In one of the first demonstrations of the impact of last year’s Loper Supreme Court decision on challenges to agency authority, a judge ruled that the FDA does not have authority to regulate tests developed by clinical laboratories.
On March 31 of this year, a federal district court judge blocked the FDA’s most recent effort to regulate laboratory developed tests as in vitro diagnostic medical devices. With explicit reference to the Supreme Court’s 2024 Loper decision overturning the longstanding Chevron deference doctrine, this ruling serves as an early look at how the Loper decision may impact agency regulatory authority going forward.
Laboratory-developed tests (LDTs) are generally understood as tests or test systems that are designed, developed and used by a CLIA-certified high complexity clinical laboratory. This is in contrast to tests or test systems that are centrally manufactured by non-laboratories and sent to labs or providers ready for use, which have long been regulated as medical devices. The FDA has always maintained that it has the authority to regulate LDTs as in vitro diagnostic medical devices. However, for many years it permitted labs an exemption from premarket approval requirements through enforcement discretion so long as they maintained their CLIA certificate through the Centers for Medicare & Medicaid Services (CMS), and the test itself did not raise significant safety concerns. As technology and industry advanced, however, those agency safety concerns started to become more frequent due to the expansion and increasing complexity of LDTs.
As an attorney representing stakeholders in the clinical laboratory, med tech and biopharma industries, LDTs are, in my experience, one of the most notorious examples of a regulatory grey area in the life sciences universe. Are they medical devices, professional services or some blend of both?
A Longstanding Open Question
The recent federal district court ruling ended a pinball game that had lasted for a decade or so, with proposals for new, formalized LDT regulatory landscapes bouncing among the FDA, CMS and Congress. For several years, industry, regulators and legislators tried to work together to pass legislation that would satisfy all stakeholders, but none of those efforts were successful. Then, on May 6, 2024, FDA issued the LDT Final Rule, setting forth a framework under which the agency would regulate virtually all LDTs as medical devices. The rule would have required all developers of LDTs, including clinical laboratories, to phase into compliance as in vitro diagnostic medical devices in five stages over the course of four years, with the deadline for the first stage set as May 6, 2025.
The LDT Final Rule prompted mixed responses from labs and their stakeholders, with some supporting it and others filing suit in the Eastern District of Texas. In American Clinical Laboratory Association et al. v. FDA, and Association for Molecular Pathology et al. v. FDA, the plaintiffs challenged the FDA’s authority to regulate LDTs at all, arguing that LDTs are professional services that are already appropriately regulated under a laboratory’s CLIA certificate. The plaintiffs’ chances increased when, on June 28, 2024, the U.S. Supreme Court issued its landmark decision in Loper Bright Enterprises v. Raimondo, overruling the long-standing Chevron doctrine. Under Loper, courts considering challenges to agency action under the Administrative Procedure Act must now exercise their independent judgment in deciding whether an agency has acted within its statutory authority, rather than deferring to an agency’s interpretation of an ambiguous statute, as had been the prevailing rule under Chevron.
On March 31, 2025, just before the then-looming deadline for compliance with the rule’s first phase, U.S. District Judge Sean D. Jordan filed his 51-page memorandum opinion and order vacating the LDT Final Rule. Judge Jordan reasoned that, “A[n LDT] is a methodology or process by which a laboratory generates biochemical, genetic, molecular, or other forms of clinical information about a patient specimen for use by the treating physician … [LDTs] are offered as services.” His order reiterated the Loper directive that courts use “‘all relevant interpretive tools’ to determine the ‘best’ reading of a statute.”
Loper’s Aftermath
From my perspective, this is just one of the first demonstrations of the impact of Loper on challenges to agency authority, and industry broadly could see more wins when initiating such challenges going forward using this case as support. Other arguable grey areas that could be affected include the scope of “wellness” versus clinical claims, and regulation of clinical decision support software tools as devices.
The vacatur of the LDT Final Rule was not appealed by the FDA, and the agency has since submitted the rule for formal rescission to the Office of Management and Budget, Office of Information and Regulatory Affairs. As one might imagine, Judge Jordan’s decision allowed many small to mid-sized labs, who had been investing time and resources to meet the upcoming deadline, to breathe a sigh of relief. However, there remain other possible avenues for LDT regulation. For example, this outcome may encourage the FDA and industry to, once again, try to work with Congress to agree on new legislation regarding LDTs. States could also get involved, implementing oversight similar to New York State, which currently requires labs offering LDTs to register the tests as part of its Clinical Laboratory Evaluation Program. In the meantime, the FDA could set its sights on other aspects of the LDT industry, perhaps enhancing oversight of specimen collection kits, reagents and lab equipment.
Of note, while the Trump administration has indicated a focus on deregulation, priorities could shift after the next presidential election. Lab stakeholders, diagnostics manufacturers and health system leaders should keep an eye on this new landscape as it develops, particularly with respect to news from Capitol Hill and enforcement trends from the FDA. This new chapter in the regulatory landscape of LDTs may not be the last.
