Judge foils FDA plan to regulate lab-developed tests

SALT LAKE CITY — Folks with cancer that has gene variants or rare diseases often need laboratory-developed tests for information that could guide their treatment when commercial tests don't exist or aren't precise enough. Opioid and other drug tests sometimes give false positives or negatives and more sensitive, lab-developed tests are needed to confirm or refute results.

Those are just some of the uses of lab-developed tests — most often called LDTs — which are in total administered 100,000 or more times a year in labs that developed them all around the country. And this week a federal judge answered at least one of the questions about how they should be overseen.

Judge Sean D. Jordan from the U.S. District Court for the Eastern District of Texas foiled the U.S. Food and Drug Administration's plan put forth under the Biden administration to regulate them like medical devices. The court decision boiled down to whether the tests are a product, like a medical device or the commercial tests that are sold to health care providers and consumers and do fall under FDA purview, or they are a service. Deciding they are a service, since LDTs are developed in one lab and only used there, Jordan vacated as administrative overreach the new rule the FDA announced last year.

The nation's largest pathologist association, laboratories and hospitals and other groups are celebrating a decision they say will keep specialized tests affordable and, crucially, available.

It's an issue that potentially affects hundreds of thousands of patients, because LDTs are developed to provide more targeted data on diagnosis and treatment than a mass-produced test. And they are often the only test available for certain conditions, said Dr. Jonathan Genzen, chief medical officer and senior director of government affairs for ARUP Laboratories in Salt Lake City.

"For patients, this is incredibly good news. This means that labs will not be saddled with very high administrative burden or cost — all the things that regulation leads to," Dr. Donald Karcher, president of the College of American Pathologists, told Deseret News.

Diagnostic testing in the U.S.

Genzen described two pathways in the U.S. for diagnostic testing: The FDA-cleared pathway where manufacturers produce commercial kits that hospitals use and the LDTs created for use in a single laboratory. The latter have been regulated by the Centers for Medicare and Medicaid Services under Clinical Laboratory Improvement Amendments or CLIA, a law that for decades has set laboratory and LDT standards.

LDTs meet clinical guidelines, Genzen said. "They are designed and operated by highly skilled professionals who meet federal requirements and maintain compliance with CLIA" standards, he said.

One analogy sometimes used to explain the difference between commercial tests and an LDT is that of a prepackaged meal like a TV dinner and one that is well-crafted by a good cook who knows the needs and preferences of the people who will be eating it and takes responsibility for it, Genzen said. LDTs are like the latter.

Burdensome regulation?

The FDA already regulated commercial tests and wanted to regulate the LDTs, too, finalizing a rule last year. That led to legislative proposals that didn't gain traction — many believe Congress will ultimately have to decide how LDTs are regulated — and different lawsuits. Separate lawsuits filed by the American Clinical Laboratory Association and the Association for Molecular Pathology were heard together in the Eastern District of Texas, with oral arguments in mid-February, leading to this week's decision.

"This ruling ensures that hospital based labs are able to continue to develop innovative and high-quality tests that provide physicians with important clinical information to help diagnose and treat patients," Jason Kleinman, American Hospital Association director of federal relations, said in a written statement. "The LDT final rule would have stifled medical innovation and dramatically increased regulatory burden and costs for both hospitals and the federal government."

Karcher said that the now-dismissed rule from FDA had five stages, with the first due in May and final implementation to be completed in May 2028.

Genzen said ARUP is an example of a clinical laboratory that develops tests as part of its test menu. "We often do that because there is no commercially available test either because it is for a rare disorder or sometimes because what is commercially available doesn't meet the requirements of clinical guidelines or of an institution's own health care practitioners."

Though the money burden of the final rule has been criticized, Karcher said money isn't the issue. But it would have impacted whether patients have access to the tests. "The only reason I mention costs is that the FDA rule would have made it so expensive to develop even one laboratory-developed test that many labs wouldn't be able to afford it anymore. They would just stop offering those tests."

Karcher and Genzen both told Deseret News that cancer tests are an example of a condition needing LDTs, since new gene variants often lack FDA-approved tests, as are orphan and rare disorders, but there aren't enough cases to spur commercial development. And sometimes more precision is needed than a commercial test can provide.

Per Karcher, there are around 100,000 LDTs in the U.S., with thousands of unique tests, though a number of labs may develop their own versions of a test for the same purpose or condition, so it's hard to get an exact count. He estimated there are LDTs related to 2,000-3,000 purposes nationwide.

Lab-created tests account for about 4% of all the lab tests ordered by physicians. They also meet clinical guidelines and are carefully vetted by experts, said Genzen, who is also a professor in the University of Utah Department of Pathology.

Genzen said LDTs existed long before either the FDA or the CLIA law. LDTs are operated by "highly skilled professionals who are either board-certified physicians or PhD-level laboratory scientists who meet federal requirements," noting that federal CLIA law dictates the oversight of such testing. Labs also must test their results against other labs to make sure they perform well.

It's a very serious responsibility, Genzen said. "As a CLIA laboratory director, I am legally responsible and medically liable for all the testing in my laboratory."

What's next for LDTs?

The question of who will regulate LDTs in the future may not be settled, however. The court sent the question back to the U.S. Secretary of Health and Human Services. A decision on whether to appeal will be made is now up to Robert F. Kennedy Jr.'s and the Trump administration's authority.

There are mixed opinions on who should have ultimate oversight, even among laboratories and their staff. Some want it left with the Centers for Medicare and Medicaid Services and the CLIA law. Some support FDA regulation. And many, including Karcher, believe that Congress will ultimately have to deal with the issue.

Genzen said that the clinical lab community, legislative staff and the Trump administration now have an opportunity to work together to find a workable solution for LDT regulation. Many see a need to address concerns about test quality and transparency, with which pathologists seem to agree is high-quality, but not well explained to those outside the labs doing LDTs. Genzen said he hopes the coming discussions allay some of those concerns.

But since the FDA's proposed rule could have caused labs to stop offering essential testing services because of complexity and cost, he said he's hoping for less costly regulation solutions that meet quality goals.

"The clinical laboratory community is somewhat fragmented into many different specialties, and part of the conundrum has been that diversity of opinion has often been challenging to navigate for legislators and the administration," Genzen said. "I think having gone through this experience together collectively, it is an opportunity to think about how we can work together going forward."

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