On March 31, a pivotal ruling from the U.S. District Court for the Eastern District of Texas vacated the U.S. Food and Drug Administration’s final rule on laboratory developed tests, titled Medical Devices; Laboratory Developed Tests.

This decision, issued by Judge Sean D. Jordan, halted the FDA’s attempt to regulate LDTs as medical devices under the Federal Food, Drug and Cosmetic Act, significantly altering the regulatory landscape for clinical laboratories. The ruling, which came just weeks before the rule’s initial implementation deadline, has far-reaching implications for laboratories, healthcare providers and patients.

Background of the FDA’s LDT Final Rule

LDTs are in vitro diagnostic tests designed, manufactured and used within a single laboratory, often tailored to meet specific clinical needs where commercial tests are unavailable. Historically, the FDA exercised enforcement discretion, meaning it generally did not enforce medical device regulations on LDTs, allowing labs to operate under the Clinical Laboratory Improvement Amendments framework managed by the Centers for Medicare & Medicaid Services.

However, on May 6, 2024, the FDA issued its final rule, asserting that LDTs are medical devices under the FDCA. The rule aimed to phase out enforcement discretion over four years, introducing stringent requirements such as adverse event reporting, premarket review, registration, labeling and quality system compliance, starting May 6, 2025.

The rule faced immediate backlash from industry stakeholders who argued it exceeded the FDA’s statutory authority and would impose unsustainable costs, potentially disrupting patient access to critical tests. These stakeholders filed lawsuits, which were consolidated, claiming the rule violated the federal Administrative Procedure Act by overstepping the FDA’s jurisdiction and being arbitrary and capricious. 

The Texas Court’s Ruling

On March 31, U.S. District Judge Sean Jordan of the Eastern District of Texas, sided with the plaintiffs, vacating the final rule in its entirety. The court held that LDTs are professional services, not tangible physical products, and thus do not fall under the FDCA’s definition of a “device.”

The ruling emphasized that Congress intended CLIA, not the FDCA, to govern laboratory testing services, pointing to the distinct regulatory frameworks for labs and medical devices. The court also cited the FDA’s decadeslong inaction on LDT regulation and Congress’s failure to pass legislation like the VALID Act, which would have explicitly granted the FDA authority over LDTs, as evidence of the agency’s limited jurisdiction. Additionally, the decision leaned on the Supreme Court’s 2024 Loper Bright ruling, which eliminated Chevron deference, reinforcing that courts must independently interpret statutory authority without deferring to agencies.

The court remanded the matter to the FDA for further consideration, effectively reinstating the pre-rule status quo where LDTs are regulated under CLIA and, in some cases, state-specific programs like New York’s Clinical Laboratory Evaluation Program.

Immediate Implications for Laboratories

1. Regulatory relief: Labs are no longer required to comply with the FDA’s phased implementation, sparing them significant compliance costs estimated at $1 billion to more than $3 billion annually. This includes avoiding expenses related to premarket submissions, quality system requirements and adverse event reporting. Labs can continue developing and offering LDTs under CLIA, focusing on analytical and clinical validity without FDA oversight.

2. Continued CLIA and state oversight: The ruling reinforces CLIA as the primary regulatory framework for LDTs. Labs must maintain CLIA certification for high-complexity testing and comply with state regulations, such as New York’s test approval process. This ensures quality and safety without the additional burden of FDA device regulations.

3. Impact on existing FDA approvals: Labs with LDTs previously approved or cleared by the FDA (e.g., through 510(k) or premarket approval) face uncertainty. The ruling suggests these approvals may be legally void, as the FDA lacks authority to regulate LDTs as devices. Labs may need to reassess whether these tests continue under CLIA or face other regulatory scrutiny.

Longer-Term Considerations

1. Potential FDA appeal: The FDA has 60 days to appeal to the Fifth Circuit Court of Appeals. However, given the Trump administration’s deregulatory stance, an appeal seems unlikely. If appealed, the case could escalate, potentially reaching the Supreme Court, prolonging uncertainty.

2. Congressional action: The ruling shifts the LDT regulation debate to Congress. Past efforts, like the VALID Act, failed to pass, and it’s unclear whether the 119th Congress will prioritize this issue. Any new legislation would need to balance innovation, patient safety and regulatory burden, but labs may face renewed scrutiny if Congress acts.

3. Industry dynamics: The decision is a victory for labs, preserving their ability to innovate and provide specialized tests. However, it raises questions about tests offered beyond a single lab (e.g., distributed test kits), which the court suggested could still be regulated as devices. Labs must carefully define their LDTs as services to avoid FDA enforcement. Additionally, manufacturers of reagents and equipment used in LDTs may face increased FDA scrutiny.

4. Patient access and safety: Proponents of the FDA’s rule, like the Center for Science in the Public Interest, argued it would enhance test safety and effectiveness. The ruling may preserve patient access to niche tests but could leave gaps in oversight, as CLIA focuses on lab operations rather than test performance. Labs must proactively ensure test quality to maintain trust.

Strategic Recommendations

Labs should continue to:

1. Strengthen CLIA compliance: Ensure robust validation and documentation to meet CLIA standards, anticipating heightened scrutiny.

2. Monitor legislative developments: Stay informed on potential bills like the VALID Act, which could reintroduce FDA oversight.

3. Evaluate existing FDA approvals: Consult legal experts to assess the status of FDA-cleared LDTs and transition to CLIA compliance if needed.

4. Engage with stakeholders: Collaborate with industry groups to advocate for balanced regulation that supports innovation.

Conclusion

The March 31 ruling is a significant win for clinical laboratories, freeing them from the FDA’s burdensome LDT regulations and preserving the CLIA framework. While this provides immediate relief and supports innovation, labs must navigate ongoing uncertainties, including potential appeals, congressional action and the need to maintain high standards under CLIA. By staying proactive and engaged, labs can leverage this opportunity to strengthen their role in delivering critical diagnostic services while preparing for future regulatory shifts.

Brad Cook is a health care attorney at Munsch Hardt with a focus on key regulatory issues, including fraud and abuse, compliance, reimbursement, Medicare/Medicaid enrollment, overpayment audits and appeals, as well as business transactions. He is based in Houston.