FDA’s Lab Developed Test Rule Could Be First Check On Agency’s Power Post-Chevron

The recent landmark U.S. Supreme Court decision to overturn the Chevron doctrine could open the door to more challenges of Food and Drug Administration regulations, including the agency’s controversial rule on lab developed tests. 

In late June, the Supreme Court voted 6-3 to overturn the decades-old Chevron deference principle, meaning that courts no longer must defer to a federal agency’s interpretation of ambiguous statutes passed by Congress. The cases, Loper Bright Enterprises v. Raimondo and Relentless Inc. v. Department of Commerce, were about monitoring requirements for fisheries, but they could have sweeping effects for all federal agencies.

“This is a broad decision that will come up in all sorts of ways, many of which are not foreseeable,” Jeff Gibbs, director at Washington, D.C.-based law firm Hyman, Phelps & McNamara, said in an interview with MedTech Dive. 

Gibbs added the decision will affect the medical device industry, and that ongoing litigation challenging the FDA’s final rule on LDTs could be “something of a bellwether” for how Chevron’s upheaval could affect the agency.

An FDA spokesperson said the agency remains confident in the legal underpinnings for its regulations, guidances and decisions.

“We will continue to take actions that are guided by science and consistent with federal law and our regulatory authorities,” the spokesperson wrote in an email. 

The court’s decision is “very significant for FDA,” former agency Commissioner Scott Gottlieb wrote on X, the platform formerly known as Twitter. Courts will still defer to the FDA on product review decisions, Gottlieb wrote, but some areas could be affected immediately, including the agency’s final rule on LDTs.

LDTs an ‘early indication’ for Chevron effect

An early indication of how the Supreme Court’s Chevron ruling will be applied is expected in the regulation of LDTs.

For decades, the FDA treated LDTs with enforcement discretion, meaning it did not require most tests developed in a laboratory to comply with regulations for medical devices such as premarket review, device registration, labeling standards and adverse event reporting.

That all changed on May 6, when the agency published a final rule that greatly expands its oversight of LDTs, bringing the tests under the same framework as other in vitro diagnostics. The FDA forged ahead with the plan, despite strong opposition from the lab industry, because officials believe the risks associated with the increasingly sophisticated and widely used tests have grown since the agency first adopted the less rigorous approach to regulating them.

Critics of the new regulation have accused the agency of overstepping its statutory authority in defining LDTs as medical devices. Less than a month after the final rule was issued, the American Clinical Laboratory Association (ACLA) sued the FDA in the U.S. District Court for the Eastern District of Texas to have the rule vacated. Congress never granted the FDA the authority to regulate the provision of testing services by clinical laboratories, argued the ACLA, whose members include Labcorp, Quest Diagnostics and other test developers.

The Supreme Court’s decisions in Loper and Relentless overturning the Chevron deference standard will now shape the court’s review of the ACLA’s challenge, legal experts said.

“I certainly expect that Loper and Relentless are going to be a big part of the current litigation,” said attorney Rebecca Wood, a partner at Chicago-based law firm Sidley and former chief counsel at the FDA. “It doesn’t mean that the agency necessarily will lose, but it certainly would get a lot less deference than it would have before those decisions.”

FDA’s positions on scientific, technical and regulatory policy issues will continue to command respect, even with the Chevron precedent overturned, said Wood. However, the ruling could make it harder for the agency to win such court cases.

Whether testing companies and organizations will bring further legal challenges against the LDT regulation in the wake of the Supreme Court’s action remains to be seen. “They may just prefer to allow it to play out in that particular case,” Wood said.

Some think the FDA will face more pushback on its decisions overall, particularly those that involve interpreting the scope of its authority under the Federal Food, Drug, and Cosmetic Act.

“The court has made very clear that on questions of statutory interpretation, there is no deference due to the agency,” said Greg Levine, a partner with Boston-based law firm Ropes & Gray. Levine added that “industry players, manufacturers and other stakeholders will be less reticent to challenge FDA.”

The FDA, for its part, will need to spend more time thinking about the basis for its decisions and laying out justifications that could survive a court challenge.

