FDA Lab Test Authority Set for Compliance Hurdles, Legal Fights

The FDA’s final rule to regulate lab-developed tests carved out certain diagnostics from its full scrutiny, creating exceptions that are spurring compliance concerns from some industry members.

The Food and Drug Administration on May 6 published in the Federal Register its 160-page rule that gives it explicit authority to regulate certain medical tests that come from a single laboratory, known as lab-developed tests (LDTs). The rule makes clear that in vitro diagnostics (IVDs) include tests manufactured by a laboratory under the Federal Food, Drug, and Cosmetic Act. The regulation also laid out a five-stage phaseout plan over a four-year period of its historically exercised general enforcement discretion.

The final rule took some by surprise, and possibly sparked confusion, when the FDA granted exceptions for some IVDs made by laboratories that weren’t in the proposed rule. The agency determined that tests—such as ones made within a health-care system for unmet needs, or currently marketed IVDs offered as LDTs marketed before the final rule—will face a specialized enforcement discretion.

“That’s a really important change that should ease the burden of implementation on many labs,” said Joshua Oyster, a partner at Ropes & Gray LLP’s life sciences regulatory and compliance practice. “It remains to be seen exactly how that’s going to play out in practice, assuming the final rule were actually to be implemented as is.”

While the rule’s carve outs and phaseout policy are expected to shape plans for how laboratories bring their products to market, some manufacturers are already grappling with the scope of the FDA’s authority over their tests. The industry has signaled that the rule will lead to unintended consequences and potential lawsuits against the agency.

“A lot of laboratories who are developing these tests are very concerned about what this means for their ability to continue to do the work that they’re doing,” said Sarah Thompson Schick, counsel at Reed Smith LLP in the FDA and life sciences practice.

“It’ll be interesting to see what litigation will look like now,” she said.

The Carve Outs

Tests excluded from the rule’s phaseout policy and subject to immediate regulation include direct-to-consumer tests, tests used for blood donor screening or human cells, and tests for actual or potential emergencies.

But the final rule identifies certain LDTs over which the agency intends to exercise full enforcement discretion: “1976-type” LDTs, human leukocyte antigen tests for transplantation, tests solely for forensics in law enforcement, and LDTs manufactured and performed within the Veterans Health Administration or the Department of Defense.

The final rule expanded the carve outs to include other categories of IVDs made by laboratories, but those tests won’t face full enforcement discretion. They include LDTs made and performed by laboratories integrated within a health-care system to address unmet medical needs, LDTs marketed prior to the issuance of the May 6 final rule, and tests for rare blood cell antigens.

The FDA will apply enforcement discretion to tests approved by the New York State Department of Health Clinical Laboratory Evaluation Program, but LDTs must still comply with certain stages of the phaseout policy.

The FDA’s “pockets of partial enforcement discretion could be interpreted to be broad,” said Susan Van Meter, president of the American Clinical Laboratory Association, highlighting the enforcement discretion for LDTs performed within a health-care system, as an example.

“It’s like the agency has knit this fabric with lots of holes in it. Those holes are the areas of partial enforcement discretion, or carve outs, and some of those policies are vague and all are subject to change at any point via guidance only,” Van Meter said.

The ACLA, which represents the nation’s largest commercial reference laboratories such as LabCorp, Quest Diagnostics, and Mayo Clinic, has long maintained that medical device authorities are ill-suited for LDTs and that diagnostic regulation should come through Congress.

“How do you implement regulation that is saying, ‘we’ve got total authority over LDTs, but here are numerous areas of partial enforcement discretion,’ providing exemption from some, but not all requirements, that can change at any time,” Van Meter said. “It’s a difficult scenario for someone who’s trying to contemplate how to implement this rule.”

The Association for Diagnostics & Laboratory Medicine, a group that brings together more than 70,000 clinical laboratory professionals, said it appreciates the intent of protect legacy LDTs to permit continued access to the tests, but the provision “may have unintended consequences, such as stifling innovation.”

The legacy “provision may discourage labs from modifying their laboratory developed tests or introducing new and better testing services to replace grandfathered tests, since the new tests would then be subject to additional oversight,” Octavia Peck Palmer, president of ADLM, said in a statement.

Other concerns from the industry question how manufacturers should comply with the FDA’s new Quality Management System Regulation, which becomes effective Feb. 2, 2026.

The FDA intends to publish guidance documents to provide information on compliance and expectations, according to the rule. The agency also wrote it may update any of the enforcement discretion policies, consistent with the FDA’s good guidance practices.

The FDA will host a webinar May 14 to provide an overview of the final rule.

Lawsuits Loom

Some attorneys predict lawsuits challenging the FDA will pick apart how it will enforce regulation as labs determine whether they’re subject to the phaseout policy or face full or partial enforcement discretion.

Lawsuits may also challenge whether the FDA appropriately assessed the costs and burdens of the final rule, the agency’s decision to expand the device definition under the FDCA, and if the FDA is wading into the practice of medicine.

The enforcement discretion policies adopted in the final rule “can help a little bit,” Oyster said, but “they don’t necessarily change the core legal issues.”

“At some point, one or more entities are going to challenge the legality of the rule,” he said.

The ultimate question is whether the FDA possesses the legal authority to regulate LDTs.

“There’s going to continue to be this open question from various stakeholders of should this rule be the way FDA gets its authority to regulate diagnostic testing” said Mahnu Davar, partner at Arnold & Porter Kaye Scholer LLP’s life sciences and health-care regulatory practice.