LDT Final Rule Litigation — Status of Pending Court Challenges and What May Happen Next

Related Advisories/Arnold & Porter Events:

Webinar, FDA’s New LDT Rule: What You Need to Know, April 30, 2024.

Advisory, FDA Intends To Regulate Many Clinical Labs as Medical Device Manufacturers: What You Need To Know About the Laboratory Developed Test Final Rule, May 7, 2024.

As most readers are aware, two cases challenging the U.S. Food and Drug Administration’s (FDA) authority to regulate laboratory-developed tests (LDTs) were filed over the summer.¹ With a second Trump administration coming in January, we felt an update on the current state of the litigation opposing the LDT rule would be of interest. We briefly summarize the current state of the two consolidated cases against FDA and end with some thoughts on where the new administration’s policy prerogatives may lead us as we seemingly enter yet another chapter in the long history of FDA’s attempts to fully regulate LDTs as medical devices.

Case Status as of December 3, 2024

On October 25, 2024, FDA filed its cross-motion for summary judgment and opposition to Plaintiffs’ Motions for Summary Judgment in the consolidated cases: American Clinical Laboratory Association v. FDA and Association for Molecular Pathology v. FDA. FDA argues that the Federal Food, Drug, and Cosmetic Act (FDCA) allows FDA to regulate LDTs (which the brief calls “IVD Test Systems Made by Laboratories”) and that no textual or non-textual arguments undermine the final rule. FDA reiterates policy arguments made in the preamble to the final rule and in the proposed rule. Namely, FDA describes how LDTs are “no longer simple, well-characterized tests” and that they are “in widespread use beyond the laboratory that designed them — just like the IVD test systems that non-laboratory manufacturers have produced for decades” outside of FDA’s enforcement discretion approach.²

Plaintiffs filed their reply briefs on November 25, 2024, which focus on the definition of a “device,” the major questions doctrine, the Centers for Medicare & Medicaid Services’ (CMS) authority to regulate LDTs under the Clinical Laboratory Improvement Amendments (CLIA), and FDA’s lack of authority to regulate the practice of medicine.

FDA’s Arguments

FDA begins its argument that Plaintiffs are incorrect in describing LDTs as a “professional service” by pointing to the FDCA’s definition of a device. FDA argues that an in vitro diagnostic (IVD) test system is comprised of components that function together to produce a result and unequivocally fall within the statutory definition of a device.³ The brief also cites non-statutory sources such as the dictionary to define “system.”⁴ Moreover, FDA cites to other agency recognition of LDTs as devices, pointing specifically to the text of CLIA and Medicare payment provisions administered by CMS.⁵

Further, FDA explains that the legislative history of the Medical Device Amendments clearly contemplate IVD systems as devices rather than professional services and that the final rule remains consistent with FDA’s own interpretation of “Device” as that term is defined in the FDCA.⁶ Moreover, FDA points to other devices that are marketed on a fee-for-service basis and are undoubtedly within FDA’s jurisdiction, explaining that the way a device is paid for is a business decision that does not affect whether a product meets the definition of a device under the FDCA.⁷

FDA’s primary point in opposition of the Plaintiffs’ argument that CLIA “has somehow displaced FDA’s jurisdiction to regulate laboratory-made IVDs like any other device subject to the FDCA” is that the FDCA and CLIA are complementary.⁸ For example, FDA notes that the FDCA and CLIA regulate different things and even under CLIA, FDA and CMS have different authorities.⁹ CMS determines compliance with CLIA by a laboratory and its personnel whereas FDA revises, evaluates, and categorizes tests for purposes of CLIA.¹⁰ Moreover, FDA explains that FDA’s review is significantly different than CMS’ because it looks at the test’s safety and effectiveness and is “more in-depth and more comprehensive than review of analytical validity under CLIA.”¹¹

To dismiss Plaintiffs’ arguments that the rule is subject to the Major Questions Doctrine, FDA argues instead that there is no statutory ambiguity and therefore the final rule is unambiguously federal regulation pursuant to congressional authorization. FDA argues that the final rule does not implicate a matter of great political significance, FDA is not uncovering a power that “conveniently enables it to enact a program that Congress considered and rejected multiple times,” and FDA argues that Plaintiffs have not shown that the case presents a major economic question.¹² The brief does describe congressional attempts at legislation over the years, but distinguishes them as creating an entirely new subchapter to the FDCA rather than rejecting the existing authority FDA argues it has over IVDs.¹³

