Lawsuit Filed Challenging FDA Final Rule Regulating Laboratory Developed Tests

On May 29, 2024, a lawsuit was filed in the U.S. District Court for the Eastern District of Texas, challenging the U.S. Food and Drug Administration’s final rule concerning the regulatory status of laboratory developed tests (“LDTs”) under the Federal Food, Drug and Cosmetic Act (“FDCA”). As detailed in our prior analysis (here), the final rule amended the FDA’s existing regulations to make explicit the agency’s interpretation that LDTs are “devices” under the FDCA, and established a five-stage plan to phaseout the agency’s current general policy of “enforcement discretion” with respect to LDTs.

With the final rule’s July 5 effective date looming, two entities—a trade association and a laboratory—filed suit in federal court to overturn the final rule. In this Insight, we briefly summarize the legal theories advanced in the lawsuit and likely next steps.

The Lawsuit

The litigation was initiated by the American Clinical Laboratory Association (“ACLA”) and a private laboratory, HealthTrackRx. The complaint alleges that the final rule violates the Administrative Procedure Act—the federal law governing challenges to agency action—in two ways:

• The plaintiffs principally argue that the final rule is not a permissible interpretation of the FDCA. The rule amends the regulatory definition of “in vitro diagnostic products”—which are “devices” for purposes of the FDCA—to include LDTs. The complaint contends that the amended definition is unlawful because the term “devices” can only be interpreted to refer to physical products—such as a medical instrument or apparatus—and does not include intangible services, such as professional laboratory testing. To support this argument, the complaint emphasizes that the FDA has not previously exercised regulatory authority over LDTs—even though it has had the power to regulate “devices” since 1976—and that Congress created an entirely distinct regulatory regime to govern LDTs, through passage of the Clinical Laboratories Improvement Act of 1967, which assigned the role of regulating laboratory service to (what is now) the Centers for Medicare and Medicaid Services (“CMS”) and further strengthened CMS’s role through enactment of the Clinical Laboratory Improvement Amendments of 1988 (“CLIA”). 
• Separately, the complaint challenges the adequacy of the FDA’s decision making process underlying its adoption of the final rule. The plaintiffs contend that the FDA did not adequately respond to the more than 6,000 comments it received during the comment period for the proposed rule, and failed to provide a sufficiently reasoned justification for the regulatory approach it selected.

The plaintiffs ask the court to vacate the final rule and enjoin its enforcement. Either of these theories is potentially sufficient to set aside the final rule, although the specific rationale adopted would determine the FDA’s discretion to move forward.

Next Steps?

The case has been assigned to the Honorable Sean D. Jordan, who was appointed to serve in the Eastern District of Texas in 2019. In the short term, the plaintiffs may seek a preliminary injunction to prohibit the FDA from enforcing the final rule while the litigation moves forward. A decision on a motion for preliminary injunction would be immediately appealable to the Fifth Circuit.

Be sure to bookmark our dedicated LDT Resource Page to stay informed on the latest news and analyses on LDTs. If you have questions on the final rule or its potential impact, please contact the authors or a member of the Goodwin Life Sciences Regulatory & Compliance team.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee a similar outcome.