Karen Titus
September 2025—The Food and Drug Administration’s efforts to regulate laboratory-developed tests as medical devices came to a decisive halt this spring with a ruling from the U.S. District Court for the Eastern District of Texas.
Given that many observers had denounced the FDA final rule as overly broad, the court’s decision represents a clear victory for laboratories. Indeed, says Jane Pine Wood, JD, counsel for McDonald Hopkins, “The court seemed to understand the issues. I was pleasantly surprised by the reasoning in the opinion, that the court considered public policy as well as the legal basis for its decision.”
At the same time, the decision itself is quite specific.
“I think there is a misperception among some that because of the Eastern District’s decision, the FDA does not have the authority to regulate labs,” Pine Wood says. “I think we really need to emphasize that the decision was narrow. The court didn’t say the FDA doesn’t have any authority.”
In short, while the final rule itself may be history (the agency did not appeal the decision), there’s nothing final about the enforcement risks labs could continue to face, both near term and with a future presidential administration.
Eric Konnick, MD, MS, had a ring-side view of the LTD fight as chair of the professional relations committee of the Association for Molecular Pathology, which was a plaintiff in the FDA lawsuit.
He wasn’t necessarily surprised at the favorable ruling. “I’m not a lawyer; I don’t pretend to be a lawyer,” says Dr. Konnick, who is associate professor and associate director of the genetics and solid tumors laboratory, Department of Laboratory Medicine and Pathology, University of Washington. But the FDA’s authority “definitely seemed more limited than what they were claiming in the final rule. And that’s ultimately what the judge agreed with.
“So I wasn’t completely shocked,” continues Dr. Konnick, who is also chair of the CAP Genomic Medicine Committee. “But at the same time, you never know which way things are going to go.”
That continues to be true, even as the majority of laboratories can exhale after the ruling. Gone are the pressures of meeting the four-year, five-stage phaseout policy outlined in the final rule. But risks remain, and the path to managing them might feel more up in the air than usual, beyond what a new administration typically brings.
“One of the things that’s very difficult is that we are obviously in a time of a lot of uncertainty in terms of enforcement,” says Pine Wood, pointing to the substantial personnel cuts at the FDA, as well as budget cuts and larger restructuring at HHS. “There has also been a lot of loss of institutional knowledge. People are opting for early retirement, if they haven’t already been laid off, because they’re fed up with the process and uncertainty.”
For Pine Wood and other longtime observers of laboratory regulation and enforcement, the uncertainty means the past may not be a reliable indicator of what the future holds: This is what the FDA traditionally has done. “I can’t remember a time in my career dealing with something like this,” she says, “where everyone has been so uncertain as to what the priorities are. Because the administration’s policies could be changing not just year to year, but day to day.”
While the pace of change has picked up, neither change nor uncertainty surrounding LDTs is new.
In relation to FDA regulation of LDTs, says Dr. Konnick, the road has been both short—“This past year has been particularly busy with the lawsuit,” he says—and long. “Basically my entire career as an attending pathologist has had the possibility of this hanging over us, in different iterations.”
That means challenges will persist even with the favorable ruling. The next questions labs and professional organizations will face, he says, are: What is the next iteration going to be? What are the issues that are out there?
The AMP, for one, will remain focused on updating the regulatory structure to address actual or perceived concerns, Dr. Konnick says. “That’s something they’ve been working on for well over a decade, and they will continue along that path,” he says. “CLIA has been in place for a long time and has definitely improved quality over the decades. So why put another regulatory paradigm on top of that?”
Within the laboratory, Dr. Konnick is keeping a close eye on several more immediate vulnerabilities. Even though the FDA lacks oversight of LDTs, it retains authority to regulate other areas, including sample collection devices, he notes. These are medical devices, and it’s possible the FDA will change its approach in ways that affect laboratory tests.
Research use only is another category where labs might be vulnerable. “There are definitely laboratories that take advantage of those packaged products,” Dr. Konnick says. A recent warning letter from the FDA to a manufacturer regarding how it was promoting its RUO product hasn’t gone unnoticed.
