FDA’s final lab testing rule places new burdens on manufacturers

In a watershed moment for the diagnostic testing industry, the U.S. Food and Drug Administration (FDA) issued a long-awaited regulation in April that changes the way laboratory-based tests (LDTs) are regulated. The regulation aligns the regulatory framework for LDTs ​​with that for medical devices and details the agency’s rationale for removing enforcement discretion for most LDTs.

This rule expands FDA’s authority over a broader set of products to alleviate public concerns about misleading or false test results. However, with this broader regulatory authority comes concerns about the potential negative impact on patient access. As the new regulatory framework is implemented over the next four years, stakeholders—including laboratories, the broader diagnostics industry, patients, healthcare providers, and payers—must consider the broad implications of this rule.

How are the regulations regarding LDT changing?

Under this rule, all in vitro diagnostic tests—including LDTs—will be considered medical devices under the federal Food, Drug, and Cosmetic Act. The FDA will classify LDTs ​​based on their level of risk and intended use. Higher-risk tests will be subject to more stringent regulatory requirements, while lower-risk tests will be subject to a more streamlined review process.

Labs that create LDTs ​​will have to undergo premarket review, meaning they will have to demonstrate clinical evidence to support the efficacy and safety of these tests. Additionally, the rule expands the definition of LDTs ​​to include tests developed by high-complexity labs and those designed for rare diseases, expanding the scope of tests subject to FDA regulation.

In May, FDA hosted a public webinar on the rule that explained specific timelines and scope of implementation, explained the withdrawal process for general enforcement discretion, and answered stakeholder questions. FDA representatives at the webinar also noted that the administration is expected to issue guidance on the withdrawal in May 2025, which would be in effect through 2028. Additionally, FDA will seek to reclassify Class III IVDs to Class I/II. This would increase the number of LDTs ​​for which general enforcement discretion may apply to certain requirements.

Who does this rule apply to?

• Laboratories: There are over 320,000 laboratories in the United States, of which 12,000 are certified to develop and implement LDTs. These laboratories will be required to undergo premarket review and potentially face more stringent regulatory requirements based on the risk classification of their tests, requiring significant investment to ensure compliance.
• Diagnostic industry: This industry has the potential to benefit from clearer commercialization paths, opening avenues for innovation. However, companies developing and commercializing LDTs ​​will need to adapt their practices to meet new regulatory requirements, which may involve investing additional resources for premarket review and compliance efforts.
• Patients: Patients can benefit from improved access to more accurate and reliable diagnostic tests. Increased oversight and standardization of LDT regulation can lead to better health care outcomes and reduced risk of misdiagnosis or ineffective treatment.
• Health services: Healthcare providers who rely on LDTs ​​to care for patients may need to reconsider their use of some tests and ensure they order tests that comply with the new regulations. The new regulations could help streamline the diagnostic odyssey and patient journey, providing faster diagnosis and treatment.
• Payers: Public and private payers may implement policies regarding coverage and reimbursement of LDTs. For example, they may require that tests meet new regulatory standards before coverage is approved, which could impact patient access.

What are the stakeholders’ next plans?

Both diagnostic manufacturers and pharmaceutical sponsors with biomarker-based therapies or companion diagnostics should adapt their commercialization and partnership strategies to the new regulatory environment. This rule provides the FDA with a clear mandate for LDTs, offering stakeholders greater certainty about evidentiary requirements and the ability to market clinical claims in the future.

To fully realize the potential of this new landscape, stakeholders should consider the following:

• Assessment of new requirements regarding the safety and effectiveness of diagnostics available on the market and in the implementation phase;
• Reassessing how products are prioritized in the execution phase, based on a revised balance of evidentiary burdens versus market potential;
• Developing and expanding evidence collection plans (e.g. developing health economics and outcomes research plans);
• Leveraging the value of real-world data for market diagnostics (e.g., targeted evidence by population and intended use);
• Assessing development and/or commercialisation opportunities that may emerge with new targeted evidence (this may include evidence supporting the use of products in different patient groups to facilitate equitable access); and
• Consider opportunities for collaboration between pharmaceutical and diagnostic sponsors to improve access to treatment.

Summary

The final FDA rule is a paradigm shift. By explicitly defining LDTs ​​as a type of in vitro diagnostic test, they become subject to FDA enforcement both pre- and post-market. The regulation impacts commercialization by requiring an expanded level of evidence to demonstrate safety and efficacy.

Diagnostic manufacturers will need to consider adapting current development and commercialization strategies in response to policy changes. Pharmaceutical sponsors with therapies that rely on biomarker diagnostics will need to consider a new set of issues as they map out strategies for partnering with companion diagnostics.