Laboratory-Developed Tests (LDTs) Do Not Qualify as ‘Devices’ Under the Food, Drug and Cosmetic Act

At a Glance

• On March 31, the Eastern District of Texas vacated the FDA’s final rule on laboratory-developed tests (LDTs), which had asserted that FDA has the authority to regulate LDTs as medical “devices” under the Food, Drug, and Cosmetic Act (FDCA).
• In ruling that a vacatur of the final rule was the appropriate remedy, the court relied on the Fifth Circuit’s growing body of post-Loper Bright precedent from 2024, which views nationwide vacatur of unlawful regulations as the “default” remedy under the APA.
• However, in an attempt to advance the Trump administration’s deportation strategy from being enjoined at the district court level, Republicans in Congress have been advancing a bill called the “No Rogue Rulings Act.” The Act declares that a single district court’s injunctive relief orders do not have nationwide effect.
• In APA cases like this one, however, the Act may cut against the Trump administration’s attempts to defang the administrative state, as the Act does not define “injunctive relief” and does not exclude APA vacaturs of regulations. In that case and if vacaturs are not effective nationwide, then industry can expect circuit splits as to not only the interpretation of agency authority but also whether vacatur is the appropriate remedy. Such splits will lead to uneven enforcement and will likely trigger eventual review by the Supreme Court.

On March 31, 2025, in the U.S. District Court for the Eastern District of Texas vacated the Food and Drug Administration’s (FDA) final rule, in which FDA attempted to assert regulatory authority over laboratory-developed tests (LDT) as “devices” under the Food, Drug, and Cosmetic Act (FDCA). The court’s reasoning relied on the 2024 Supreme Court decision that overturned Chevron deference Loper Bright Enterprises v. Raimondo. In Loper Bright, the Supreme Court ruled that courts must exercise “independent judgment” to determine whether an agency has acted within its statutory authority, ensuring that a regulation and its enforcement by the agency is the “best reading” of the statute, not merely a “permissible one.” The Supreme Court underscored the role of the Administrative Procedure Act (APA) in determining this “best reading.”

Applying Loper Bright, the Eastern District of Texas determined that FDA’s final rule “defies bedrock principles of statutory interpretation, common sense, and longstanding industry practice.” The court explained that Congress had addressed the regulation of clinical laboratories through the Clinical Laboratory Improvement Amendments (CLIA) of 1988, delegating regulatory authority to the Centers for Medicare and Medicaid Services (CMS), not FDA. The court determined that the FDCA defines “devices” as products of commerce, not services, and concluded that “Congress has not sub silentio granted FDA the regulatory power that it seeks to exercise through the final rule.”

In ruling that a vacatur of the final rule was the appropriate remedy, the court relied on the Fifth Circuit’s growing body of post-Loper Bright precedent from 2024, which views nationwide vacatur of unlawful regulations as the “default” remedy under the APA. Practically, this means that LDTs will continue to be regulated by CMS under CLIA.

Background

The 1976 Medical Device Amendments (MDA) delegated authority to FDA to regulate medical devices, including tests developed by manufacturers sold for commercial purposes to laboratories. However, the MDA is silent on laboratory tests developed by clinical laboratories for their own use or LDTs. Instead, LDTs have been regulated by CMS under CLIA.

In 2021, a bill that would have explicitly delegated authority to FDA to regulate LTDs (the Verifying Accurate Leading-edge IVCT Development (VALID) Act) was proposed in Congress but failed to become law. In an apparent effort to circumvent that failure, FDA promulgated this final rule in May 2024, arguing that FDA has the authority to regulate LTDs under the MDA and that it has simply exercised enforcement discretion since 1976. FDA argues that this enforcement discretion is present in its various attempts at rulemaking since that time, wherein FDA claimed it has this authority in the preambles to new rules in the Federal Register or in informal draft guidance. However, FDA had not until May 2024 actually promulgated a rule explicitly regulating LDTs.

