Proposed LDT Rule Raises Many Questions but Provides Few Answers

As we reported last week, FDA has issued a 26 page, single spaced, tiny-font Proposed Rule of Laboratory Developed Tests (LDTs).  There is much to unpack, and we intend to do so in a series of blog posts. In this post, we focus on the proposed changes themselves, and the many questions the agency leaves unanswered.

Change to the IVD definition

First, the mechanics of the change.  The crux of the proposed rule lies in the addition of ten words: “including when the manufacturer of these products is a laboratory.”   These words would be added to the definition of “in vitro diagnostic [IVD] products” in 21 C.F.R. § 809.3(a).

The amended regulation would read as follows (revisions underlined):

In vitro diagnostic products are 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)(1) of the Federal Food, Drug, and Cosmetic Act (the act), and may also be biological products subject to section 351 of the Public Health Service Act, including when the manufacturer of these products is a laboratory.

The brevity of this change belies the foreseeably seismic impact of FDA regulation of clinical laboratories on the healthcare system.  The practical consequence of adding these words is that LDTs are expressly defined as a type of IVD device, and subject to device regulations, including registration and listing, premarket review, post-market reporting, and quality system regulation.  As we will explore in a subsequent post, FDA has long claimed these regulations implicitly covered LDTs, but many have questioned the basis for this position.

The end of enforcement discretion

The PR proposes to phase out LDT “enforcement discretion” over a period of four years, after which most LDTs will be subject to all applicable medical device regulatory requirements.

The phase out period applies to LDTs currently on the market in reliance on FDA’s enforcement discretion policy (“affected laboratories”).  It does not extend to tests for which FDA has historically not exercised enforcement discretion (e.g., direct-to-consumer tests, tests for use in a public health emergency).  FDA proposes a five-stage transition period for all affected laboratories currently who are not subject to one of the areas of continued enforcement discretion (as discussed later in this post):

• Stage 1 (one year after issuance of the final rule): Begin filing medical device reports (MDR) under 21 C.F.R. Part 803 and notices of correction and removal under 21 C.F.R. Part 806.
• Stage 2 (two years after issuance of the final rule): Register with FDA as a device establishment and list LDTs performed, pursuant to 21 C.F.R. Part 807. Labs must also begin complying with device labeling requirements (21 C.F.R. Part 801) and investigational device exemption requirements (21 C.F.R. Part 812).
• Stage 3 (three years after issuance of the final rule): Comply with the Quality System Regulation (QSR) (21 C.F.R. Part 820).
• Stage 4 (three and a half years after issuance of the final rule): Laboratories offering high‑risk LDTs (i.e., Class III) would be required to submit an application for premarket approval (PMA) to FDA.
• Stage 5 (four years after issuance of the final rule): Laboratories offering low and moderate‑risk LDTs (i.e., Class I or II) would be required to submit a 510(k) premarket notification, unless eligible for exemption.

A few observations are in order:

First, FDA’s timeline is, to put it mildly, wildly ambitious.  The Proposed Rule states that Stage 4 and Stage 5 would not begin before October 1, 2027, and April 1, 2028, respectively, in order to enable laboratories to participate in negotiations preceding user fee reauthorization in 2027 (taking effect in FY2028, which begins on October 1, 2027).  However, meeting this timeline would require FDA to issue a final rule within approximately six months of the PR’s publication date—in other words, by April 2024.  Issuing any final regulation that quickly would be a challenge; given the number of affected stakeholders, the number of questions posed in the PR (see further discussion below in Call for Comment), and the far-reaching effects of the PR, it would be nearly impossible.  Thus, in our view, it is highly unlikely that Stages 4 and 5 would come close to these “not before” dates.

Second, much remains to be done—by both FDA and affected laboratories—before these stages can be implemented.  The PR acknowledges that a proposed rule was issued that, if finalized, will make changes to the QSR.  FDA claims that three years should be plenty of time for labs to come into compliance with the QSR, but the Agency would only aim to have the new QSR rule in effect “before the proposed beginning of stage 3.”  This timing undermines the Agency’s rationale that three years is enough time to come into compliance.  In order for labs to implement a compliant system, they need to know what they are working towards.  Without a final rule, labs cannot be certain that any quality system it puts in place will meet the requirements of the new QSR rule, if finalized.

