Clinical laboratories in the United States operate under a layered regulatory framework that involves two distinct federal agencies with overlapping but non-identical authority over different aspects of laboratory testing. The Centers for Medicare & Medicaid Services (CMS) regulates laboratories themselves — the facilities, personnel, quality systems, and operational standards that govern how tests are performed. The Food and Drug Administration (FDA) regulates in vitro diagnostic (IVD) products — the tests themselves, when those tests are manufactured and sold commercially.
For most diagnostic tests that are manufactured by a company, sold to laboratories, and used as intended, this division is relatively clean: CMS certifies the lab, and the FDA has reviewed and cleared the test. The complexity arises with laboratory-developed tests (LDTs) — tests designed, manufactured, and used within a single clinical laboratory. LDTs have historically operated in a regulatory gray zone between CMS and FDA authority, and that gray zone became the subject of significant regulatory and legal action between 2024 and 2025. Understanding where the landscape stands today requires understanding both the underlying statutory framework and the events of the past two years.
The CLIA Framework: CMS Regulates Laboratories
The Clinical Laboratory Improvement Amendments of 1988 (CLIA) established the federal framework for oversight of all clinical laboratory testing performed on human specimens in the United States. CMS administers CLIA and is responsible for certifying all clinical laboratories — or recognizing accreditation by an approved body such as the College of American Pathologists (CAP) or The Joint Commission — as a condition for laboratories to receive Medicare and Medicaid reimbursement.
CLIA regulates laboratories on the basis of test complexity. Tests are classified as waived, moderate complexity, or high complexity, and the requirements for personnel qualifications, quality control, proficiency testing, and inspection scale with the complexity level. Molecular diagnostics, next-generation sequencing assays, and most laboratory-developed tests fall in the high complexity category, which carries the most rigorous personnel and quality system requirements.
Critically, CLIA focuses on the analytical quality of laboratory testing — the precision, accuracy, and reproducibility with which a laboratory performs a test. CLIA requires laboratories to validate the analytical performance of tests before reporting results to patients, but CLIA has not historically required laboratories to demonstrate clinical validity — the accuracy with which a test predicts the presence or absence of a clinical condition. This gap in CLIA’s scope became one of the central arguments for expanded FDA oversight of LDTs.
The FDA Framework: Device Authority Over IVDs
The FDA regulates medical devices under the Federal Food, Drug, and Cosmetic Act (FDCA) as amended by the Medical Device Amendments of 1976. In vitro diagnostics — tests that analyze specimens taken from the human body to provide information about health or disease — are classified as medical devices under FDA’s regulatory framework. Depending on the risk level of the device, IVDs are subject to one of three premarket pathways:
- 510(k) clearance: for moderate-risk devices that are substantially equivalent to a legally marketed predicate device. The manufacturer demonstrates equivalence to the predicate in terms of intended use and technological characteristics.
- De Novo classification: for novel moderate-risk devices without a predicate. Establishes a new device type and may create a predicate for future 510(k) submissions.
- Premarket Approval (PMA): for high-risk devices, including most companion diagnostics and novel molecular diagnostic tests. Requires demonstration of safety and effectiveness supported by valid scientific evidence, typically including clinical data.
The FDA evaluates both analytical validity and clinical validity for IVDs submitted through the 510(k) and PMA pathways. This is the key distinction from CLIA: the FDA requires test developers to demonstrate not just that the test performs consistently, but that it accurately identifies the clinical condition it claims to identify.
Laboratory-Developed Tests: The Historic Gray Zone
An LDT is a test designed, manufactured, and used within a single CLIA-certified laboratory. LDTs have been a feature of clinical laboratory practice for decades — they allow laboratories to develop specialized tests for conditions where no commercially available IVD exists, or to modify commercial assays to meet specific clinical needs.
The FDA has long asserted that LDTs fall within its statutory authority as devices manufactured by a laboratory. However, for most of the past four decades, the FDA exercised enforcement discretion over LDTs — acknowledging its authority in principle but choosing not to enforce premarket review requirements in practice. The rationale was that LDTs were historically low-volume, low-risk tests used within a single institution by sophisticated clinical professionals. CMS oversight through CLIA was considered sufficient.