The key statutory provision FDA relied on for authority to regulate LDTs is the FDCA’s definition of “device” in 21 U.S.C. § 321(h)(1):

an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory . . . .

The MDA requires medical device manufacturers to register new devices prior to introduction into interstate commerce with a pre-market report for approval of the device by FDA. See 21 U.S.C. § 360(k).

By contrast, CLIA tasks CMS with regulating clinical laboratories. Specifically, all laboratories that perform clinical tests on human specimens must be certified by CMS or accredited through certain CMS-approved accreditation organizations. 42 U.S.C. § 263a(b).

Analysis

1. An LDT Is Not a Device

   The court began the opinion by defining an LDT, not a term defined in statute, as a specialized service, namely, a “methodology or process by which a laboratory generates biochemical, genetic, molecular, or other forms of clinical information about a patient specimen for use by the treating physician.” The court used that definition as a springboard to find why an LDT could not be a “device” under FDCA.

   Invoking Loper Bright, the court then examined the plain text of FDCA’s “device” definition (21 U.S.C. § 321(h)). The court reasoned that FDA’s authority is limited to regulating tangible products, such as test kits, that are introduced into interstate commerce, while LDTs are professional services, not physical products. The court emphasized that terms like “apparatus” and “contrivance” typically refer to physical items, not intangible processes involved in laboratory testing, warning that accepting the FDA’s broad interpretation could extend regulation to all medical services involving devices, such as the work of radiologists or surgeons.¹ By way of example, the court directly took issue with FDA’s creation and use of the term “IVD test system,” saying that it and other related FDA-created terms “affirmatively work against the FDCA’s limits on FDA’s jurisdiction.” According to the opinion, FDA conflates two distinct things here: (1) a discrete set of tangible articles packaged as a product for commercial distribution (e.g., a COVID-19 test kit), and (2) an assortment of physical tools that laboratory professionals use in transient relationships to each other to deliver a service.

   Two canons of statutory construction — ejusdem generis and noscitur a sociis — reinforced the court’s reasoning. Specifically, the phrase “other similar or related article” following tangible items like “instrument” and “machine,” the court explained, should be interpreted to cover only physical products similar to those listed, not services. Under ejusdem generis, the court concluded that the catchall term refers to things like the specific items mentioned earlier. Similarly, applying noscitur a sociis, the court reasoned that terms like “apparatus” and “contrivance” should be understood to mean physical products when read in context with other words referring to tangible items, not services.

   The court also found that the FDA’s interpretation was inconsistent with the broader design of the statute. The FDCA is focused on regulating manufactured products, not professional services, the court explained. The term “manufacture” in the FDCA refers to creating physical products and does not apply to professional services like LDTs, which are not “manufactured” in the conventional sense. The court pointed to FDCA provisions requiring premarket approval and dealing with repairs or replacements of devices, all of which are actions applicable only to tangible, manufactured items. The court also noted that FDA’s labeling and packaging regulations, designed for physical products, do not align with the nature of clinical laboratory services, which involve direct communication between health care providers and laboratory clinicians. The court emphasized that LDTs created test results, which are not physical, manufactured products.

   The court rejected FDA’s argument that its various prior formal and informal rulemaking attempts showed FDA’s authority to regulate LDTs as devices (e.g., 1992 draft Compliance Policy Guide; 1973 rulemaking asserting authority over in vitro diagnostic products (38 Fed. Reg. 7096 (Mar. 15, 1973)); 1977 rulemaking that “recognized [FDA] authority to enforce its system of establishment registration, premarket authorization, and postmarket controls” on clinical laboratories “that manufacture their own devices and subsequently ‘provide a service through the[ir] use.’” (quoting 42 Fed. Reg. 42,520, 42,521, 42,528 (Aug. 23, 1977) (codified at 21 C.F.R. Part 807); 1996 proposed rule preamble regarding authority to regulate (and continuing enforcement discretion) active ingredients used in preparing LDT (61 Fed. Reg. 10,484, 10,485 (Mar. 14, 1996)). In this analysis, the court highlighted the nonbinding nature of the various proclamations of authority FDA made over the decades while noting the inconsistency that could have arisen had FDA ever decided to end its enforcement discretion. CLIA, by contrast, the court noted, created “a separate statutory and regulatory framework for laboratory test services” to ensure that “laboratory test services [were] governed by a single ‘unified regulatory mechanism.’” (citing H.R. Report No. 100-899, at 11 (1988) as reprinted in 1988 U.S.C.C.A.N. 3828, 3831).

