FDA Rescinds Rule on Laboratory Developed Tests, Impacting Hospital Laboratories

What's Happening?

The Food and Drug Administration (FDA) has rescinded its final rule on laboratory developed tests (LDTs), ending a long-standing effort to expand oversight of the lab industry. The decision follows a federal district court order in March that vacated the controversial 2024 rule after lab industry groups sued to stop its implementation. The FDA had aimed to regulate LDTs under the same framework as medical devices and other in vitro diagnostics. Currently, LDTs are regulated by the Centers for Medicare and Medicaid Services under the Clinical Laboratory Improvement Amendments, with the FDA exercising enforcement discretion. The American Hospital Association has expressed support for the rescission, noting that it will help maintain patient access to innovative diagnostic tests while reducing regulatory burdens.

Why It's Important?

The rescission of the FDA's rule on LDTs is significant for hospital laboratories, particularly smaller ones, as it alleviates potential regulatory burdens that could have led to the discontinuation of certain tests. This decision is expected to preserve access to essential diagnostic tests for patients and communities, while also reducing costs for hospitals and the federal government. The FDA had estimated that the rule would have imposed annual costs between $1.29 billion and $1.37 billion over 20 years, highlighting the financial impact of the regulation.

What's Next?

With the rule rescinded, hospital laboratories will continue to operate under the existing regulatory framework, maintaining enforcement discretion by the FDA. This decision may prompt further discussions among stakeholders about the balance between regulatory oversight and innovation in the lab industry. The FDA's approach to LDTs could influence future policy decisions regarding the regulation of medical diagnostics.