Diagnostic Tests are Generally Regulated as Devices

The Federal Food, Drug, and Cosmetic Act’s (FDCA’s) definition of “device” include “in vitro reagent” that “is intended for use in the diagnosis of a disease or other conditions . . . .” Thus, in vitro diagnostic products (IVDs) are considered devices under the FDCA, and are generally subject to FDA’s premarket and postmarket requirements, including clearance or approval, quality controls for manufacturing and distribution, and specific labeling requirements. Many genetic tests are IVDs, as are tests used in genomics, personalized medicine, and with digital health technologies to identify whether a patient is likely to benefit from a particular treatment.

FDA generally regulates IVDs according to the agency’s device risk classification system: ranging from Class I to Class III, the higher the device classification, the more FDA regulations the developer/manufacturer must follow, and the longer the statutory timeline for the device to be legally marketed. IVDs are also subject to requirements and categorization under the Clinical Laboratory Improvement Amendments of 1988 (CLIA).

FDA’s Final Rule Subjects LDTs to Regulation as IVDs

Laboratory developed tests (LDTs) have long been distinguished from IVDs because of differences in development, implementation, and use. IVDs are diagnostic tests that manufacturers sell to laboratories as complete “kits,” and come with all components – reagents, controls, and procedures – that a laboratory needs to perform the test. LDTs are designed, manufactured, and performed entirely within a single laboratory. This distinction presents an important legal and jurisdictional issue.

FDA first asserted its authority over LDTs in 1992, but this authority has long been challenged. The agency issued Draft Guidance documents in 2006, 2007, and 2014. In 2017, instead of issuing Final Guidance, FDA released a “Discussion Paper” that synthesized feedback from the 2014 Draft Guidance and follow-up meetings with stakeholders. The Discussion Paper specifically disclaimed representing any agency position. Meanwhile, FDA largely exercised “enforcement discretion” over LDTs. This created years of confusion and uncertainty for the laboratory industry. (For Penn Avenue Law & Policy’s detailed analysis of the history of FDA’s attempt to regulate LDTs, see here and here).

On October 3, 2023, FDA published in the Federal Register a proposed rule seeking to amend the definition of IVDs to explicitly include tests “manufactured” in a laboratory, thus subjecting LDTs to FDA regulation as medical devices. The agency received more than 6,700 comments, and published the final rule on May 6, 2024. Though the timing of the rule was expected, the content definitely was not. In brief, the final rule amends the definition of in vitro diagnostic products (IVDs) to explicitly include tests “manufactured” in a laboratory. Under the final rule, FDA will generally phase out its longstanding practice of enforcement discretion for LDTs with a five-stage policy over the course of four years. However, the agency will continue to exercise enforcement discretion with respect to specific regulatory requirements, for several categories of tests.

The FDA Phaseout Policy for LDTs:

• Be subject to all stages of the final rule’s phaseout policy;
• Be exempt from the entire phaseout policy and remain under enforcement discretion for all applicable medical device requirements;
• Be exempt from premarket review requirements only;
• Be exempt from premarket review and some quality system (QS) requirements; or
• Fall completely outside the phaseout policy and remain subject to existing regulations and requirements.

These categories of enforcement discretion, and the scope and details under each category, changed significantly from FDA’s proposed rule. Stakeholder comments to the proposed rule clearly led the agency to exclude more types of LDTs from the entire general phaseout policy. While these changes will lessen the burden many laboratories were anticipating under the proposed rule, none of the new exclusions from the entire phaseout policy constitute true “grandfathering.” Tests that may not be required to obtain premarket notification, authorization, or approval still must comply with many medical device regulations and requirements. Moreover, the final rule establishes many circumstances under which FDA can end enforcement discretion and subject laboratories and tests to all medical device regulations and requirements.

Most laboratories are unfamiliar with FDA’s regulations and the agency’s enforcement practices. The final rule is confusing and difficult to understand. All laboratories not currently regulated by FDA will need to invest significant time, money, and other resources to understand the final rule; develop and implement policies, procedures, and systems to comply with the medical device regulations and requirements applicable under the final rule and the phaseout policy; and prepare for the possibility of complying with additional requirements. Even if tests appear to fall under continued enforcement discretion, laboratories must not become comfortable or complacent.

