A Court Vacates the LDT Rule, But Questions Remain for Test Developers

A Court Vacates the LDT Rule, But Questions Remain for Test Developers

The dispute between the FDA and clinical laboratories over the agency’s efforts to regulate LDTs (laboratory developed tests) has focused on the question of authority: does the FDA’s authority to regulate devices include LDTs? On March 31, 2025, in a decision written by Judge Sean Jordan, a U.S District Court answered with an emphatic “no.” But the decision does not fully resolve the question of what counts as an LDT. In particular, the court’s definition of an LDT as a test developed and used in a “single laboratory” doesn’t account for the complex business relationships that often underlie laboratory test development, pointing to continued uncertainty for some developers and laboratories.

American Clinical Laboratory Association v. U.S. Food and Drug Administration

The history of the FDA’s effort to regulate LDTs is long and convoluted and likely not over. For simplicity, the evolution of the FDA’s policy can be divided into three phases: before and after issuance of its rule to regulate LDTs and the current phase, since the court’s decision. 

Before the issuance of the rule struck down by the court, the FDA maintained that it had authority to regulate LDTs without issuing a regulation. The FDA proposed to use its enforcement discretion to develop a tailored oversight model but the proposal drew furious opposition, in part because the FDA did not use notice-and-comment rulemaking. Unable to finalize its draft policy, on May 6, 2024, the FDA issued the LDT Rule to expressly include tests produced by a laboratory within the FDA’s definition of a device. The preamble to the LDT Rule describes a plan to phase out enforcement discretion as it phased in active regulatory oversight of such tests. Between issuance of the Draft 2014 Framework and the LDT Rule, Congress introduced—but did not pass—the VALID Act, a comprehensive regulatory scheme for the FDA’s oversight of LDTs.

In ACLA, the court held that the FDA lacked statutory authority to support the rule and issued a ruling of vacatur, vacating the rule and remanding the issue for further action consistent with the court’s decision. 

Clinical laboratories have greeted the decision as a major victory. But tests offered as LDTs are often the product of collaborations between more than one laboratory or between laboratories and other entities who engage in sometimes complex business relationships with clinical laboratories; these include healthcare systems and test protocol developers who play a role in developing, validating, and performing these tests. For developers of such tests and the laboratories that use them, the court’s definition of LDT as a test developed and used in a “single laboratory” may mean continued uncertainty.

LDTs and LDTs*: the blurred bounds of FDA oversight.

LDTs: the “single laboratory” criterion. The “single laboratory” criterion is at the core of the FDA’s LDT definition. In the LDT Rule, the FDA offered the following definition:  

FDA has generally considered an LDT to be an [in vitro diagnostic test] that is intended for clinical use and that is designed, manufactured, and used within a single laboratory that is certified under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) and meets the regulatory requirements under CLIA to perform high complexity testing.

Although not part of the definition, the LDT Rule adds a qualifier that, to be considered an LDT, the test must not be offered Direct-to-Consumer.

The limitation to tests “designed, manufactured, and used within a single laboratory” reflects deference to physician-patient relationship. But this deference points to the tension between the FDA’s rationale for regulating LDTs as devices and the fundamental principle that the FDA does not regulate the practice of medicine. In tailoring the LDT definition to tests “used and interpreted directly by physicians and pathologists working within a single institution that was responsible for the patient,” the FDA acknowledges that such tests at a minimum implicate the practice of medicine. By issuing a rule to regulate them, the FDA discounts this implication, treating the tests as “practice of medicine adjacent,” yet still devices. 

LDTs*: LDT policy extended to tests not developed/used in a single laboratory. As discussed in the final LDT Rule, however, the FDA has applied its policy of enforcement discretion more broadly. Even in the Draft 2014 Framework, the FDA proposed a policy that would treat some tests that do not fall squarely within the LDT definition as though they were LDTs. 

The LDT Rule retains this policy, acknowledging that some laboratories provide tests as LDTs even though the tests are developed or used in more than one laboratory or developed by an outside entity for use in one or more laboratories. The LDT Rule creates a category of tests comprising “any IVD that is offered as an LDT by a CLIA-certified laboratory.”  The FDA included these LDTs—or LDTs*, because they do not meet the LDT definition—within the proposed phase out policy described in the Draft 2014 Framework. Moreover, under the LDT Rule, tests offered as LDTs* before the issuance date of the LDT Rule would be partially grandfathered, exempt from premarket review by the FDA. As discussed in the Draft 2014 Framework, LDTs* include tests developed and/or used under the following business arrangements:

• An entity that owns several clinical laboratories develops a [test] in one of its clinical laboratories and then transfers the [test] to several clinical laboratories within its network. 
• An academic institution develops a [test], which it then licenses to or signs an exclusivity agreement with a private corporation that owns a CLIA-certified laboratory. The private corporation’s CLIA-certified laboratory then begins manufacturing and using the device to provide clinical diagnostic results. 
• A laboratory contracts with a third party manufacturer to produce a key component (e.g., coated microtiter plate, specialized specimen collection kit) used in its [test]. 
• A laboratory contracts with a specification developer to design a new [test]. Once complete, the design is then transferred to the clinical laboratory for final validation prior to the [test] being manufactured and used by the laboratory to provide clinical diagnostic results.

