ACLA Sues FDA Over Regulation of Laboratory-Developed Tests—in Texas

The laboratory industry’s battle against the U.S. Food and Drug Administration’s (FDA’s) move to regulate laboratory-developed tests (LDTs) was elevated recently when the American Clinical Laboratory Association (ACLA) sued to block the agency’s LDTs final rule.

The ACLA filed the lawsuit in late May in federal court just a month after the FDA released its final rule that would regulate such tests, which are developed and used within a specific laboratory or laboratory network but not typically distributed elsewhere.

“The medical device framework is inappropriate and ill-suited for regulating laboratory-developed tests, which are services provided by trained professionals rather than manufactured products,” said ACLA president Susan Van Meter in a statement.¹

Why did the ACLA file the lawsuit in Texas?

The ACLA’s pick of legal venue appears to be designed to obtain a quick stay on the rule while the case is litigated. It chose the Eastern District of Texas, which is presided over by some of the most conservative and anti-regulatory judges in the US. Among them are U.S. District Court Judge Jeremy Kernodle, whose rulings in recent years led to a temporary suspension of the independent dispute resolution under the No Surprises Act intended to stop balance billing by providers. Another Kernodle ruling prohibited the Centers for Medicare & Medicaid Services (CMS) from eliminating hold-harmless arrangements among providers paying Medicaid taxes.^2,3

Also sitting in Texas is U.S. District Court Judge Reed O’Connor, who five years ago ruled that the entire Affordable Care Act (ACA) was unconstitutional after Congress eliminated the mandate to obtain individual coverage. That ruling was later overturned by the US Supreme Court.⁴ Though the ACLA is based in Washington, DC, two of its members, HealthTrackRx and HealthTrackRx Indiana, joined the lawsuit. Both are based in Texas, allowing the suit to have standing there.

Bruce Quinn, MD, a Los Angeles-based consultant for the laboratory industry, noted numerous times at industry conferences that the case would likely be filed in Texas due to the perceived edge the ACLA might receive.

“Several cases started in Texas, including ACA cases, and I believe the recent eye-popping FDA case where [FDA approval of] a contraceptive drug was tossed by a Texas judge,” Quinn said in an email, referring to a Texas court decision that the FDA had erred in approving the abortion drug mifepristone as being safe. That ruling was recently overturned by the Supreme Court.⁵ Quinn added that the U.S Fifth Circuit Court of Appeals—which handles federal appeals for Texas—is also an extremely conservative court.

What the ACLA is arguing

In the sprawling lawsuit, which is 449 pages including exhibits, the ACLA is arguing that the FDA does not have the authority to regulate LDTs under the Federal Food, Drug, and Cosmetic Act (FDCA) of 1938. That law was amended in 1976 to include medical devices. However, the ACLA contends that those 1976 amendments apply “only to physical products that are sold and distributed by manufacturers in interstate commerce.”⁶

The suit also noted that “the FDCA has never applied medical device regulation to laboratory testing services. And for good reason: Those tests are not physical products sold and distributed by manufacturers.”

The suit described the function of LDTs as “a series of processes and tasks undertaken by trained laboratory professionals using instruments and other tools to derive information that may be useful to a treating physician. Under any reasonable interpretation, these procedures and the exercise of judgment that they require constitute a professional service, not a manufactured device.”

Update: A Key Supreme Court Ruling 

A June 28 US Supreme Court (SCOTUS) case decided after G2 Intelligence’s press deadline could help support the ACLA’s case. In its ruling on Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al., SCOTUS overturned the Chevron doctrine. This doctrine requires courts to “defer to ‘permissible’ agency interpretations” of the laws they administer in cases where the language in those laws is unclear, even if the reviewing court has a different interpretation of the law in question.

Overturning Chevron essentially means that it will be left up to courts to decide whether federal agencies have overstepped their authority in cases involving unclear laws. This could help support the American Clinical Laboratory Association’s (ACLA’s) long-held argument that the FDA is overstepping its authority by claiming that laboratory-developed tests (LDTs) are medical devices.

Look for further insight and analysis on the ruling, and its potential impact on FDA LDTs regulation, in upcoming G2 Intelligence content.

The FDA’s stance on laboratory-developed tests

The FDA has insisted that the growing complexity of LDTs requires greater oversight. “Patients and healthcare providers need assurances that the tests they are using are appropriately safe and effective to make good healthcare decisions,” the agency said on its official page for LDTs. “These assurances are lacking for IVDs offered as LDTs without more active FDA oversight. False test results or false claims regarding the meaning of test results can lead to significant patient harm.”⁷

Danielle Sloane, a Nashville, Tennessee-based healthcare compliance attorney with the firm Bass, Berry & Sims PLC, observed that the FDA is not confident that CLIA regulations are appropriate for governing LDTs.

“From the final rule and the related CMS commentary it is relatively clear that both the FDA and CMS agree that the FDA is better equipped to assess the analytical and clinical validity of individual tests,” Sloane said in an email.

Sloane also noted that LDTs have evolved to the point where patients may be relying on them to make profound healthcare decisions, including whether to undergo an elective mastectomy or to terminate a pregnancy.

“In 1976, testing was primarily done locally, whereas today specimens are collected from all over the country,” Sloane said. “I don’t think either of those necessarily makes those tests more ‘device like’ but raises the FDA’s concerns about the public’s reliance and ability to hold clinical laboratories accountable for inaccurate results.”

The FDA’s guidance was also likely spurred by the spectacular implosion of Theranos, which had opened collection and testing services inside numerous Walgreens drug stores in California and Arizona before the company was revealed as fraudulent in 2015. Two Theranos executives—including founder and chief executive officer Elizabeth Holmes—were convicted of federal charges and are currently serving lengthy prison terms. Last year, Walgreens paid $44 million to settle a class-action lawsuit filed by consumers who underwent testing by Theranos and received fraudulent test results.⁸

The battle over LDT regulation is not likely to be resolved anytime soon, as federal courts tend to move quite slow compared to their state counterparts. Barring a quick settlement, it will likely take several years for the case to actually go to trial. And any adverse rulings before that will almost certainly be litigated in higher courts, if not the US Supreme Court.

References:

1. 1. https://www.acla.com/acla-challenges-fdas-final-rule-to-regulate-laboratory-developed-testing-services-as-medical-devices/

1. 1. https://sponsors.aha.org/rs/710-ZLL-651/images/TMAIIDecision02072023.pdf

1. 1. https://casetext.com/case/texas-v-brooks-lasure

1. 1. https://time.com/5482004/affordable-care-act-court-ruling/

1. 1. https://www.supremecourt.gov/DocketPDF/23/23-235/298586/20240123205548537_23-235tsUnitedStates.pdf

1. 1. https://www.acla.com/wp-content/uploads/2024/06/ACLA-LDT-Complaint.pdf

1. 1. https://www.fda.gov/medical-devices/in-vitro-diagnostics/laboratory-developed-tests#oversight

1. https://www.axios.com/2023/09/11/walgreens-theranos-class-action-settlement-44-million

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Tests and related products approved or having received Emergency Use Authorization or Breakthrough Device Designation for accelerated review by the FDA in the past month include:

New CE Marks and Global Certifications

Significant EU or global approvals announced during the period: