FDA has finalized its landmark proposed rule that will amend the definition of “in vitro diagnostic (IVD) products” in 21 CFR § 809.3 to make explicit that IVDs are medical devices under the Federal Food, Drug, and Cosmetic Act (FDCA), “including when the manufacturer of the IVD is a laboratory.” We previously analyzed the October 2023 proposed rule (Notice of Proposed Rulemaking (NPRM)) online here, providing background in that article on FDA’s decades-long history of exercising enforcement discretion over LDTs, as well as Congressional efforts to either codify a specific delegation of authority to regulate LDTs or to affirmatively remove LDTs from FDA’s oversight.

In announcing the Final Rule, FDA Commissioner Robert Califf expressed concern that “LDTs are being used more widely than ever before — for use in newborn screening, to help predict a person’s risk of cancer or aid in diagnosing heart disease and Alzheimer’s,” suggesting the greater need for governmental oversight of the tests. The Final Rule also reiterates FDA’s position that a general enforcement discretion approach is no longer appropriate given the significantly increased complexity of LDTs compared to when the policy was initially put in place.

Enforcement timeline and phaseout policy

Similar to the proposed rule, the Final Rule will gradually transition from FDA’s long-standing practice of exercising enforcement discretion over LDTs to the agency’s requiring compliance with all applicable FDA regulatory requirements over the course of four years, following official publication of the Final Rule on May 6. Thus, on May 6 of each of the following years (except for Stage 4), the corresponding stages will begin as the Phaseout policy

• Stage 1: On May 6, 2025 (one year after publication of the final rule), FDA will begin to enforce the requirement under 21 CFT 820.198 for complaint files which will serves an and input for medical device reporting (MDRs) and correction and removal reporting on LDTs, as well as complaint record keeping.

• Stage 2: In 2026 (two years after publication of the final rule), FDA will begin to enforce additional medical device requirements on LDTs, including registration and listing, labeling, and investigational use requirements.

• Stage 3: In 2027 (three years after publication of the final rule), FDA will begin enforcing the rest of the amended Quality System Regulation (21 CFR Part 820) on LDTs (other than those on complaints as an input to MDR, which are imposed in Stage 1) with a heavy emphasis on design controls.

• Stage 4: On November 6, 2027 (three and a half years after publication of the final rule), FDA will begin to apply premarket review requirements for high-risk IVDs offered as LDTs, meaning those that may be classified as Class III devices or biologics requiring licensure and where an application has been submitted before November 6, 2027, the agency will continue its enforcement discretion while it review the application. Notably, marketed high-risk IVDs offered as LDTs that file a PMA before the start of Stage 4 will be able to continue marketing their tests while the marketing application is pending.[1]

• Stage 5: On May 6, 2028 (four years after publication of the final rule), FDA will stop using enforcement discretion for moderate-risk and low-risk IVDs offered as LDTs, meaning those that require premarket submissions and will similarly continue to exercise enforcement discretion for applications submitted before May 6, 2028 while it review the application.

With respect to the Stages 4 and 5 in which FDA will begin to require premarket review and clearance for LDTs, the Final Rule acknowledges that it is a known practice for labs to use another manufacturer’s lawfully marketed test and make modifications. The Final Rule makes clear that the agency plans to exercise enforcement discretion over such modified third party-developed and legally marketed tests if:

1. the original test received marketing authorization via the 510(k) or De Novo pathway

2. the lab modifying the test is a high-complexity CLIA certified lab,

3. the design controls and other quality system requirements for which FDA expects compliance under Stages 1-3 are followed,

4. the modifications could not significantly affect the safety or effectiveness of the test and would not constitute a major change or modification in the intended use, and,

5. the modified test must only be performed in the lab that makes the modification.

To be clear, FDA would expect a premarket submission from labs modifying a third party’s 510(k) cleared or De Novo authorized test if the changes being implemented by the clinical laboratory would have required a new premarket submission had they been implemented by the original manufacturer. Thus, FDA’s rule allows for labs to modify legally marketed tests without seeking a new premarket authorization, but also creates a scenario where a lab could be required to seek premarket clearance for a test prior to Stage 5 (i.e., if certain significant changes are made to the original test). As indicated by the requirements above, this enforcement discretion policy will not apply when the underlying third-party developed test is a Class III test legally marketed under a PMA approval.

Changes from the proposed rule

While much of the Final Rule resembles the proposed rule (as summarized online here), it differs from the NPRM in several important respects. These changes mostly stem from FDA’s acknowledgement (in its responses to comments in the Final Rule) that FDA currently lacks the resources and personnel necessary to review premarket submissions for all LDTs, and that competing interests exist – such as current healthcare provider reliance on certain IVDs offered as LDTs and the need to protect small laboratories who may face challenges in quickly becoming compliant with the new requirements. In response to comments, FDA added into the Final Rule new categories of tests to be carved out from both premarket review and compliance with the QSR under narrower enforcement discretion policies to be introduced alongside the staged framework above.

