FDA’s final rule for LDT regulation: Reshaping the diagnostic landscape

LDTs have been at the forefront of personalized medicine, providing timely solutions especially when commercial tests fall short. The FDA’s decision to tighten regulations on LDTs has been met with many concerns from the industry - as outlined in our previous opinion piece ‘LDT Regulation by FDA: Balancing safety, innovation and patient access to testing, primarily due to concerns about stifling innovation and increasing operational burdens. However, several key deviations from the initial proposed rule suggest a thoughtful consideration of the comments received, potentially making the final rule more palatable to a broader range of stakeholders.

Firstly, the introduction of grandfathering, which means LDTs marketed before the final rule issuance (in market before 6th May) are exempt from regulatory review under FDA enforcement discretion. This addresses a major concern of the industry and the exemption is a significant relief for many in the diagnostic field, as it ensures that the currently marketed tests will continue to be available for patient testing and would reduce the need for immediate administrative and financial resources.

Secondly, the rule’s specific provision for “LDTs manufactured and performed by a laboratory integrated within a health care system to meet an unmet need of patients receiving care within the same health care system when an FDA-authorized test is not available” needs to be elaborated further by FDA, but our interpretation is that academic labs associated with hospital centers can continue to use LDTs for hospital in-patients but not in other cases. This provision appears to align with the IVDR rules in the EU that provide similar exemptions for LDTs manufactured and used at associated health institutions. However, this may limit the ability of academic labs to act as reference centers and may not allow testing for patients outside of the associated healthcare system.

Lastly, the exemption for LDTs approved by the New York State Clinical Laboratory Evaluation Program (NYS-CLEP) indicates a recognition of robust existing state-level regulatory frameworks and removes the need for duplicative regulation. This will again reduce the costs and administration for labs with NYS CLEP-approved tests. The initial FDA prediction of costs to the industry was $50B in the first 5 years but with all the proposed changes in the final rule, there is a significant downshift in costs, expected to be 10 times lower at ~$5B in the first 5 years.

Timelines:

The timelines for the phaseout of the current enforcement discretion policy remain largely the same as listed in the initial proposed regulations, with the five-stage, four-year plan.

Stage 1: From May 6, 2025 (1 year) - Implementation of medical device reporting (MDR) and complying with requirements for complaint files

Stage 2: From May 6, 2026 (2 years) - Implementation of manufacturer registration and test information listing, labeling requirements, and investigational device exemptions

Stage 3: From May 6, 2027 (3 years) - Implementation of Quality System Regulation (QSR) - good manufacturing practices applicable to medical devices

Stage 4: From Nov 6, 2027 (3.5 years) Pre-market review of high risk (Class III) tests (i.e., PMA submissions)

Stage 5: From May 6, 2028 (4 years) - no earlier than Apr 2028 - Moderate-risk and low-risk LDTs would have to comply with pre-market review requirements, (i.e., submit a 510(k) or a De Novo application).

Additionally, as announced in Jan 2024, in Jan 2024, FDA confirmed its intent to reclassify the majority of IVDs from Class III to Class II. This will allow for more simple regulatory submissions through the De Novo or 510(k) pathway than the more stringent and expensive pre-market approval (PMA) pathway.

Diaceutics Opinion

Impact

There are continuing concerns that the implementation of this rule may mean that the testing options for some biomarkers may be reduced at both clinical trial and post-launch, as some labs may remove their low volume tests, including those for rare diseases. Overall, this means that upcoming launches with novel biomarkers will be impacted as it may take longer to get the necessary regulatory approval for new LDTs. Furthermore, the addition of new biomarkers to existing panels in FDA-approved tests may also take significantly longer to factor in time for regulatory submission and reviews.

There is still a lot to assess from this final regulation and as much still remains under FDA’s discretion, the true impact of these rules will depend heavily on their interpretation and implementation. The ability of FDA to enforce and monitor these new regulations within the 4-year timeframe is also under question but FDA is expected to allocate more resources to cover for all the additional regulatory review submissions. There may also be litigation over the authority of FDA to regulate over LDTs which may result in delay to implementation of the new rule.

Our Recommendations

As the landscape evolves, we remain committed to adapting our strategies to leverage these regulatory changes, ensuring continued patient access to safe and timely testing.

At Diaceutics, we feel it is crucial to monitor this space closely and plan for mitigating any disruption to patient testing. Investing early in securing adequate access to FDA-approved diagnostic tests and choosing the right diagnostic partner may be critical to minimize any patient leakage.

Recognizing the importance of these changes, the FDA is hosting a webinar on May 14th to further clarify on these new regulations, with the cut-off date for inquiry submission being May 7th. This session is an essential opportunity for stakeholders to gain a deeper understanding of the rule’s implications and its potential outcomes for the industry.