Loper Bright Renews Interest in the VALID Act

The recent Supreme Court of the United States decision in Loper Bright Enterprises v. Raimondo¹ has significant implications for the U.S. Food and Drug Administration’s (FDA’s) final rule to regulate laboratory-developed tests (LDTs) as devices.² The most immediate impact may be on separate legal challenges to the rule, filed by the American Clinical Laboratory Association (ACLA) and Association for Molecular Pathology.^3,4 However, Loper Bright is also influencing potential enactment of new legislation, such as the Verifying Accurate Leading-edge IVCT Development Act (VALID Act).

Overview of Chevron and Loper Bright

The court’s June 28 decision in Loper Bright overturned Chevron U.S.A. Inc. v. Natural Defense Council, Inc.,⁵ one of the most seminal cases in administrative law. Since 1984, federal courts have applied the “Chevron doctrine,” which required deference to a federal agency’s reasonable interpretation of an ambiguous statute.

Under Chevron’s two-part test, a court first determined “whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear,” then the court applied that clear intent. If the statute was silent or ambiguous, the second step of the Chevron test required courts to defer to and uphold an agency’s interpretation of the statute, so long as it was a “permissible construction of the [statutory language].”⁵ Thus, even if a court would have interpreted the statute differently, an agency’s interpretation had to be upheld if it was reasonable.

Critics of the Chevron doctrine have long maintained that the Administrative Procedure Act (APA), enacted in 1946, directs courts, not agencies, to decide “all relevant questions of law.”¹ This plain text interpretation of the APA served as the basis for the Supreme Court’s decision in Loper Bright. The Supreme Court held that the APA requires courts to exercise independent judgment in deciding whether an agency has acted within its statutory authority. For all cases decided after June 28, 2024, courts may not defer to an agency interpretation simply because a statute is ambiguous. A court can agree with an agency’s interpretation of an ambiguous statute, but is no longer required to.¹

Issues presented by FDA’s final rule

The FDA asserts throughout the preamble to its final rule that its authority to regulate LDTs has always been clear. That is not the case. The agency’s governing statute, the Federal Food, Drug, and Cosmetic Act (FD&C Act), was amended in 1976 to establish specific authority for the FDA to regulate medical devices. Though the definition of “device” includes an “in vitro reagent, or other similar or related article … intended for use in the diagnosis of disease … or in the cure, mitigation, treatment, or prevention of disease,”⁶ the FD&C Act does not provide FDA with authority over laboratories. That authority is given to the Centers for Medicare & Medicaid Services under the Clinical Laboratory Improvement Amendments of 1988 (CLIA).

The legislative timeline and history for the FD&C Act and CLIA support the argument that Congress did not intend for the FDA to regulate LDTs. However, based on the FDA’s authority to regulate devices, the agency created the definition of in vitro diagnostic products (IVDs).⁷ Distinctions between IVDs and LDTs present legal and jurisdictional issues central to the LDT debate. FDA’s final rule eliminates these distinctions by amending the definition of IVDs to include LDTs.⁸

Prior to Loper Bright, federal courts would likely have deferred to the FDA’s interpretation of Congress’s definition of “device” under the FD&C Act, and concluded that laboratories are device manufacturers and LDTs are devices. However, each judge that evaluates legal challenges to the FDA’s final rule must now apply their independent judgment.⁹

The VALID Act could be the solution to the LDT debate

The FDA’s final rule and the Loper Bright decision have renewed interest in the VALID Act. Originally introduced in 2018, the VALID Act would provide the FDA with regulatory authority over LDTs, but not under the existing device framework. The VALID Act would eliminate by law all distinctions between LDTs and IVDs, and amend the FD&C Act to create a new product category, separate and distinct from devices: in vitro clinical tests (IVCTs).

Under the VALID Act of 2023, re-introduced in the House on March 29, 2023, IVCTs are defined as those:

“intended to be used in the collection, preparation, analysis, or in vitro clinical examination of specimens … for the purpose of … identifying or diagnosing a disease or condition [or] providing information for diagnosing, screening, measuring, detecting, predicting, prognosing, analyzing, or monitoring a disease or condition … [or] selecting, monitoring, or informing therapy or treatment for a disease or condition.”¹⁰

The VALID Act creates a new paradigm for the regulation of IVCTs. Low-risk tests would be exempt from FDA premarket review, moderate-risk tests could be reviewed by the FDA or through a voluntary “technology certification program,” and high-risk tests would be subject to premarket review by the FDA (but not under the agency’s 510(k), De Novo, or Premarket Approval processes). Most point-of care tests, tests for humanitarian use, and “manual tests” would also be exempt from premarket review or technology certification. Importantly, the VALID Act provides true “grandfathered” status for qualifying LDTs offered for clinical use prior to enactment of the legislation.¹⁰

Compared to the existing device paradigm, the VALID Act creates more appropriate standards for classification and review of IVCTs. For example, the device standard of “reasonable assurance of safety and effectiveness” would be replaced with an “applicable standard” for IVCTs, which includes analytical validity, clinical validity, and a reasonable assurance of safety.¹⁰ In this and other ways, VALID combines elements of CLIA and the FDA’s device regulations to more appropriately address unique issues presented by laboratories and clinical laboratory tests.