• Grandfathering. Perhaps the most notable provision in the Final Rule is that currently-marketed LDTs will be “grandfathered” with respect to certain regulatory requirements. Specifically, FDA will not require premarket review and compliance with the QSR (except for record keeping) for currently marketed LDTs “that were first marketed prior to the issuance” of the Final Rule and that “are not modified, or that are modified in certain limited ways.” The “grandfathered” LDTs will nevertheless still be subject to labeling and MDR reporting requirements, which are considered within the Final Rule to be necessary for patient safety.

  • This enforcement discretion policy extends to modifications of currently-marketed LDTs, so long as those modifications do not:

    • change the indications for use of the LDT;

    • alter its operating principle (e.g., changes in critical reaction components);

    • include significantly different technology in the modified version compared to the grandfathered LDT (e.g., addition of artificial intelligence or machine learning to the test algorithm, a change from targeted sequencing to whole genome sequencing, a change from immunoassay to mass spectrometry, or a change from manual to automated procedures); or

    • adversely change the LDT’s original performance or safety specifications.

While allowing currently marketed LDTs to remain on the market may appear contrary to FDA’s stated need for the change in policy, the Agency has included an action plan in the Final Rule outlining how it will proactively act against poorly validated Grandfathered tests. Specifically, the agency believes that poorly validated LDTs eligible for grandfathering will be rooted out by (i) requiring all IVDs currently marketed as LDTs to submit labeling to FDA, which will include performance data (authority derived from 21 CFR § 807.26(e)), (ii) reviewing records during inspections, (iii) requiring that the clinical laboratories making the LDTs comply with MDR requirements, corrections and removals requirements, registration and listing requirements, and labeling requirements, and (iv) competitors alerting FDA of performance issues once such IVD performance information is transparent and available for LDTs.

• NY CLEP carve-outs. FDA intends generally not to enforce premarket review requirements for LDTs approved by New York state’s Clinical Laboratory Evaluation Program (CLEP). For the purpose of the Final Rule, such CLEP-qualified LDTs are existing LDTs that are “approved, conditionally approved or within an approved exemption from full technical documentation” under NYS Department of Health oversight. Such LDTs do not include “LDTs used in Clinical Trials” and “Tests Not Subject to Evaluation” as those categories of LDTs are defined and described on NYS CLEP’s website. Notably, the enforcement discretion is limited to premarket review requirements, whereas other requirements (Stages 1-3) will still apply.

• Integrated health systems. In the proposed rule, FDA had recognized that a premarket review approach specific to LDTs for “unmet needs” might be possible, but did not include such an approach. In the Final Rule, however, FDA said it intends generally not to enforce premarket review and QS requirements for 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.” Whether a laboratory is considered “integrated” within a healthcare system will depend mostly on common ownership of the healthcare system and the lab in question.

  • We explore issues surrounding this premarket review approach in the “unanswered questions” section of this article below.

• Non-molecular antisera LDTs. In the Final Rule, FDA said it intends generally not to enforce premarket review and QS requirements for non-molecular antisera LDTs for rare red blood cell (RBC) antigens where such tests are manufactured and performed in “blood establishments, including transfusion services and immunohematology laboratories and where there is no alternative available to meet the patient’s need for a compatible blood transfusion.”

• DOD, VA exceptions. Recognizing that the Veterans Health Administration (VA) and the Department of Defense (DOD) often need to manufacture “unique LDTs,” and because these agencies have developed expertise for evaluating such tests, FDA acknowledges that it would be inefficient for it to engage in further oversight in this space. As a result, FDA plans to continue exercising enforcement discretion for LDTs manufactured and performed within these agencies.

• Third Party review. FDA indicates in the Final rule its intent to enhance the Third Party 510(k) review program to enable greater review (approximately 50 percent) of low- and moderate-risk IVDs offered as LDTs by third party review organizations. The agency also plans to use the next reauthorization of the Medical Device User Fee Amendments (MDUFA), which will align with the phase-out of enforcement discretion for premarket review, to negotiate with industry the user fees and FDA performance goals as applicable to IVD and LDT premarket submissions.

• Emergency response enforcement discretion. Alongside the Final Rule, FDA published two new draft guidance documents on enforcement discretion policies regarding unauthorized tests, or unauthorized uses of authorized tests, when there is an emergent threat, specifically: (1) in the absence of a declaration permitting emergency use authorizations (“EUAs”), and (2) during a declared public health emergency. Implementing lessons learned in part from the COVID-19 pandemic, these guidance documents outline the agency’s plan to ensure the availability of necessary testing without sacrificing adequate quality during such times, when the benefit/risk calculus is by necessity altered.

• AMCs. In the proposed rule, FDA sought comment on whether FDA should have a different enforcement policy for tests manufactured by Academic Medical Center (AMC) laboratories., In the Final Rule, FDA opted against creating a separate enforcement regime for LDTs manufactured by AMC laboratories and instead subject these LDTs to the same enforcement discretion carve-outs noted above, including grandfathering, NYS CLEP approval, or unmet need.