“IVDs” Now Explicitly Include Tests “Manufactured” in a Laboratory 

Prior to the final rule, IVDs were defined under 21 C.F.R. § 809.3(a) as:

“those reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions, including a determination of the state of health, in order to cure, mitigate, treat, or prevent disease or its sequelae. Such products are intended for use in the collection, preparation, and examination of specimens taken from the human body. These products are devices as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act …, and may also be biological products subject to section 351 of the Public Health Service Act.”

The final rule amends this definition by simply adding to the end of the last sentence: “including when the manufacturer of those products is a laboratory.” Throughout the final rule, FDA refers to LDTs as “IVDs manufactured in a laboratory,” thus reinforcing that this amendment eliminates the longstanding regulatory distinction between IVDs and LDTs. Tests currently considered LDTs are now regulated as medical devices. Additionally, laboratories and the tests they design and perform are still subject to regulation by the Center for Medicare & Medicaid Services (CMS) under the Clinical Laboratory Improvement Amendments of 1988 (CLIA). Laboratories will therefore have to comply with FDA’s applicable medical device regulations and CLIA’s standards, categorization, validation, and certification requirements. Importantly, the assignment of complexity under CLIA’s regulations, i.e., moderate complexity or high complexity, does not align with FDA’s classification of low-, moderate-, and high-risk devices. The classification systems are separate and distinct; for example, a high complexity test system (under CLIA) could be a moderate-risk device under FDA’s classification system.

The Final Rule Generally Phases Out FDA’s Enforcement Discretion for Tests Manufactured in a Laboratory

FDA acknowledges that laboratories need time to comply with applicable medical device regulations and requirements, and is therefore phasing out its general enforcement discretion approach for “IVDs that are manufactured and offered as LDTs by laboratories that are certified under CLIA and that meet the regulatory requirements under CLIA to perform high complexity testing, and used within such laboratories.”

Tests that meet those criteria, and do not fall under another enforcement discretion policy laid out in the final rule, must come into compliance with all medical device regulatory requirements in five stages over four years. The timeframe for the phaseout policy began on May 6, 2024, the publication date of the final rule.

The Five Stages of the Final, General Phaseout Policy Are:

• Stage 1: By May 6, 2025, FDA will expect laboratories to comply with requirements for medical device reporting, corrections and removals reporting, and compliant files.
• Stage 2: By May 6, 2026, FDA will expect laboratories to comply with “requirements not covered during other stages of the phaseout policy,” which include requirements for facility registration and product listing, labeling, and investigational use of devices.
• Stage 3: By May 6, 2027, FDA will expect laboratories to comply with all QS requirements, except for requirements for complaint files, which are required under Stage 1.
• Stage 4: By November 6, 2027, FDA will expect compliance with premarket review requirements for high-risk IVDs offered as LDTs. Within this 3 ½ -year timeframe, laboratories must determine which tests require PMA submissions, prepare PMA submissions for each test for which FDA approval is required, and submit all PMA applications. If laboratories submit all required PMA applications within the 3 ½-year timeframe, the agency does not intend to enforce against IVDs offered as LDTs for lacking premarket approval until FDA completes its review of the application.
• Stage 5: By May 6, 2028, FDA will expect compliance with premarket review requirements for the moderate-risk and low-risk IVDs offered as LDTs that require premarket submissions. Within this 4-year timeframe, laboratories must determine which tests require 510(k) notification submissions or De Novo authorization submissions, prepare these submissions for each test for which FDA clearance or authorization is required, and submit all 510(k) clearance submissions and De Novo authorization submissions. If laboratories submit all required 510(k) clearance and De Novo authorization submissions within the 4-year timeframe, the agency does not intend to enforce against IVDs offered as LDTs for lacking premarket authorization until FDA completes its review of the submission.

