ACLA's and AMP's Suits over the LDT Final Rule: Summary Judgement Promised "Soon"

It was an exciting day in Plano, Texas! Yesterday, the Honorable Sean D. Jordan, United States district judge of the United States District Court for the Eastern District of Texas, heard oral argument in the consolidated suits against the U.S. Food and Drug Administration (FDA) regarding the final rule to regulate laboratory developed tests (LDTs) as medical devices.

In prior briefs, the plaintiffs, the American Clinical Laboratory Association (ACLA) and the Association for Molecular Pathology (AMP), asked the court to (1) declare FDA does not have authority to regulate LDTs as devices, (2) vacate the LDT final rule, and (3) enjoin FDA from enforcing the final rule.

The hearing lasted more than three hours, with one short recess. In brief, Judge Jordan demonstrated an excellent command of the facts, maintained a neutral tone as he questioned each party, and treated both sides with equal courtesy. ACLA and AMP argued that LDTs are not devices, the development and performance of LDTs is a professional service that is not subject to FDA regulation, and implementation and enforcement of the final rule will cost hundreds of billions of dollars and reduce patient access to crucial diagnostic testing. FDA argued that LDTs are simply a subset of in vitro diagnostic devices (IVDs), which are and have always been clearly subject to agency regulation, and that LDTs are products introduced into interstate commerce for commercial distribution.

Judge Jordan began the hearing by asserting that a key issue is how each side defines "LDTs," and asked each party to provide their definition. ACLA explained that LDTs are a set of procedures used to analyze a biological sample for the purpose of helping to treat a patient. However, ACLA emphasized it is more important to define what an LDT is not. Specifically, an LDT is not a tangible physical article that is manufactured or commercially distributed for sale in interstate commerce. AMP concurred with these points.

FDA defined LDTs as a subset of the larger category of IVD test systems intended for clinical use. Thus, LDTs are devices. FDA referred to LDT as "a term of art," and said LDTs traditionally had the boundaries of being designed, manufactured, and used within a single laboratory. However, many tests referred to as LDTs today no longer fit within these boundaries. FDA emphasized that an LDT is a test system comprised of physical components.

These definitions were, in fact, crucial to the hearing and shaped the arguments presented by all parties and discussed with Judge Jordan. Key points of emphasis and dispute were:

Does the definition of "device" under the Federal Food, Drug, and Cosmetic Act (FDCA) include LDTs?

• "Device" is defined under the FDCA as "an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is ... intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals." 21 U.S.C. § 321(h).
• Unfortunately, Congress did not define the terms included in this definition, such as "apparatus," "contrivance," or "article." Therefore, in their briefs and before the court, ACLA, AMP, and FDA presented "plain language" and dictionary definitions of these terms to argue how they should be interpreted and applied to evaluate the scope of FDA's authority.
• These discussions got deep in the weeds of statutory interpretation and led to the next key topic:

Are LDTs actually physical things introduced into interstate commerce for commercial distribution?

• As explained here and here, LDTs have long been distinguished from IVDs. IVDs are diagnostic tests that manufacturers sell to laboratories as complete kits. They come with all components in one physical package -- reagents, controls, and procedures -- that a laboratory needs to perform the test. There is no dispute that IVDs are devices subject to FDA regulation. LDTs, however, are designed, manufactured, and performed entirely within a single laboratory. There is no physical, tangible item that the laboratory distributes in interstate commerce.
• ACLA and AMP argued that FDA can only regulate physical items introduced into interstate commerce for commercial distribution. LDTs are not physical items, but rather the development of processes and the performance of procedures by expert healthcare professionals, including world-renowned pathologists. The process of designing and performing these tests is akin to the practice of medicine and surgical procedures (see below). Even if an LDT is designed and performed with components that are themselves devices, it is not itself a physical thing; there is no physical product.
• FDA argued that the appropriate definitions of "article" and "contrivance" demonstrate that LDTs are not legally distinguishable from IVDs. The agency strongly asserted that all LDTs could be packaged into a physical box and distributed in interstate commerce. According to FDA, laboratories are simply making a business decision not to sell their tests in this manner. That business decision does not change the legal status of tests, and FDA's jurisdiction applies to LDTs.
• AMP forcefully refuted FDA's implication that laboratories are attempting to skirt federal law by developing and performing LDTs. AMP argued that that performing a test, or performing any professional service for that matter, does not introduce any product into interstate commerce.

The legislative history of the FDCA, the Medical Device Amendments to the FDCA, and the Clinical Laboratory Improvement Amendments (CLIA)

• All parties discussed the legislative timelines of the original FDCA (1938), the original CLIA law (1967), the Medical Device Amendments to the FDCA (1976), and CLIA's amendments (1988).
• ACLA and AMP argued that based on the timelines and specific regulatory histories of the FDCA and CLIA, Congress did not intend for FDA to regulate laboratories and LDTs. If FDA had authority over laboratories and LDTs, Congress would not have amended CLIA in 1988 without reference to the Medical Device Amendments just twelve years before. (An overview of this legislative history is provided here, here, and here.)
• FDA argued it has had authority over all laboratory tests since 1938. This original act included the terms "instrument," "apparatus," and "contrivance" to describe devices, and these terms were carried over to the 1976 Medical Device Amendments (which clarified and made explicit FDA's authority over devices).
• The parties also disagreed over whether FDA's exercise of enforcement discretion impacted how the legislative and regulatory history should be interpreted and whether FDA's exercise of this purported discretion undermines its claims of clear authority.
• Judge Jordan asked each party several questions regarding these legislative timelines and specific legislative history documents submitted to the court.

