FDA’s final rule on LDTs raises concerns about innovation in personalised medicine: GlobalData

With the FDA’s final rule on laboratory developed tests’ (LDT) first stage coming closer, clinical laboratories, manufacturers, and patients have voiced their concern over how this will impact the diagnostic industry in the US. The final rule, which is scheduled for 6 May 2025, raises concerns about innovation in personalised medicine, as it imposes new burdens on typically small laboratories to meet FDA standards for a wide variety of test types, including those using complex or rare biological samples,  according to GlobalData.

At the recent Advamed’s MedTech Conference in Toronto, speakers and attendees voiced concerns and future actions in anticipation for the FDA oversight on LDTs. Supporters of the rule argue that it enhances patient safety by ensuring higher standards of accuracy and reliability, while opponents worry it could stifle innovation and delay access to critical tests.

Selena Yu, Senior Medical Analyst, at GlobalData, states, “The future of LDTs transitioning to medical devices is in limbo. This is due to the multi-year process, which can lead to multiple opportunities for litigation that may delay timelines set out by the FDA.”

With the court case, “American Clinical Laboratory Association (ACLA) v. U.S. Food and Drug Administration (FDA),” arguing that the FDA is overstepping its regulatory authority by grouping LDTs as medical devices still in session, there is another layer of complexity. There are a lot of moving parts, and the industry is trying to be flexible and prepared for any outcome. If the lawsuit is successful, the FDA will need to amend the rule or scrap it altogether.

Moreover, the US presidential election in November can delay the LDT final rule because a new administration will enter the office, regardless of results, and a new FDA commissioner and Human and Health Services (HHS) secretary will be chosen.  Both the FDA commissioner and HSS secretary of the Biden administration have expressed that they will not stay on for the next administration. Thus, this change in leadership can delay LDT implementation.

Yu adds, “The diagnostic space has to be flexible and position itself for success before the first stage deadline. Laboratories need to update their quality management systems to include adverse event reporting, corrections, and removals, and establish a complaint file. However, there is some hesitancy to invest into this if the lawsuit succeeds. The speakers at the 2024 MedTech Conference stressed that since there is no fixed deadline for the court to rule, manufacturers are expected to proceed with LDT oversight and pivot as needed.”

Many clinical laboratories lack expertise in FDA proceedings, and they are likely to rely on their manufacturing vendors for aid. IVD manufacturers need to consolidate LDTs, where their reagents are involved in, by selecting which tests are investment-worthy as proceeding with clinical trials and FDA approval can be costly.They need to consider aspects such as LDT profitability (market size and patient pool growth, test manufacturing cost and production) and clinical trial complexity (limited patient pool, expensive and exhaustive to execute) when selecting which LDTs to proceed with.

Small laboratories will need to lean on their manufacturers and large laboratories in various ways, from advice on how to navigate the FDA approval space to having their tests acquired by large companies or manufacturers.

Yu continues, “Assuming that the FDA final ruling for LDTs proceeds as planned, there will be a consolidation of LDTs and smaller clinical labs. This is due to the fact that various clinical labs often use the same manufacturing reagents, adapting them to test for the same indications.”

However, consolidating the number of LDTs submitted for similar or identical tests by different labs reduces the need for investments by manufacturers and may result in a decrease in the number of clinical labs. The sheer volume of tests that were conducted in the LDT space will also not change drastically as the same patient population is receiving tests.

Yu concludes, “The FDA’s projected multi-year timeline for oversight in LDTs could be delayed as there is ample opportunity for more litigations to arise. It is difficult to predict what will happen in the next few months for LDTs as new leaders enter the White House, FDA, and HHS, which, coupled with the current lawsuit against the FDA, makes the future of LDTs transitioning to medical devices uncertain.”