Laboratories must ensure that they understand, prepare for, and comply with the regulations and requirements under this phaseout policy within the prescribed timeframes. However, as detailed below, some types of tests fall completely outside the scope of the phaseout policy because they are excluded from FDA’s enforcement discretion approach. Additionally, the final rule identifies types of LDTs over which the agency intends to continue to exercise enforcement discretion, but with respect to different regulatory requirements. These categories and the scope of FDA’s intention to continue to exercise enforcement discretion are very specific. There are also several circumstances under which FDA can end enforcement discretion and subject laboratories and tests to medical device regulations and requirements under the general phaseout policy. It is therefore crucial that laboratories understand all of the distinctions and nuances under the final rule.

Specific Types of Tests are Exempted from the Phaseout Policy Entirely, and FDA will Continue to Exercise Enforcement Discretion with Respect to All Requirements

The final rule identifies types of LDTs over which the agency intends to continue to exercise enforcement discretion, with respect to one or more regulatory requirements. The types and scope of FDA’s enforcement discretion are very specific. The first enforcement discretion category applies to tests for which FDA intends to exercise full enforcement discretion and “generally not enforce all applicable requirements.” The four types of tests that fall under this exercise of enforcement discretion are

• Tests that FDA designates in the final rule as “1976-Type LDTs”
• Human leukocyte antigen (HLA) tests for transplantation
• Tests intended solely for forensic (law enforcement) purposes
• LDTs manufactured and performed within the Department of Defense (DoD) or the Veterans Health Administration (VHA)

Under the final rule, FDA intends to continue to exercise full enforcement discretion for these four types of tests. Thus, laboratories that design and offer these tests are not subject to any stage of the enforcement discretion phaseout policy and do not have to register their facilities, list these tests, comply with FDA’s QS for these tests, or submit premarket review submissions for tests. However, laboratories must ensure that tests satisfy all criteria laid out in the final rule for this broad exemption. Failing to satisfy just one criterion places the test or tests back under FDA’s medical device authority and the final rule’s phaseout policy.

Tests Approved by New York are Exempted from Premarket Review Requirements, but Stages 1 through 3 of the Phaseout Policy Still Apply

The second enforcement discretion category applies to LDTs that are approved by the New York State Department of Health Clinical Laboratory Evaluation Program (NYS CLEP). Under the final rule, FDA “intends to exercise enforcement discretion with respect to premarket review requirements” for these tests. Thus, even if a test is approved by NYS CLEP, laboratories must still comply with Stages 1, 2, and 3 of the phaseout policy under the final rule. Obtaining approval for a test from NYS CLEP does not, therefore, provide full exemption from regulation by FDA. The only medical device requirements with which a laboratory does not have to comply are those related to premarket review (under Stages 4 and 5 of the phaseout policy).

This very narrow exercise of enforcement discretion applies to high-risk LDTs that receive full technical review and approval by NYS CLEP as well as moderate-risk LDTs that receive both conditional approval and full approval from that state agency. A moderate risk test that receives conditional approval from NYS CLEP is not subject to FDA’s premarket review requirements while full approval by New York is pending. However, if conditional approval is withdrawn by NYS CLEP because approval is denied after a full technical review, the laboratory would be required to submit to FDA a 510(k), De Novo, or PMA for the LDT. Additionally, FDA’s enforcement discretion with respect to premarket review requirements only applies to the version of an LDT approved by NYS CLEP. If a laboratory offers a different version of the test for samples or specimens not collected in New York, FDA’s premarket review requirements and all five stages of the phaseout policy would apply.

Three Types of Tests Are Exempted from Premarket Review and Some QS Requirements, But Laboratories Must Pay Close Attention to What Requirements Still Apply

In the final rule, FDA applies the third enforcement discretion category to three types of tests for which the agency intends to generally not enforce premarket review requirements and QS requirements (except for those pertaining to records). This means that such tests do not have to prepare or submit premarket review submissions (510(k)s, De Novos, or PMAs) and do not have to comply with QS requirements except for records. Thus, based on FDA’s description of this exercise of enforcement discretion and the general phaseout policy under the final rule, the LDTs under the third type of enforcement discretion policy must comply with the following requirements and timeframes under the phaseout policy

• All requirements for medical device reporting, corrections and removals, and complaint files under the timeframe of Stage 1;
• All requirements and timeframe of Stage 2; and
• Only the QS requirements relating to records, within the timeframe of Stage 3.