That rationale came under increasing pressure as LDTs evolved. Modern LDTs are often high-complexity molecular tests — NGS panels, multi-gene cancer profiling assays, pharmacogenomic tests — used to guide high-stakes clinical decisions for large patient populations. The FDA began documenting cases where LDTs produced inaccurate results with serious patient consequences, arguing that the expanding complexity and reach of LDTs made the CLIA-only oversight model inadequate.
| Regulatory Dimension | CMS / CLIA Framework | FDA / IVD Device Framework | Current Status for LDTs | MKA Strategic Implication |
|---|---|---|---|---|
| Governing Statute | Clinical Laboratory Improvement Amendments (CLIA), 1988 | Federal Food, Drug, and Cosmetic Act (FDCA); Medical Device Amendments, 1976 | LDTs: CLIA only (post-Sept 2025 rescission). Commercial IVDs: FDCA. | Two statutes. Two agencies. Neither was written with modern molecular diagnostics in mind. The regulatory complexity for novel diagnostics is structural, not procedural — and understanding which statute governs which product type is the first analytical step in any CDx regulatory strategy. |
| Primary Scope of Oversight | Laboratories — facilities, personnel qualifications, quality systems, proficiency testing | Products — the tests themselves: safety, effectiveness, analytical and clinical validity of IVD devices | CLIA governs the lab. FDA governs the test (for commercial IVDs). For LDTs, only CLIA governs. | This distinction is why labs have historically been able to develop and offer novel tests faster than commercial IVD developers — CLIA oversight is operational, not evidentiary. The regulatory speed advantage of the LDT pathway is real and is a deliberate strategic choice for many diagnostics companies. |
| Analytical Validity Required? | Yes — CLIA requires laboratories to establish precision, accuracy, and analytical sensitivity before reporting patient results | Yes — FDA requires analytical validation as part of any premarket submission (510(k) or PMA) | Both require analytical validity. No meaningful difference here regardless of regulatory pathway. | Analytical validity requirements are essentially harmonized across CLIA and FDA. The real strategic difference is not analytical validity — it is clinical validity, where the two frameworks diverge significantly. |
| Clinical Validity Required? | No — CLIA does not require labs to demonstrate that the test accurately identifies the clinical condition it claims to detect. Exception: CAP-accredited labs have additional standards for some test categories. | Yes — FDA premarket review requires clinical validity: the test must accurately predict the presence or absence of the clinical condition for its intended use | This gap was the FDA’s primary justification for the 2024 LDT rule. With the rule rescinded, LDTs under CLIA are still not required to demonstrate clinical validity at the federal level. | The clinical validity gap is the most consequential regulatory difference between CLIA and FDA oversight — and it is why payers increasingly treat FDA clearance as a proxy for clinical validity in coverage decisions. A CLIA-validated LDT without FDA clearance faces a more complex reimbursement conversation, particularly for national coverage. |
| Premarket Review | None — laboratories do not submit tests to CMS for pre-market review before offering them to patients | Required for most IVDs — 510(k), De Novo, or PMA depending on risk classification. Average PMA review: 180 days; 510(k): 90 days | LDTs: no premarket review required (CLIA pathway). Commercial IVDs: full FDA premarket review required. | Premarket review is where time-to-market and cost diverge most sharply between the two pathways. Labs can launch a new LDT under CLIA in weeks; a PMA submission takes years and millions of dollars. This speed and cost advantage is why the LDT pathway is strategically valuable for test developers — and why payers and patient advocates have pushed for stronger oversight. |
| Applicability to LDTs (Current Status) | Full applicability — all clinical labs offering LDTs must be CLIA-certified and meet high-complexity testing requirements | Enforcement discretion restored (Sept 2025) — FDA reverted to pre-2024 posture; LDTs not subject to FDA premarket review or medical device QSR requirements. FDA retains authority to act on specific LDTs posing public health risk. | CLIA governs. FDA exercises discretion. New York State maintains independent LDT approval requirements for labs serving NY residents. | The 2025 reversal restores flexibility but not certainty. The regulatory environment for LDTs is genuinely unsettled — two legislative proposals (VALID Act and VITAL Act) are pending and unresolved. Labs and diagnostics companies should build quality and clinical validity programs that would survive a more demanding regulatory future, regardless of what the current framework requires. |
Regulatory framework sourced from CMS CLIA regulations (42 CFR Part 493), FDA FDCA and Medical Device Amendments, American Clinical Laboratory Association v. FDA (N.D. Tex. 2025), and FDA final rule rescission (September 19, 2025). Strategic implications reflect MKA Insights analytical framework.
The 2024 Final Rule and Its Reversal
In May 2024, the FDA issued a final rule that amended the regulatory definition of in vitro diagnostic products to explicitly include tests manufactured by laboratories — formally classifying LDTs as medical devices subject to FDA oversight. The rule proposed a five-stage phaseout of the FDA’s enforcement discretion policy over four years, with the most rigorous premarket review requirements applying to high-risk LDTs by 2028.