Third, it’s unclear which tests FDA intends to fall into Stages 4 and 5.  On its face, it seems simple – Class III in Stage 4 and Class I and II into Stage 5.  But, by statute all devices not previously classified are automatically placed into Class III.  LDTs are some of the most novel tests, meaning that a large proportion of them are not classified and would not have a predicate device, even if they are arguably a Class II test, for example.  The PR says that tests going through the De Novo process would fit within Stage 4, but who will ultimately determine whether a test is appropriate for De Novo classification or a PMA and, therefore, either fall into Stages 4 or 5?  Will the responsibility be on the lab?  What will happen if FDA disagrees?

Fourth, The PR does not mention what will happen to the premarket submissions from Stages 4 and 5 that are not cleared/approved.  With regard to both stages, the PR says, that “FDA generally would not intend to enforce against IVDs offered as LDTs after a [510(k), De Novo, or] PMA has been submitted . . . until FDA completes its review of the application.”  This suggests that if the submission is unsuccessful, FDA could take enforcement action, which could include requiring the lab to cease offering the test, among other things.

Remaining Enforcement Discretion

The PR indicates that FDA plans to continue to exercise enforcement discretion, as appropriate for certain kinds of tests.  FDA notes that it would consider issuing enforcement discretion policies for labs developing LDTs during the early phase of any future public health emergencies.  Specifically, FDA states that it plans to issue a draft guidance with an enforcement policy for IVDs for emerging outbreaks offered prior to FDA review to address the immediate public health need.  Ironically, perhaps, FDA cites problems with LDTs for COVID as part of the rationale for FDA regulation of LDTs, so the logic doesn’t quite hold together.

In addition, FDA proposes to continue to exercise enforcement discretion (i.e., to not enforce the new framework) with respect to certain categories of LDTs:

• “1976-Type LDTs,” which FDA describes as “us[ing] manual techniques (without automation) performed by laboratory personnel with specialized expertise; use of components legally marketed for clinical use; and design, manufacture, and use within a single CLIA-certified laboratory that meets the requirements under CLIA for high complexity testing.” As an example, the PR cites immunohistochemistry tests that involve no automation (e.g., preparation or interpretation) and would not include lateral flow tests as they do not, typically, rely on lab personnel expertise;
• Human Leukocyte Antigen (HLA) tests used in CLIA high complexity laboratories;
• LDTs intended for forensic use (over which, we note, FDA already lacks jurisdiction); and
• LDTs intended exclusively for use in public health surveillance where a result is not reported directly to a patient or provider (where, again, FDA lacks jurisdiction).

Call for Comment

Despite the significant potential impact of the PR for a wide array of stakeholders, and the many questions it raises, comments must be submitted no later than December 4, 2023—just 60 days after the PR’s issuance.  The PR itself solicits feedback from the public on a number of complex issues, making the short comment period even more puzzling.  Specifically, FDA asks for comment on:

• “Whether specific enforcement discretion policies would be appropriate for IVDs offered as LDTs for other public health scenarios.” FDA asks that comments provide “a description of those scenarios, an explanation of why enforcement discretion policies with respect to those scenarios would be appropriate, [including how public health interests are served by such a policy], and any relevant evidence to support such policies.”
• “What, if any, unintended consequences may result from the proposed phaseout policy to certain patient populations (for example, Medicare beneficiaries, rural populations, etc.) and what steps could be taken to mitigate those consequences.”
• Whether there is “a public health rationale to have a longer phaseout period for IVDs offered as LDTs by laboratories with annual receipts below a certain threshold (e.g., $150,000).”
• Whether academic medical centers should be treated differently than other laboratories offering LDTs.
• How to leverage “programs such as the New York State Department of Health Clinical Laboratory Evaluation Program (NYSDOH CLEP) or those within the Veterans Health Administration (VHA).”

The PR cites CDC’s report that “70 percent of medical decisions are based on laboratory test results.”  Given the potentially massive impact of the proposed changes on a wide range of stakeholders, and indeed on the healthcare system, we strongly encourage interested parties to submit comments, which can be done using the provided link.

The fate of the PR is far from certain.  Given the number of open questions, we hope that the Agency would consider publishing an amended proposed rule prior to issuing a final rule once it has a firmer stance on these and other important questions.  For context, a quick review of a number of notable CDRH rules in the last ten years shows that most rules take approximately three to four years to be issued as final from the time that they are proposed.  There was one outlier, the hearing aid rule, which went from proposed to final in just under a year.  As readers of our blog will recall, however, the Agency missed its statutory deadline to issue that proposed rule (see prior post here).  During the media call, in response to the question about the timing of publishing the final rule, CDRH Director Jeff Shuren commented, “That is ultimately up to the administration.”

Even if FDA completes rulemaking, a final rule will likely face judicial challenge.  Future blog posts will analyze FDA’s legal authority as well as FDA’s claimed public health need for LDT regulation.