   Lastly, the court resoundingly rejected FDA’s argument that these various forms of rulemaking meant that FDA had latent enforcement discretion since 1976:

   The FDA’s interpretation of the FDCA is troublesome for another reason — it turns on the assumption that a breathtaking amount of criminal activity has been occurring in the clinical laboratory field for many years…

   According to FDA, the only reason laboratories have not been civilly and criminally punished is because FDA has chosen to exercise unreviewable “enforcement discretion.” Put more bluntly, accepting FDA’s interpretation of the FDCA, as articulated in the final rule, would mean that the entire clinical laboratory sector, a significant part of the health care system, has been breaking the law for nearly 50 years, and possibly much longer. And it would mean that, going forward, the entire profession is operating unlawfully and can be subject to civil and criminal penalties at any time, with its only protection coming from a policy of enforcement discretion that FDA maintains it is free to revoke at any time.

   The practical implication, the court reasoned, would require significant administrative burden and years of effort to bring the laboratory industry into compliance, including the imposition of criminal penalties. The court stated, “Those implausible implications affirm that FDA’s strained reading of the FDCA flouts, rather than effectuates, Congress’s intent.” Finding CLIA, not FDCA, was the proper regulatory vehicle, the court likened FDA’s assertion of additional regulatory authority as “extra icing on a cake already frosted” and a “square peg into round hole” in trying to apply a regulatory framework designed for manufactured products to LDT services.

2. The Vacatur of the Final Rule Has Nationwide Effect, for Now

   Having found that the rule was beyond the scope of FDA’s authority, the court vacated the rule with nationwide effect. The court relied on recent Fifth Circuit precedent that “vacatur under [the APA] . . . is the ‘default’ remedy for unlawful agency action.” (citing Braidwood Mgmt., Inc. v. Becerra, 104 F.4th 930, 952 (5th Cir. 2024); Tex. Med. Ass’n v. U.S. Dep’t of Health & Hum. Servs., 110 F.4th 762, 789 (5th Cir. 2024). The court also relied on similar precedent and Supreme Court Justice Kavanaugh’s concurrence in Loper Bright-related case Corner Post, Inc. v. Bd. of Governors of Fed. Rsrv. Sys., 603 U.S.799, 830–31 (2024) that such vacaturs have nationwide effect.²

   However, in an attempt to advance the Trump administration’s deportation strategy from being enjoined at the district court level, Republicans in Congress have been advancing a bill called the “No Rogue Rulings Act.” The Act declares that a single district court’s injunctive relief orders do not have nationwide effect:

   Notwithstanding any other provision of law, no United States district court shall issue any order providing for injunctive relief, except in the case of such an order that is applicable only to limit the actions of a party to the case before such district court with respect to the party seeking injunctive relief from such district court.

   In APA cases like this one, however, the Act may cut against the Trump administration’s attempts to defang the administrative state, as the Act does not define “injunctive relief” and does not exclude APA vacaturs of regulations. In that case and if vacaturs are not effective nationwide, then industry can expect circuit splits as to not only the interpretation of agency authority but also whether vacatur is the appropriate remedy. Such splits will lead to uneven enforcement and will likely trigger eventual review by the Supreme Court.

   For now, this ruling means that LDTs will continue to be regulated by CMS under CLIA. This decision itself is unlikely to be affected by the Act, as it has not yet been passed. However, if the decision is appealed and the Act is passed, the nationwide effect of this and future decisions may become less certain.