Questions that remain unanswered

Although the display version of the Final Rule stands at a lengthy 528 pages, many questions remain surrounding how it will be implemented and what happens next.

• “Grandfathering.” While the grandfathering provisions would effectively exempt a large number of currently-marketed LDTs from the premarket review and QS requirements, the implications for industry to evaluate which changes / modifications to LDTs are “significant” and require FDA authorization will be challenging. In responses to comments in the Final Rule, FDA acknowledged this concern and said it intends to develop appropriately targeted enforcement discretion policies for certain common changes, such as extension of specimen stability and certain alternative specimen types, following good guidance practices. In addition, it is not clear how FDA will orchestrate the submission of labeling materials for Grandfathered tests, make such labeling available to the public, or facilitate policing by industry for inaccurate performance claims.

• “Integrated health” and “unmet need.” It is unclear how FDA intends to apply its exception for LDTs for unmet needs. The Final Rule suggests that a test is intended for an “unmet need” where there is “no available FDA-authorized IVD that meets the patient’s needs,” and provides some examples, but the rule does not fully explain this category, stating instead that “FDA intends to provide additional guidance on this enforcement discretion policy” at an unspecified point in the future.

• NY certification expansion. We speculate that the NY state CLEP carve-outs may be a model that other states could wish to adopt, raising the question of whether FDA may be willing to exercise enforcement discretion for LDTs approved in those jurisdictions as well. And within New York, it remains to be seen whether the state will have the capacity to review a large number of submissions for LDTs from sponsors seeking to fall into this FDA regulatory carve-out.

• Companion diagnostics. From a drug development perspective, the Final Rule does not address any plan for companion diagnostics (CDx), leaving unanswered questions over whether LDTs can fill the gap in identifying patients who may be eligible for a particular pharmacotherapy after its approval or licensure where a CDx has not yet been authorized.

• Practical impact of FDA & CMS regulation of LDTs. FDA addressed several comments in the Final Rule regarding the effect of its co-regulation of LDTs with CMS. In response, FDA noted that although the agency and CMS’ regulatory schemes are different in focus and scope, they are intended to be complementary. However, it remains to be seen how the co-regulation is implemented in practice and whether it will further delay the clearance or approval of these tests.

• FDA resources and review timelines. Some comments on the NPRM questioned whether FDA resources suffice to review the significant number of new premarket submissions for LDTs that will become actively regulated upon implementation of the phaseout approach outlined above, even citing delays in review of emergency use authorization (“EUA”) requests during the COVID-19 pandemic as evidence that FDA will not be able to handle the workload. FDA disagreed with this view, emphasizing that EUAs are not a valid comparator and that the staged approach takes into account appropriate expectations to enable FDA to review the submissions that will come in for new or modified LDTs. While the grandfathering provision coupled with the phased approach avoids creation of an instant backlog, it remains to be seen how the agency will hire, train, and manage staffing and ramp up to be ready for estimate that approximately 12,000 labs will have to start submitting their tests to CDRH for review, especially when the User Fees needed to support such changes in staffing follow, rather than precede, the anticipated influx of new submissions.

What’s next?

Litigation against the Final Rule remains likely, based on long-standing industry stakeholder claims that the rulemaking exceeds FDA’s statutory authority. Throughout the Final Rule, FDA explains its rationale for maintaining that it has such authority, and that the Final Rule does not create new authority to enforce against violative test manufacturers because enforcement discretion is voluntary on the part of the agency and never represented a lack of authority to oversee these products. Nevertheless, the likelihood of success of those claims will be greater if, this summer, the Supreme Court overturns the longstanding Chevron doctrine of deferring to an agency’s authority to interpret statutory ambiguity in the cases pending before the Court.

FDA says it considered the more than 6,500 comments it received upon publishing its initial draft of the rule and made various changes to the phaseout policy based on some of them. Yet, calls for legislative action to prevent FDA from exercising regulatory authority over LDTs continue. For example, U.S. Senate HELP Committee Ranking Member Bill Cassidy rebuked the release of the Final Rule, stating: “The FDA does not have the authority to unilaterally increase its regulatory jurisdiction. This rule will undermine access to essential laboratory tests, increase healthcare costs and ultimately harm patients.”

Regarding the enforcement discretion policies outlined in the Final Rule, FDA plans to elaborate on each separately through guidance. We anticipate significant industry commentary and pushback at each of those steps, giving rise to circumstances that may well serve as the basis for litigation.

On May 14, 2024, FDA will host a webinar to provide an overview of the Final Rule and phaseout policy. Following the agency’s webinar, our team will share our takeaways from FDA’s added insights into the Final Rule; be on the lookout for our formal invitation to that conversation.

We are continuing to review the Final Rule and its implications on medical product development and manufacturing, and on clinical laboratories involved in developing LDTs. If you may wish to submit a comment, or have any questions about regulatory requirements for LDTs, please contact any of the authors of this alert or the Hogan Lovells attorney with whom you regularly work.