“That inevitably will slow down some FDA policymaking or publication of rules,” Levine said.

Another recent Supreme Court decision could open the FDA up to more challenges by allowing people to sue six years after a plaintiff is injured by an agency action, regardless of when that action occurred. 

“That’s a pretty potent combination, in terms of FDA’s vulnerability to legal challenges,” said Levine.

Implementing the LDT rule

In the meantime, test developers are transitioning to the new standards, especially those that do not already make medical devices and therefore are not used to complying with the FDA’s current good manufacturing practice regulations and other requirements.

“We’re definitely seeing clients who believe that the rule would apply to them getting ready and gearing up for it,” said Sidley’s Wood.

Sugganth Pillei, global medical director of oncology for San Diego-based gene sequencing company Illumina, said he sees labs doing their best to prepare for compliance.

“The overall sentiment is to comply, because this is a governmental requirement,” Pillei said.

As a long-standing manufacturer of laboratory instruments, Illumina is already compliant with quality management system requirements and knows the processes involved, he said. Pillei added that the company is preparing to serve as a resource for its lab customers, using its experience to help them navigate the changes under the FDA’s new rule.

Return of the VALID Act?

Congress for years has failed to pass a bill known as the Verifying Accurate, Leading-edge IVCT Development (VALID) Act that would clarify the regulatory framework for lab developed tests by amending the Federal Food, Drug, and Cosmetic Act.

In the absence of legislation to address the FDA’s role in regulating LDTs, the agency moved ahead with its rulemaking process, citing a need to ensure the safety and effectiveness of tests that range from screening newborns to predicting cancer risk. Mahnu Davar, a partner at Washington-based Arnold & Porter who focuses on the life sciences, said that despite a lack of appetite in Congress for expanding agency authority, there may be agreement that a legislative fix would offer a clearer path for LDTs now that Chevron is overturned.

“It’s the kind of thing where hopefully it would give some impetus to the parties to come together again and try to push for congressional action in this area,” said Davar.

FDA may face more litigation post-Chevron

While attorneys expect the FDA to field more challenges in light of the recent Supreme Court rulings, the agency’s authority around product approvals, clearances and recalls is likely to remain intact. 

Stuart Gerson, former acting U.S. Attorney General, expects “a lot more cases” between the two decisions. Gerson also expects more “forum shopping” across courts, when specific jurisdictions are targeted to get a favorable ruling.

“We’re moving into a period of uncertainty,” he said. “There are going to be more disputes because there’s … an enhanced way to bring them.” 

However, not every challenge to FDA policy is likely to succeed. Courts will rely on agency and private party experts on technical questions, and agencies are more likely to get deference when they hold a consistent position over time, said Gerson.

Decisions that apply the FDA’s scientific expertise, such as device approval or clearance, will still be difficult to challenge in court, said Ropes & Gray’s Levine. He also doesn’t expect an impact on the FDA’s oversight of recalls for similar reasons. 

The FDA could see more pushback in its regulation of artificial intelligence and software as a medical device because there’s some ambiguity about how software fits into existing regulations. 

While the 21st Century Cures Act clarifies that software functions can be medical devices, Levine said “there are challenging questions on the margins about what type of software is a regulated device and what type of software is not.” 

In 2022, the FDA issued final guidance on clinical decision support software, which clarified when certain software features should be regulated as medical devices. The guidance stirred up pushback from industry groups as it broadened the types of software regulated as medical devices, including tools that analyze patient information to detect potential stroke or sepsis, which had previously skirted FDA oversight. 

“It’s so gray,” said James Ravitz, a partner at Chicago-based law firm McDermott Will & Emery. “That’s something where someone could say, ‘I’m not a medical device.’”

However, he added that the issue doesn’t currently have the same industry fervor as LDTs.

For medical device companies, the attorneys expect little day-to-day impact from the Supreme Court rulings. Hyman Phelps’ Gibbs said that he expects legal challenges to come up in a “very small proportion” of high-stakes issues, such as with LDTs. 

“Suing the United States government is not inexpensive,” Ravitz said. “It would have to be coalitions coming together.”