Finally, FDA addresses the argument that its phaseout of the general enforcement discretion approach is arbitrary and capricious. FDA argues that it is not, and that the targeted enforcement discretion policies announced in guidance alongside the final rule are likewise not arbitrary and capricious because FDA considered the available evidence, reliance interests, and patient access, and concluded that the final rule is a “prudent public health measure taken based on changed circumstances documented in a thorough rulemaking record.”¹⁴ To support its position, FDA cites to changes it made to the final rule based on comments to the proposed rule about reliance interests in addition to similar arguments in opposition to the Association for Molecular Pathology’s claims.¹⁵

Plaintiffs’ Arguments on Reply

The Plaintiffs’ reply briefs echo arguments which seasoned opponents of FDA LDT oversight have raised in comments to the Final Rule and in other venues.

Concerning the definition of “device” within the meaning of the FDCA, Plaintiffs argue that a device is a tangible object rather than a professional service and, relying also on the definition of “manufacture,” argue that an assortment of physical objects that are never packaged together or sold as a kit cannot constitute a manufactured device.¹⁶ To further support this argument, Plaintiffs make a policy argument that if the Court were to accept FDA’s interpretation that an LDT is a device, then virtually every medical service would constitute the manufacturing of a device (e.g., a nurse uses a stethoscope and blood-pressure cuff during a physical examination).¹⁷ Moreover, the Plaintiffs emphasize that the FDCA prevents FDA from regulating the practice of medicine and as such cannot regulate LDTs since LDTs are services performed by medical professionals within their practice of medicine.¹⁸

The Plaintiffs also argue that FDA’s interpretation of the FDCA triggers the major questions doctrine by reinterpreting the statute and bypassing a “skeptical Congress” all while imposing tens or hundreds of billions of dollars in compliance costs and classifying as criminal the widespread, longstanding practices of a respected medical profession.¹⁹ Relatedly, the Plaintiffs further posit that Congress established CLIA to regulated LDTs since LDTs are laboratory services carried out by trained medical professionals and CLIA ensures both analytical and clinical validity of LDTs.²⁰

What Could Happen Next?

The new Trump administration is likely to take a different approach to LDT oversight than the outgoing Biden administration, and there are a number of ways in which this could impact the ongoing litigation. As we noted previously, the LDT Final Rule was promulgated in time to escape Congressional Review Act scrutiny; however, the executive branch and a Republican-controlled Congress have other tools to limit or vitiate FDA’s authority. These include, in no particular order:

• The U.S. Department of Health and Human Services (HHS) could revoke the LDT Final Rule. The recission of a rule is treated the same as the promulgation of a new rule.²¹ If HHS revokes the final rule, the cases will likely be dismissed as moot. The timing of such action is uncertain at this time.
• FDA could extend or revise its policies of enforcement discretion. LDTs are currently subject to FDA’s phaseout policy which has five stages, the last of which begins in May 2028. Specific categories of IVDs will continue under an enforcement discretion policy indefinitely as described in the preamble to the final rule. HHS could quickly issue such a revised policy or policies without prior public comment if it determines such policy meets the threshold in 21 CFR 10.115(g)(2).
• Congress could act. With a Republican-controlled House and Senate to start the new Trump administration, there is a chance that efforts to legislate the regulation of LDTs could be reignited. Based on prior congressional efforts, it is likely that such legislation would place LDTs under control by CMS and CLIA, rather than require LDTs to comply with FDA requirements.
• HHS could let the litigation continue. The new administration may view the U.S. District Court for the Eastern District of Texas to be sympathetic to the Plaintiffs’ arguments and therefore proceed unabridged assuming the final rule will be struck-down, if that is indeed the deregulatory objective of the new administration.
• The U.S. Department of Justice (DOJ) could act concerning the litigation. DOJ options are constrained by ethics rules but DOJ could request to amend its filings, pause the case pending rule-making proceedings, or take other actions intended to stall or moot the litigation in a deregulatory fashion.

We will continue to monitor all developments concerning LDTs and FDA’s regulation of IVDs more generally. If you have any questions about these developments, please do not hesitate to contact one of the authors or another member of the Arnold & Porter team.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.