“Those are the big things we’re watching,” says Dr. Konnick.
The ruling does give Dr. Konnick and his colleagues a little more say in how to deploy their own resources. For labs that are CAP accredited, he says, the initial phase one efforts weren’t a huge stretch. But beyond that, he says, if the final rule had stood, the burden would have been enormous in terms of increasing cost and administrative overhead to bring laboratories into compliance.
“So I think we’re looking at this now and saying we can take that effort and apply it to improving operations and doing things that will actually improve patient care, improve throughput, improve quality,” he says. “So that’s not breathing easier, but we do have some clarity to move forward and not have to worry about having to reposition people and resources to comply with things that we don’t think are going to benefit patients.”
Pine Wood sees several areas where laboratories remain vulnerable as well.
But with the FDA now facing its own staffing and resource challenges, it’s harder to predict how enforcement policies might roll out. “If people are just worried about their jobs, what happens?” she asks.
At the same time, she notes, a number of dedicated and experienced people at the FDA remain who will be responding to the court decision.
Because of all the pressures on the agency, Pine Wood suggests laboratories might need to be even more cautious about where they have exposure, where the FDA might find it easy to crack down.
That could include intellectual property development, particularly algorithms that may be used for testing that are then licensed to other laboratories. “We have to be very careful,” she says. “This is an area where even the court in the Eastern District case was saying, Is someone selling a test kit, or are they licensing intellectual property so the laboratory can develop its own LDT?”
Between those two bookends lies a shelf of gray. Pine Wood routinely—every week, she says—has conversations with laboratories that have developed a test and, seeking a source of income, want to license it to other labs with payer contracts. Says Pine Wood: “That’s an LDT—you can’t just license your LDT to someone else. Otherwise, you’re just selling a test kit.” She pauses. “There is, to say the least, a lot of misunderstanding there.”
It’s an area of significant exposure, she cautions, even if it’s unintentional. “I don’t think anyone thinks they’re doing something improper—they’re not trying to get away with anything.” Rather, there’s often an intellectual split between those who develop an assay and those who seek to commercialize it. The easy solution? Sell the new assay to labs that already have payer contracts. But, says Pine Wood, “That’s the leap that creates issues.” From the agency’s perspective, something that walks and talks like a test kit would be a tempting target, even if the lab that purchases the components, including the reagents and algorithm, has to do its own validation. “And then you have a competitor who says, We went through the process to get FDA approved—and you didn’t. And they could call the FDA and file a complaint,” Pine Wood says.
Direct-to-consumer testing is another vulnerability. Says Pine Wood: “The FDA may have a legitimate concern with respect to testing where patients could make significant adverse care decisions based upon the test results, without appropriate medical guidance.” Even if it’s not widespread among laboratories currently, interest has grown as more patients become willing to pay out-of-pocket for such tests, particularly in the oncology area.
Some observers suggest this will not draw much scrutiny from the FDA because it hasn’t been on the agency’s radar in recent years. “But five years ago, the FDA was going down the path of the final rule,” Pine Wood says.
She continues: “Now that cold water has been thrown on the final rule, and you’re dealing with funding and personnel uncertainty, it makes sense to me, if I were in the FDA, that I might retrench, look around, and say, Where do I want to focus my efforts now? Where is it an easier argument that there could be patient harm and potential abuse?” Both direct-to-consumer testing, particularly in the oncology area, and licensed “LDTs” check those boxes, she says.
Any final rule compliance efforts laboratories might have made prior to the court’s decision might have an upside. “There’s still some benefits from going through much of the process,” Pine Wood says.
Having an FDA-approved test does not guarantee getting paid by third-party payers, but it can assist, she says, especially for newer tests, where payers are particularly interested in seeing clinical utility studies. Some of the same information that might have gone into putting together a package for the FDA also creates a package that could be useful in discussing the test with payers, she says, as well as for seeking New York State Clinical Laboratory Evaluation Program approval.