The rule was immediately contested. The American Clinical Laboratory Association (ACLA) and the Association for Molecular Pathology (AMP) filed suit in federal court, arguing that the FDA lacked statutory authority to regulate LDTs under the FDCA and that Congress had intended CLIA — not the FDCA — to govern laboratory testing. In March 2025, a federal district court vacated the FDA’s final rule, agreeing that the agency had exceeded its statutory authority. The FDA did not appeal. In September 2025, the FDA formally rescinded the 2024 rule, reverting the definition of in vitro diagnostic products to its pre-2024 language and restoring the status quo.
The net result: LDTs are once again regulated under CLIA by CMS, with the FDA exercising enforcement discretion. Laboratories are not required to seek FDA clearance or approval for LDTs. The compliance deadlines and phaseout schedule established by the 2024 rule are void.
What Remains In Place
The reversal of the 2024 rule does not eliminate all FDA involvement in the LDT space. Several important principles and requirements remain:
- Tests that do not meet the strict definition of an LDT — including tests offered by multiple laboratories, or marketed tests that happen to be offered by laboratories — remain subject to FDA oversight. The court’s ruling does not expand the LDT exemption; it preserves its historically narrow scope.
- State-level regulation continues to apply. New York State, through its Department of Health Clinical Laboratory Evaluation Program (CLEP), requires approval of LDTs offered to residents — a requirement that applies regardless of the federal regulatory status of the test. Laboratories offering LDTs on a national basis must still satisfy New York’s requirements.
- CLIA oversight remains fully in effect. Laboratories performing LDTs must be CLIA-certified for high-complexity testing, meet personnel and quality system requirements, and pass proficiency testing for each test category. CLIA does not require clinical validity validation, but accrediting bodies such as CAP have incorporated clinical validity requirements into their accreditation standards for some test categories.
- The FDA retains authority to act on LDTs that pose significant risks to public health. The enforcement discretion policy is a policy choice, not a statutory limit on the FDA’s authority — meaning the agency can choose to enforce against specific LDTs that create patient safety concerns, even without a general regulatory requirement.
The Legislative Path Forward
The court’s ruling makes it difficult for the FDA to pursue LDT oversight through rulemaking without new congressional authorization. Two legislative proposals are currently before Congress that would establish a statutory framework for LDT oversight. The VALID Act (Verifying Accurate, Leading-edge IVCT Development) would create a new regulatory category — in vitro clinical tests (IVCTs) — encompassing both commercial IVDs and LDTs under FDA oversight, with a risk-based tiering framework. The VITAL Act (Verified Innovative Testing in American Laboratories) would instead expand CLIA to require clinical validity validation for LDTs, keeping oversight within the CMS framework while strengthening the evidentiary requirements.
As of mid-2026, neither bill has advanced to enactment. The legislative environment for LDT regulation is uncertain, and the field should expect continued uncertainty until Congress acts.
Practical Implications for Laboratory and Life Sciences Companies
For clinical laboratories, the immediate practical implication of the 2025 reversal is relief from the compliance burden and cost of the FDA’s 2024 phaseout schedule. LDT programs can continue under CLIA requirements without needing to prepare FDA premarket submissions. However, the landscape has not returned to a stable baseline — the regulatory debate will continue, and laboratories that build strong internal clinical validation programs and quality systems will be better positioned if the statutory framework eventually changes.
For diagnostics companies and IVD manufacturers, the distinction between an FDA-regulated commercial IVD and a CLIA-regulated LDT remains commercially and strategically significant. FDA clearance or approval provides a regulatory credential that supports reimbursement negotiations, national coverage determinations from CMS, and commercial market access in ways that a laboratory’s internal validation process does not. Companies developing novel diagnostics with broad intended use should evaluate whether pursuing FDA clearance — even when not legally required — creates strategic value.
For pharmaceutical companies developing companion diagnostics, the framework is unchanged: companion diagnostics intended for use in guiding treatment decisions tied to a specific drug are IVDs subject to FDA review, and the co-development and co-approval pathway with the therapeutic product applies as before. The LDT exemption does not extend to companion diagnostics that are intended to be marketed broadly as part of a drug’s labeling.
The regulatory framework for laboratory testing in the United States is more unsettled today than it has been in decades. The 2024 rule, the court’s reversal, the rescission, and the unresolved legislative process have created a period of genuine regulatory uncertainty. For companies and laboratories operating in this space, staying current on regulatory developments — and building relationships with counsel experienced in both the CMS and FDA frameworks — is not optional. It is a core competency.
MKA Insights