In its Draft 2014 Framework, the FDA proposed to treat these LDTs* the same way the agency has treated LDTs: as under a policy of enforcement discretion, subject to a gradual, risk-based phase out of enforcement discretion. Apart from a handful of advisory letters sent in 2010 and earlier, the FDA has largely treated LDTs* in the same manner as LDTs.

LDTs as defined by the court.

The district court offers its own definition of LDT in its opening sentences:

Laboratory-developed test services are in-house diagnostic tests developed, validated, and performed by trained professionals within a single clinical laboratory. They are performed on blood, urine, tissue, or other types of specimens at the request of an individual physician, in the context of a specific doctor-patient relationship.

The court’s decision that LDTs fall outside the FDA’s jurisdiction hinges on the reference to “services” in its definition. The decision elaborates in detail how the language of the device definition and the history of the Federal Food, Drug, and Cosmetic Act, the Clinical Laboratory Improvement Act, and other statutes militate against regulating LDT “services” as devices.

But apart from the reference to services, the court’s understanding of LDTs largely tracks the FDA’s understanding. As the court makes clear, its definition excludes packaged test kits that are shipped in commerce; coupled with the court definition’s emphasis on the doctor-patient relationship, the exclusion of kits effectively excludes DTC tests. The court concurs with the FDA’s limitation of LDTs to tests performed in high complexity laboratories. 

Importantly, like the FDA, the court understands LDTs to be test services “developed, validated and performed … in a single laboratory” (emphasis added). The decision elaborates that “a laboratory-developed test service is a proprietary methodology performed by only the developing laboratory,” and that “[e]ach laboratory uses its own unique knowledge of the protocols, performance characteristics, and means of analysis to develop such methodologies and processes,” which are “not sold as a kit, and the protocol is not transferred in any manner to other laboratories, hospitals, or other facilities outside the developing laboratory entity.” The court’s reliance on the “single laboratory” criterion, while excluding LDTs from FDA oversight, doesn’t appear to reach LDTs*. 

The courts arguments for treating LDTs as outside the FDA’s regulatory authority also do not foreclose a different outcome for LDTs*. It is not clear whether the court’s proposition that the definition of “device” applies only to tangible items excludes LDTs*, for several reasons. For one thing, the proposition is at odds with the FDA’s regulation of software as a medical device, regulation that Congress has implicitly sanctioned by carving out only subsets of software from the definition of “device.” Moreover, tangible instrumentation used in an LDT* may be specified and shipped between entities that develop and use an LDT* independent of any physician-patient relationship. 

Second, when an LDT* protocol is licensed or otherwise exchanged between entities, potentially with specifications for use with specific instrumentation, the protocol itself, rather than the service the protocol is used to perform, is the object of the commercial transaction. Developers of LDTs* may be left to rely on the argument that parallel statutory regimes for devices under the FDC Act and LDTs under CLIA preclude FDA oversight for LDTs* as well, a fair but not definitive argument because commercially, transactions involving LDTs* can resemble device transactions more than sales of LDT services. For example, it is not obvious that a test developed by an academic center, licensed to one or more laboratories, for use by a physician who is independent of both, falls within the practice of medicine and is thus exempt from FDA oversight.

Open questions and what may be next.

The question of the regulatory status of LDTs* developed and/or used by entities other than a single laboratory is not the only unanswered question following the ACLA decision. A remaining difficult question concerns the status of LDTs that the FDA has approved or cleared. If, as Judge Jordan contends, the FDA has no authority over LDTs, what is the status of those market authorizations? 

These questions are, for now, academic. The administration has not signaled whether it will appeal the court’s decision, but if it does, the appeal would go to the conservative Fifth Circuit Court of Appeals. The ultimate arbiter would be the Supreme Court that recently decided the Loper Bright decision, gutting the principle of judicial deference to agency rulemaking.

To the extent not foreclosed by the decision, regulatory action by the FDA also seems unlikely to happen any time soon. Commissioner Martin Makary was sworn in on April 1, 2025, one day after the court issued its decision. The new commissioner joins an agency depleted of institutional knowledge following successive rounds of layoffs, including a recent reduction in force reported to leave the agency down by one-third its staff. The Trump Administration has charged all federal regulatory agencies with taking ten deregulatory actions for every regulatory action taken: even if new HHS and FDA leadership were committed to LDT oversight, they would have to pair a new regulatory effort with ten deregulatory actions. Under these conditions, it is difficult to imagine the FDA leading a regulatory initiative to revive the LDT regulation in any form now.

Whether the court’s decision creates new impetus for Congress to pass the VALID Act may also depend on the administration’s stance. With a complex piece of legislation like the almost 300-page VALID Act, members of congress depend on technical assistance from invested agency leadership and staff to advance the legislation. And even with the FDA’s support of LDT oversight during Commissioner Robert Califf’s tenure, the VALID Act, though introduced several times, did not pass.

While the prospects for appeal are uncertain, and regulatory and legislative action seem unlikely in the very near term, the FDA’s authority to take advisory and enforcement actions against LDTs that do not fall within the LDT definition articulated in ACLA v. FDA—namely, a subset of LDTs*—remains. The ACLA decision may mean a more uncertain enforcement landscape for such tests.