This category of enforcement discretion applies to three types of tests:

• LDTs manufactured and performed by a laboratory integrated within a healthcare system to meet an unmet need of patients receiving care within the same healthcare system (for purposes of this article, “integrated unmet need LDTs”);
• Currently marketed IVDs offered as LDTs that were first marketed prior to the issuance of the final rule (for purposes of this article, “currently marketed LDTs”); and
• Non-molecular antisera LDTs for rare RBC antigens when such tests are manufactured and performed by blood establishments, including transfusion services and immunohematology laboratories and when there is no alternative IVD available to meet the patient’s need for a compatible blood transfusion.

Integrated unmet needs LDTs, currently marketed LDTs, and the nuances and limitations of FDA’s exercise of enforcement discretion for these tests are discussed below.

Integrated Unmet Needs LDTs

FDA specifically intends for its exercise of enforcement discretion over integrated unmet needs LDTs to be “targeted” and not to provide an alternative marketing pathway for LDTs for unmet needs generally. Importantly, this exercise of enforcement discretion does not apply to tests for patients who are treated at an affiliated hospital with a different corporate entity. To be “integrated,” the laboratory and the treating physicians must be within the same corporate entity. Additionally, integrated unmet needs LDTs under the final rule are only those for which:

• There is no FDA-authorized IVD for the disease or condition;
• There is an FDA-authorized IVD for the disease or condition but “it is not indicated for use on the patient, or a unique attribute needs to be added to the LDT to meet the patient’s needs”; or
• There is an FDA-authorized IVD, but it is not available to the patient.

Thus, this enforcement discretion policy does not apply to all LDTs for unmet needs; the test must be manufactured and performed in a laboratory that satisfies FDA’s integration criteria under the final rule. Moreover, this is not an exception for tests performed at academic medical centers (AMCs) generally. FDA’s final rule does not provide a category of enforcement discretion for AMCs; to continue to fall under enforcement discretion, tests must satisfy criteria under the final rule.

Currently Marketed LDTs

The second type of test that FDA includes under this specific enforcement discretion policy is currently marketed IVDs offered as LDTs that were first marketed before May 6, 2024. Like other types of tests included in this enforcement discretion category, laboratories must comply, under the prescribed phaseout timeline, with requirements for medical device reporting, corrections and removals reporting, complaint files, registration, listing, labeling, and investigational uses. In the final rule, FDA asserts that it will explicitly request submission of the labeling for currently marketed LDTs to use this information, combined with the other information submitted under the phaseout policy, to identify LDTs that specifically raise concerns.

For tests that specifically raise concerns, the agency may end enforcement discretion and request premarket review submissions and compliance with all QS requirements. Thus, FDA intends for the information it collects under the phaseout policy to provide it with information and evidence to support ending enforcement discretion for some currently marketed LDTs.

Moreover, making modifications to currently marketed LDTs can cause FDA’s enforcement discretion to end. To continue to fall under the limited enforcement discretion policy, currently marketed LDTs must not be modified in certain significant ways that would, under FDA requirements, generally prompt the need for premarket review and compliance with other QS requirements. Thus, if a laboratory makes any of the following modifications to a currently marketed LDT, FDA’s enforcement discretion will end and the laboratory will have to comply with all medical device regulations and requirements under the timeline of the final rule’s phaseout policy for the modified test:

• Change to the indications for use of the IVD;
• Alter the operating principle of the IVD (for example, a change in critical reaction components);
• Include significantly different technology in the IVD (for example, adding artificial intelligence or machine learning to the test algorithm, change from targeted sequencing to whole genome sequencing, change from immunoassay to mass spectrometry, or change from manual to automated procedures); or
• Adversely change the performance or safety specifications of the IVD.

In sum, laboratories must understand all of the nuances and distinctions that apply to FDA’s intended exercise of enforcement discretion under the final rule. Laboratories may believe that their tests are not subject to some of the medical device regulations and requirements and be caught unaware and unprepared if FDA determines that a test is problematic, has been modified significantly, or no longer satisfies a criterion required for enforcement discretion.

