In our May 2024 Healthcare Alert, we discussed a final rule published by the US Food and Drug Administration (FDA) amending its regulations to include in vitro diagnostic products (IVDs), even those manufactured in a laboratory, as devices. The final rule attempted to remove the FDA’s general enforcement discretion, thereby imposing additional compliance requirements on laboratory-developed tests (LDTs), which are IVDs manufactured and used within a single clinical laboratory, most often in hospitals. The first stage of a five-stage phaseout of general enforcement discretion was scheduled to begin next month, but a judge in the Eastern District of Texas recently vacated the final rule.
In the memorandum opinion and order issued on March 31, 2025, the court concluded that the final rule exceeded the FDA’s statutory authority and must be vacated under the Administrative Procedure Act (APA). In so holding, the court examined the history of LDTs and reviewed the Clinical Laboratory Improvement Act of 1967, as expanded by the Clinical Laboratory Improvement Amendments of 1988 (CLIA), as well as the Federal Food, Drug, and Cosmetic Act (FDCA).
The court exercised its independent judgment to decide legal questions under the APA pursuant to the Supreme Court’s decision last year in Loper Bright Enters. v. Raimondo in reviewing agency authority. The court concluded that “[s]tatutory text and basic principles of interpretation confirm that laboratory-developed test services are not medical ‘devices’ under the FDCA.” In reviewing the FDCA definition of a device, the court concluded that “[a] laboratory-test process and methodology…is far afield from…tangible products, equipment, ‘apparatuses’ or ‘contrivances.’” The court could have relied on the FDCA’s text alone to conclude that LDTs are not devices, but it added that the statutory framework and history of the FDCA and the CLIA “reinforce[] the conclusion that the final rule attempts to assert authority over professional medical services that FDA lacks.” Moreover, the court explained how “Congress has considered but declined to enact several bills over the past two decades that would have reshaped the regulatory framework over laboratory-developed test services.”
The court rejected the notion of party-tailored relief as impractical, considering that there are nearly 80,000 existing tests offered by almost 1,200 laboratories and approximately 10,000 new tests offered in each future year. Besides vacating the final rule, the court remanded the matter to the FDA for further consideration in light of the opinion.
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