“It never hurts to go through some of these processes,” Pine Wood says. Not that labs are eager to do so. Given the upheaval at the FDA, as well as the stress surrounding the final rule prior to the court decision, “I think what most groups have done is just shelved things for now,” she says, in part because of their own limited resources.
The workforce problems laboratories face could only get worse, says Pine Wood, who predicts that changes in federal policy regarding work and student visas are likely to diminish the number of laboratory personnel even further. For pathologists in training, for example, “I’m hearing now of empty residency and fellowship slots because people were abroad and cannot get back into the U.S.”
She also expresses concerns about an overall cultural change in which the importance of academics and science is being diminished. “Ridiculed, even,” she says. “So how do you encourage people to go into an incredibly scientific field with this shift in culture and priorities, and where funding is disappearing?” Coupled with recent steps to remove patients from Medicaid rolls, the pressures on laboratories to continue to provide care—with reduced payments—“will make everything even worse.” By the same token, she’s concerned that those who might have previously been drawn to government careers at agencies like the FDA may no longer find the work alluring.
She points to a recent conversation she had with a group of academic professionals who were noting the potential for even larger risks. “Given how much has happened in the last six months, we may be looking at it taking a generation to repair the damage that has been done in terms of our pathology and laboratory workforce. Which is more than a little disturbing.”
Walcoff, of Goldbug Strategies, views the impact of the court decision with a sooner/later lens as well.
She says laboratories are looking at two windows in which to assess what might come next. One is with the current administration; the other would depend on what happens in the next presidential election.
For now, she says, she’s quite optimistic for most laboratories, at least for the next three years. She was formerly associate commissioner at the FDA, under president George W. Bush, and later became the senior science and public health policy official advising HHS secretary Michael O. Leavitt, which has given her familiarity with those in leadership roles now at both institutions. “Knowing how they approach regulatory policymaking, I anticipate there will be opportunity for labs to take advantage of some changes in policy,” she says.
The current deputy commissioner for policy, legislation, and international affairs at the FDA, Grace Graham, “was on the Hill for a long time and knows this particular issue and its stakeholders very well,” Walcoff says. Likewise, Jim O’Neill, deputy secretary of HHS, “knows FDA and has a deep background in both LDT and software/AI regulatory policies, which is extremely unusual for anyone at those levels.” As key advisors to the FDA commissioner, the HHS secretary, and the White House, she says, they will have significant input on what should come next for labs. (At CAP TODAY press time, O’Neill also was named acting CDC director.) While LDTs have been in the news more recently, “It’s a very esoteric area,” especially since most people in leadership at the FDA tend to come from a medical background and focus on the dominant issues in biologics and drugs, she says.
The focus on FDA policymaking and enforcement expands and contracts depending on who’s in power in the White House and Congress. Walcoff worked on Capitol Hill as counsel for a major committee before she was at the FDA. If history remains a guide for diagnostics-related policies, she says, it’s likely that broad FDA enforcement will contract and incentives will increase. However, there’s little likelihood that Congress will pursue legislation to enact new laws for regulations around LDTs. “It’s very contentious on the Hill; leadership has other priorities—big priorities—across the federal government.” And there has never been true stakeholder consensus around the LDT issue—she spent much of the last 20 years working with legislators and labs on the many iterations of such proposals—so it’s unlikely to emerge with congressional champions now.
Given all that, Walcoff says it’s unlikely that laboratories will need to invest heavily in broad risk reduction. Nevertheless, the FDA can easily continue to enforce in areas where its legal authority is not controversial, she says. It’s likewise important for labs and third-party companies that support labs to bear in mind that the FDA’s view at the technical level is unchanged. “FDA still has concerns about the accuracy and reliability of lab tests generally,” she says, in part because it saw a huge range of assay quality during the pandemic. She notes also that the FDA’s focus on problems with the analytical and clinical validation of advanced LDTs with bioinformatics pipelines and the AI-driven software technologies used by LDTs to determine clinical results in areas like oncology and neurology has only grown over time. There’s still a chance that the FDA could someday make modifications to the final rule consistent with the court’s decision and push it forward, assuming the agency has the resources and creativity to do so. But with the agency layoffs, that thinking might be waning.