Some Tests Fall Outside the Scope of FDA’s Enforcement Discretion Phaseout Policy

The final rule’s phaseout policy does not apply to the following types of tests because FDA regulations and requirements already apply, or the tests are not generally regulated by the agency:

• Tests intended as blood donor screening or human cells, tissues, and cellular tissue based products (HCT/Ps), which are already regulated as biologics.
• Tests intended for emergencies, potential emergencies, or material threats declared under section 564 of the FD&C Act, which require Emergency Use Authorizations (EUAs).
• Direct-to-consumer (DTC) tests that patients can order and receive their own results without the meaningful involvement of a licensed healthcare professional. These tests are already subject to device regulations and requirements.
• Tests manufactured and offered for use exclusively for public health surveillance.

Despite FDA’s Changes in the Final Rule, Legal and Legislative Challenges are Still Likely

Though the changes in the final rule offer more types of enforcement discretion for more types of LDTs, and the burdens on laboratories may be less than anticipated under the proposed rule, FDA’s medical device framework is still not ideal for laboratory tests. Moreover, if LDTs do not fall under any categories of enforcement discretion, or lose enforcement discretion, laboratories will be subject to all medical device regulations and requirements. Compliance with these regulations is costly, confusing, and burdensome, and will likely stifle innovation and lead to a consolidation of the laboratory industry.

It is possible that one or more lawsuits could challenge FDA’s authority to regulate LDTs as medical devices, and the implementation and enforcement of the final rule may be stayed (delayed) by a federal court. Additionally, as discussed here and here, members of both the House and the Senate have resumed dialogue about alternative regulatory classifications and systems for laboratory tests. Thus, there may be opportunities for laboratories to continue to engage with other stakeholders and Congress to potentially enact new legislation that would be less burdensome and better support innovation.

What Should Laboratories Do Now?

Laboratories should assume that the final rule will take effect 60 days from May 6, 2024, and that the timeline for the phaseout policy will remain in place. Thus, laboratories must:

• Read the final rule to identify whether their tests will continue to fall under any type of enforcement discretion;
• Determine the exact scope and details of enforcement discretion for each test or type of tests they develop and offer;
• Understand which medical device regulations and requirements will apply to each test or type of tests;
• Develop and implement policies, procedures, and systems to comply with the medical device regulations and requirements applicable under the final rule and the phaseout policy;
• Prepare for the possibility of complying with additional requirements; and
• Identify budget options and possible funding sources for the increased costs in complying with the final rule and FDA’s regulations and requirements for medical devices.

Laboratories must understand what the final rule means and how it exactly applies to each LDT. While a laboratory’s test or tests may fall under some type of continued enforcement discretion, the scope of FDA’s enforcement discretion under the final rule is limited, nuanced, and can end at any time. FDA’s current exercise of enforcement discretion for LDTs has created confusion and uncertainty; the final rule potentially adds more. Laboratories must not rely on the protection of enforcement discretion. Instead, they must realize what changes in circumstances could subject their tests to all medical device regulations and requirements and be prepared for the costs and burdens of additional compliance.

All Laboratories Must Comply with CLIA Requirement

Through CLIA, the Center for Medicare & Medicaid Services (CMS) regulates all non-research laboratory tests performed on humans in the United States. Before a laboratory can accept human specimens for testing, it must have CLIA certification. CLIA certificates vary based on the types and complexities of tests performed by the laboratory.

CMS’ objective under CLIA is to ensure that laboratories performing tests on human specimens produce accurate and reliable test results. Under the FDCA, FDA regulates devices, including IVDs, to ensure that they are reasonably safe and effective. Laboratories manufacturing or developing IVDs (including LDTs), must be aware of and comply with FDA and CLIA requirements. It is important to note that some requirements under these systems that are not consistent. 

Christine P. Bump has Extensive Experience Regarding the Regulation of Diagnostic Tests

There remains a lot of confusion regarding the regulation of diagnostic tests, and how laboratories consistently comply with both FDA requirements and CLIA. Whether your test is an IVD device, an LDT, or being combined with a personalized medicine/digital health technology, you need legal counsel who is experienced at navigating these pathways. Christine P. Bump has extensive experience advising clients on the regulations, guidance, and policies applicable to laboratories and tests, and developing regulatory strategies for diagnostic tests, even when pathways are not clearly defined.