Loper Bright can help shape new legislation

The VALID Act had been a legislative priority for the FDA. Congress’s failure to pass the VALID Act after multiple attempts in 2022 prompted the FDA to pursue notice-and-comment rulemaking for LDTs. Before this rulemaking, many stakeholders opposed the VALID Act, based on an objection to FDA regulation of LDTs. However, any alternative to the final rule is likely to include some form of FDA authority over these tests.

Congress is expressing renewed interest in the VALID Act. In March 2024, the House Subcommittee on Health held a hearing to evaluate the impact of the FDA’s then-proposed LDT rule.¹¹ A key takeaway was that the VALID Act would better balance test accuracy with innovation and access. Following the Loper Bright decision, Senator Bill Cassidy, MD, Ranking Member, US Senate Committee on Health, Education, Labor and Pensions, stated in a letter to the FDA that the FD&C Act does not grant FDA authority over LDTs and that “LDTs are not medical devices subject to FDA regulation.” Senator Cassidy cited the VALID Act as legislation that could grant FDA “new authority over LDTs.”¹²

Historically, federal agencies have not halted implementation or enforcement of regulations due to congressional inquiries. Despite statements and questions from legislators, the FDA has amended the definition of IVDs and is proceeding with the enforcement timeline of the final rule. The final rule could be abandoned as a result of the current lawsuits against the agency, but new legislation can resolve whether the FDA has authority over LDTs.

Loper Bright should influence Congress to avoid ambiguity and clearly define authority granted to federal agencies. As drafted, the VALID Act provides explicit authority to the FDA to regulate IVCTs, which include LDTs. If the VALID Act passes, the ambiguity presented by the FD&C Act’s definition of “device” and the longstanding questions regarding whether LDTs are devices would be eliminated.

Learn more about the affect the Loper Bright ruling could have on the laboratory industry in our upcoming webinar on September 25.

References:

1. 603 U.S. __ (2024). https://www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf . Though Loper Bright overturned Chevron, courts may still consider an agency’s experience and expertise when determining how a statute should be interpreted. Under Loper Bright, the Supreme Court left in place the “Skidmore deference,” based on the pre-Chevron decision in Skidmore v. Swift & Co., 323 U.S. 134 (1944). Under Skidmore, courts’ decisions, even on questions of law, may be informed by “a body of experience and informed judgment” of a federal agency.
2. Medical Devices; Laboratory Developed Tests, 89 Fed. Reg. 37,286 (May 6, 2024) to be codified at 21 C.F.R. Part 809) [hereinafter Final LDT Rule]. https://www.federalregister.gov/documents/2024/05/06/2024-08935/medical-devices-laboratory-developed-tests
3. See ACLA v. Becerra, No. 4:24-CV-479 (E.D. Texas, filed May 29, 2024). https://www.acla.com/wp-content/uploads/2024/05/ACLA-LDT-Complaint.pdf
4. See AMP v. Becerra et al., No. 3:24-cv-00241 (S.D. Texas, filed August 19, 2024)  https://www.amp.org/AMP/assets/File/advocacy/AMPvFDA_Complaint_8.19.2024.pdf?pass=85
5. 467 U.S. 837 (1984). https://supreme.justia.com/cases/federal/us/467/837/
6. 21 U.S.C. § 321(h). https://uscode.house.gov/view.xhtml?req=(title:21%20section:321%20edition:prelim)
7. See 21 C.F.R. § 809.3. https://www.ecfr.gov/current/title-21/chapter-I/subchapter-H/part-809/subpart-A/section-809.3
8. See Final LDT Rule, supra note 2, at 37,445. IVDs are defined under 21 C.F.R. § 809.3(a) as “those reagents, instruments, and systems intended for use in the diagnosis of disease or other conditions, … in order to cure, mitigate, treat, or prevent disease…. Such products are intended for use in the collection, preparation, and examination of specimens …. These products are devices as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act….” The final rule amends this definition by adding, “including when the manufacturer of these products is a laboratory.” https://www.federalregister.gov/documents/2024/05/06/2024-08935/medical-devices-laboratory-developed-tests
9. A ruling in ACLA’s lawsuit against the FDA is not expected until early 2025. On July 12, 2024, ACLA and FDA filed a joint motion to establish a summary judgment briefing schedule. The court granted the joint motion, and established a briefing schedule through December 10, 2024.
10. H.R. 2369, 118th Cong. § 2 (2023). Rep. Larry Bucshon (R-IN) re-introduced the VALID Act in the House on March 29, 2023. The bill was referred to the House Committee on Energy and Commerce that day, and to the Subcommittee on Health on April 7, 2023. https://www.congress.gov/bill/118th-congress/house-bill/2369/text
11. “Evaluating Approaches to Diagnostic Test Regulation and the Impact of FDA’s Proposed Rule: Hearing Before the H. Subcommittee on Health,” 118th Cong. (2023). https://energycommerce.house.gov/events/health-subcommittee-hearing-evaluating-approaches-to-diagnostic-test-regulation-and-the-impact-of-the-fda-s-proposed-rule
12. Letter from Bill Cassidy, MD, Ranking Member, U.S. Senate Committee on Health, Education, Labor, and Pensions, to Robert Califf, MD, Commissioner of Food and Drugs, U.S. Food and Drug Administration (June 30, 2024), at 2. Senator Cassidy’s letter asks FDA how the agency intends to apply the Loper Bright decision to the regulation of LDTs. Id. at 4. https://www.help.senate.gov/imo/media/doc/loper_bright_letter_fdapdf.pdf