Overall, she says, she doesn’t foresee “a tremendous amount of enforcement, even when FDA settles down.” The FDA could, for example, press the issue and—given the narrowness of the ruling—target enforcement against any clinical lab test that lies outside the new definition of an LDT as being an IVD by default, Walcoff says. “They could read the court’s decision this way, and I don’t think that’s unreasonable.”
That, in turn, could open up more enforcement risks for labs. “But still, FDA’s options are very limited, and probably even more limited in this administration.” She suspects that any enforcement will be targeted to clear violations and will take place primarily behind the scenes, with nonpublic communications to third-party lab test developers and other “IVD-adjacent manufacturers” of components like RUO instruments and software used for LDTs. Often the FDA will enforce where it has received reports of problems, she says. “And competitors, including both labs that offer LDTs and IVD manufacturers, are known to report companies and labs that appear to be noncompliant or are claiming superiority to their FDA-regulated IVDs,” Walcoff cautions.
One area of possible benefit involves the question of whether laboratories can continue to voluntarily submit to the FDA tests that are understood by the lab community to fit an LDT definition. Says Walcoff, “I’ve heard a lot of pondering and questions among lawyers about whether that’s permissible or not permissible after the court’s ruling.”
She says she doesn’t see such submissions to be problematic. “When you go to FDA voluntarily in this sector, you define what your device is,” she explains. “So, if you don’t define it as an LDT that fits the court’s definition, then they won’t reject it on that basis. And for advanced diagnostic test systems, it’s not hard to define a test as a single-site IVD instead of an LDT,” given the court’s definition of LDT. Until now, LDT was not defined in law or regulation even though its use evolved beyond those tests previously known as homebrews. The FDA reviews tests as either single-site assays or distributed kits. “Single-site assays are what we’ve informally called LDTs with FDA clearance or approval, but it can be a meaningful way to distinguish a test from the narrow legal definition of an LDT when that is the objective.”
Laboratories could have several reasons for going through voluntary FDA submission, Walcoff says.
LDT advertising and promotional claims remain a gray area of compliance, for example, and labs may prefer to establish their own certainty rather than face persistently unknown enforcement risk.
There also seems to be more of a movement for seeking FDA clearance or approval as a sign of test quality. “There’s a lot of debate whether that’s actually true,” Walcoff says, “but using FDA approval as a marketing tool is something that I’ve seen shift in the last few years, given the substantial increase in single-site companion diagnostics, which require FDA approval, and other indications that obtain reimbursement based on FDA clearance or approval.”
Another incentive: Walcoff says she would not be surprised to see the FDA and the CMS work together—this is happening already within other HHS entities—to change policy around breakthrough designations to establish more meaningful commercial incentives to invest in advanced diagnostics. “If you get an FDA clearance or approval as a lab with a breakthrough designation, having that payment guaranteed immediately when you get through the FDA review is huge. Everyone sees a benefit when labs don’t have the uncertainty and additional expense associated with going through CMS separately” to get the revenue flowing.
Adds Walcoff, “Of course, CMS typically isn’t looking to pay for additional things, but this is a policy that was previously supported so it is a quick way to spur additional investment that will benefit patients.”
Another area of risk mitigation is to establish a standardized quality system, which is a tool that the FDA has already embraced as a basis for broad enforcement discretion of LDTs.
“It’s a surprising asset for a laboratory,” she adds. Having a quality system in place can be useful if the FDA “comes knocking and says, We think you really are a device, which gives labs a chance to say, We can demonstrate the risk is low—see our quality system documentation,” she says. “Moreover, a lab with an LDT on a path through FDA can do a lot of negotiating to reduce the compliance burden when it has a recognized quality system, as long as it has followed it.”