The burden of the final rule and the potential impact to healthcare and public health

• ACLA and AMP emphasized the essential role that laboratories and LDTs play in diagnosing and contributing to the treatment of diseases, especially for rare diseases and in pediatric populations. AMP explained that within healthcare systems, such as academic medical centers, physicians seek the help of pathologists to develop and customize tests (which are not available as commercial IVDs) to help diagnose and treat patients.
• The plaintiffs repeatedly provided the court with (low) estimates of the economic burden of FDA's final rule: a one-time cost of $115 Billion and $14.5 Billion a year in annually recurring costs. ACLA and AMP argued that implementation and enforcement of the final rule will cause laboratories to stop offering existing tests, and prevent new tests from being developed. There is already evidence of such reduction in test offering and development. Again, because of the financial burdens of FDA's device regulations (on top of continuing compliance with CLIA and accreditation bodies), there will be a disproportionate impact on tests for rare diseases and in pediatric populations.
• FDA countered that the final rule balanced the competing interests of safety, reliability, innovation, and access.

Does CLIA require clinical validity?

• Judge Jordan asked each side several times to clarify whether CLIA requires clinical validity.
• FDA argued that both analytical validity and clinical validity are necessary to ensure that laboratory tests are reliable, safe, and effective. CLIA requires analytical validity, but the plain language of CLIA and its regulations do not require laboratories to demonstrate clinical validity to the Centers for Medicare & Medicaid Services (CMS).
• AMP argued on behalf of the plaintiffs that CLIA requires validity, "full stop." The distinction between analytical validity and clinical validity are not written into the statute. Importantly, CMS has authority to inspect laboratories for compliance with CLIA, and the types of documents subject to inspection include demonstration of clinical validity. Moreover, CMS will not reimburse for laboratory tests that do not demonstrate clinical validity.
• FDA countered AMP's argument by asserting that what may be available to CMS inspectors is not proof of a requirement in the statute itself, and that CMS' authority to reimburse for tests is under a separate authority (the Social Security Act).
• AMP also cited the differences in the statutory frameworks of CLIA and the FDCA to argue that CLIA is appropriate for LDTs. CLIA recognizes that tests need to be modified and specifically provides flexibility for test improvements and modifications. Under the FDCA, FDA's regulation of devices is static; each modification could require a new submission to the agency, which can take more than a year to review. FDA's device framework does not support or allow for rapid scientific development.

Does the "major questions doctrine" apply?

• Under the "major questions doctrine," regulatory authority for issues of vast economic and political significance must be expressly granted to an agency by Congress. AMP and FDA got deep into the weeds of this issue of statutory interpretation and argued about the three interpretations of the doctrine. (Based on a series of recent Supreme Court decisions, there is now the clear statement approach, the contextual approach, and the hybrid approach. If you are interested in a deep dive, the Wisconsin Law Review provides an excellent analysis here.)
• In brief, FDA argued that the final rule should not prompt analysis under the major questions doctrine because the agency's authority to regulate LDTs has always been clear and was expressly granted by Congress. Moreover, the doctrine is not triggered because there is no political significance in regulating LDTs; such tests are merely a subset of IVDs, which are devices under the FDCA.
• AMP emphasized that FDA's authority over LDTs is not clear, and has never been clear. The agency's decision to now regulate LDTs as devices is the very kind of discretionary policy making authority that the major questions doctrine should "rein in." AMP repeated the extreme economic impact of the final rule, and explained the appropriateness of the major questions doctrine in the court's assessment.

Dueling surgical analogies

• In their brief, ACLA analogized the process of a laboratory developing and performing an LDT to a surgeon performing surgery. If a surgeon uses two devices in combination, such as a scalpel and a needle, to perform surgery, the surgeon does not manufacture a new device. Moreover, the performance of the surgery is the practice of medicine and cannot be regulated by FDA. Likewise, if a laboratory combines components to develop and perform an LDT, the laboratory is not manufacturing a device. The process of performing the test is the exercise of professional judgement not subject to FDA regulation.
• In both its briefs and in oral argument, FDA did not directly respond to this analogy, but rather provided its own. According to the agency, when a cardiovascular surgeon is implanting a stent, and recognizes the stent is defective, that exercise of professional judgement does not negate the fact the defective stent is still a device.
• Judge Jordan referenced these dueling surgical analogies several times and asked each side to respond to the other's analogy.

Judge Jordan's questions for each party focused on the traditional distinction between LDTs and IVDs, details about the FDCA's and CLIA's legislative history, and which legislative and regulatory provisions require clinical validity. Again, Judge Jordan repeatedly pressed each party on the surgical analogies presented in the briefs.

Importantly, the judge is aware of the May 6, 2025 Phase 1 deadline under the final rule's phaseout policy, and understands that laboratories have to prepare now to comply with other phases. Judge Jordan committed to ruling "as soon as [the court] can."

ACLA’s arguments were presented by Ashley C. Parrish, King & Spalding LLP. AMP's arguments were presented by Michael Shumsky, Hyman, Phelps & McNamara, P.C. FDA's arguments were presented by Gabriel Schonfeld, Civil Defense Unit, Consumer Protection Branch, U.S. Department of Justice.?