretion from premarket review and most of the quality systems requirements as long as they are not modified, individually or in the aggregate, to (a) change the indications for use, (b) alter the operating principle of the test, (c) include significantly different technology in the test, or (d) adversely change the performance or safety specifications of the test. If a currently marketed LDT is modified in such a way, it would then be subject to full FDA controls, including the premarket review and all quality systems requirements.

Rare Blood Cell Antigen Testing

The FDA also intends to exercise partial enforcement discretion with respect to rare blood cell antigen testing performed by blood establishments such as transfusion centers and immunohematology laboratories, and when there is no available FDA-authorized test to meet the patient's needs. These LDTs will be exempt from premarket approval requirements (fourth and fifth boxes in the table) and most of the quality systems requirements (third box in the table).

Areas of Concern for Laboratories

Although the final May 6, 2024 rule is not as onerous as the proposed October 3, 2023 rule, most laboratories that perform LDTs will still face significant challenges and burdens in complying with the final rule because the systems and protocols that they have in place for compliance with federal and state laboratory regulations, such as the Clinical Laboratory Improvement Amendments of 1988, are not adequate for compliance with the FDA's controls.

For example, all laboratories covered under the partial enforcement discretion will need to comply with the requirements for medical device reporting (first box in the table). This means that laboratories must develop and/or refine policies and protocols to identify, track, and report defects or errors in their LDTs and, as applicable, correct or withdraw the LDTs. One or more responsible parties will need to be designated (and trained) to oversee compliance with these requirements. In many laboratories, the sales representatives are often the first to hear of complaints from ordering physicians, and therefore will need to be trained to immediately report such complaints to the responsible parties.

As part of the labeling requirements (second box in the table), laboratories will need to determine the class into which their LDTs fall, and prepare the labeling to reflect the characteristics and performance data related to their LDTs. The labeling will be available to the public on the FDA's website. In the commentary to the final rule, the FDA alluded to the review of this publicly available labeling data by laboratory competitors as a way to ensure compliance with the labeling standards.

The labeling requirements will require strict adherence to FDA guidelines by all sales and marketing functions in the laboratory. Sales representatives will need to be trained to stay "on script" with the laboratory's labeling in all conversations with ordering clinicians regarding the ordering and use of the LDT. Going "off script" could be viewed as promoting off label use of the LDT. Similarly, all of the laboratory's marketing materials, whether digital or hard copy, must align completely with the laboratory's labeling of the LDT. Protocols must be developed and monitored to ensure that the sales and marketing personnel comply with these requirements and the laboratory must maintain documentation of the same.

Depending upon which quality systems requirements are applicable (the third box in the table), a laboratory may discover that its existing laboratory information system or document control system is inadequate to meet the quality systems requirements. Laboratories will need to make this determination and, if necessary, budget for, acquire, and install adequate systems to meet the FDA requirements.

As noted above, the enforcement discretion for currently marketed LDTs will be lost if the LDT is modified in a manner that individually or in the aggregate, (a) changes the indications for use, (b) alters the operating principle of the test, (c) includes significantly different technology in the test, or (d) adversely changes the performance or safety specifications of the test. Laboratories frequently "tweak" their LDTs to improve performance, address vendor modifications to reagents, deal with vendor shortages, etc. Prior to making such modifications in the future, laboratories will need to determine if the modifications are such that the LDT would no longer be eligible for enforcement discretion.

Steps to Take Now

Laboratories should assemble an internal team (with outside consultant assistance if needed) and map out a timeline for compliance with the FDA's four year phase-out process. After this team is assembled, the laboratory should assess whether any of the categories of enforcement discretion are applicable to its LDTs. If so, the next step will be to determine the FDA standards to which each LDT will be subject, along with the deadlines for compliance with the applicable standards.

Following these determinations, it is advisable for the laboratory's team to estimate the costs of compliance with the FDA standards for each LDT, including not only actual dollars invested, but also personnel time and effort. Most laboratories do not have extra personnel sitting around with time on their hands, so personnel who already are busy with other tasks may need to be partially or fully redirected to the FDA project, or new personnel hired to work on the project.

Once the laboratory has estimated the costs of compliance for each LDT, the laboratory should consider a "make vs. buy" analysis. In other words, does it make financial business sense for the laboratory to continue to perform the LDT at issue? Or can a similar test be performed with an existing FDA approved test kit, or purchased from a reference laboratory?

Finally, the FDA will be issuing additional guidance in the coming months and years with respect to compliance with the final rule. In addition, given that much of final rule rests upon "enforcement discretion", the FDA can modify this enforcement discretion at any time. Therefore, the laboratory's internal team should regularly monitor the FDA's website and other applicable publications and resources for important developments.

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.