She acknowledges that the process of establishing an FDA- or ISO-based quality system in a clinical lab can be painful and often requires intentional investment in the beginning. “It’s awkward—like a square peg in a round hole.” But it can provide laboratories that end up going through FDA with a competitive advantage, Walcoff says. “Of all IVD products we work with, it’s FDA-cleared or -approved single-site IVDs where a predetermined change control plan provides the greatest value,” she says. “These plans rely on SOPs from established quality systems and enable a lab to act like a lab and continue to iterate within the FDA regulatory framework without additional FDA submissions.”
Perhaps in part because of her federal background, Walcoff sounds relatively sanguine about the current state of affairs, but even she sees some divergence in DC these days.
While every administration brings changes, she says, “This certainly felt different.” The changes have come quickly, in part because the current administration had prior experience being in power. “There wasn’t a steep learning curve. It’s moving much, much faster, and it’s changing on many fronts—and it’s very granular. They’re hitting the ground running in all directions.”
“While these changes can lead to needed and positive outcomes,” she says, she knows from having worked closely with the FDA, “The DOGE cuts have been disruptive. Certainly, from an institutional knowledge perspective, there has been a loss of helpful diagnostics expertise, and we feel for those who remain and are being spread thin.”
Noting that she began her legal career in maritime law, she offers this metaphor: “Right now we’re all just a lot of little boats, bobbing all over the place. Some are on top of the waves, and some are getting rolled. And many folks at FDA and across the industry are just trying to keep their heads above water until the storm passes.
“The water is going to become calmer,” she continues. “You’ll see what you need to do once the waves start to subside. I think we’re all going to see some positives out of it in the end. We’re just feeling seasick along the way.”
What could happen in a few years? Even if the current party in power retains control in the 2028 election, Walcoff says, “we’d likely still have different people with different priorities in leadership roles.” Every HHS leader has had their own priorities, she notes, from fitness and nutrition to personalized medicine, which impacts priorities for the FDA, the CMS, and other health agencies.
But, she says, “I have yet to find anyone at FDA in a career position who thinks there should be no oversight of lab tests. And as things stand now, there will continue to be IVD manufacturers who can identify labs that are competing directly with them but following a less burdensome set of rules.” So short and long term, she advises, laboratories should continue to mitigate their enforcement risk and look for new opportunities that emerge from the changes.
Dr. Konnick sets that risk against two layers of uncertainty.
One is the churn in DC. “I’m not sure, with the restructuring of the federal government that’s occurring, what that’s going to look like at the end of the day, or what the impact is going to be,” he says.
Trying to avoid speculation, he says, “Most laboratories and professional organizations are waiting, and watching, to see where things might head, while continuing, as best as possible, to interact with the agencies as we normally do.” Things could go in any number of directions, depending on FDA staffing levels, agency leadership, directives from the current administration, and future elections. And the loss of institutional knowledge and workforce reductions at the FDA as well as other federal agencies is concerning, he says.
“I think the last year has shown us that there’s really no way to predict where you’re going to end up,” he says. Which brings him to his second observation.
If unpredictability has become normalized, laboratories can look slightly further back in time to draw on lessons gleaned from COVID, which he says may be more instructive than anything learned from the efforts to overturn the final rule.
In the first 12 to 18 months of the pandemic, Dr. Konnick says, any laboratory that performed COVID testing experienced a quickly changing—i.e. day-to-day—regulatory environment as well as supply chain issues. That led to a considerable amount of resiliency and strategies, he says, some of which will likely remain useful today, including the possible need to use different reagents and acquire backups if tariff and importation issues become problematic.
There also remains the issue of workforce mismatches, he says. Even if laboratory workers are no longer being reassigned to meet final rule requirements, Dr. Konnick notes that workforce shortages of pathologists, technologists, and others persist.
Though COVID “was only a couple of years ago, it feels like a forever ago,” he says. As challenging as it was, “We did learn quite a bit through that process. I feel like there’s a lot more resiliency—at least in our system—than might have been there before. I feel like there’s a different mindset, before and after.”
Karen Titus is CAP TODAY contributing editor and co-managing editor.