SUPPLEMENTARY INFORMATION:

I. Background

In the Federal Register of May 6, 2024, FDA published a final rule entitled “Medical Devices; Laboratory Developed Tests” (89 FR 37286) (codified at 21 CFR 809.3) (the Rule). The Rule added the words “including when the manufacturer of these products is a laboratory” to the Agency's regulations at 21 CFR 809.3(a).

On March 31, 2025, the United States District Court for the Eastern District of Texas issued a final judgment in Am. Clinical Lab'y Ass'n v. FDA, No. 4:24-CV-479-SDJ, 2025 U.S. Dist. LEXIS 59869 (E.D. Tex. Mar. 31, 2025), vacating and setting aside the Rule and remanding the matter to the Secretary of Health and Human Services for further consideration.

II. Description of the Amendment

FDA is removing the words “including when the manufacturer of these products is a laboratory” from 21 CFR 809.3(a), reverting to the text of the regulation as it existed prior to the effective date of the Rule. This update is being made to reflect the court's order vacating the Rule.^[1]

III. Notice and Public Comment

Under the Administrative Procedure Act (APA) at 5 U.S.C. 551(4), a rule means “the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure, or practice requirements of an agency.” Under the APA at 5 U.S.C. 553(b)(B), notice and comment rulemaking procedures generally do not apply when an agency for good cause finds that such procedures would be “impracticable, unnecessary, or contrary to the public interest.”

FDA has determined that this final rule meets the APA's notice and comment exemption under 5 U.S.C. 553(b)(B). On March 31, 2025, the United States District Court for the Eastern District of Texas vacated and set aside the Rule. Because the Rule has already been vacated, this action is ministerial in nature and merely removes text from the Code of Federal Regulations to reflect the court's order. Accordingly, FDA for good cause finds that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.

The APA allows an effective date less than 30 days after publication of a rule as “provided by the agency for good cause found and published with the rule” (5 U.S.C. 553(d)(3)). An effective date 30 or more days from the date of publication is unnecessary because a court has already vacated the Rule. This action does not impose any new regulatory requirements on affected parties, and affected parties do not need time to “adjust to the new regulation” ( printed page 45135) before the rule takes effect. Am. Federation of Government Emp., AFL-CIO v. Block, 655 F.2d 1153, 1156 (D.C. Cir. 1981). Therefore, FDA for good cause finds that this action may become effective on the date of its publication.

IV. Economic Analysis of Impacts

We have examined the impacts of this action under Executive Order 12866, Executive Order 13563, and Executive Order 14192.

Executive Orders 12866 and 13563 direct us to assess all benefits and costs of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits. Rules are economically significant under Executive Order 12866 if they have an annual effect on the economy of $100 million or more; or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. The Office of Information and Regulatory Affairs (OIRA) has determined that this action is a significant regulatory action under Executive Order 12866.

Executive Order 14192 requires that any new incremental costs associated with certain significant regulatory actions “shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations.” This action is considered an Executive Order 14192 deregulatory action.

On May 6, 2024, FDA published the Rule. The primary estimate of the total annualized cost of the Rule over a 20-year time horizon was $1.29 billion at a 7 percent discount rate and $1.37 billion at a 3 percent discount rate, both reported in constant 2022 dollars. We report these costs in constant 2024 dollars as $1,384.98 million at 7 percent discount rate and $1,475.93 million at 3 percent discount rate after adjusting for inflation using the GDP deflator. For purposes of estimating the cost savings of the vacatur of the Rule, costs for reading and understanding the Rule represent sunk costs while the remaining costs constitute cost savings.^[2] The estimated sunk cost of the Rule is $0.34 million at 7 percent discount rate and $0.25 million at 3 percent discount rate.

Table 1 summarizes the estimated forgone benefits and cost savings resulting from the Rule no longer being in effect. A simple reversal of the estimates published with the Rule indicates that now, the annualized forgone benefits over 20 years would be $3,723.39 million and $4,606.01 million and at 7 and 3 percent discount rate, respectively. The total annualized cost savings are $1,444.45 million and $1,539.50 million at 7 and 3 percent discount rate, respectively. The annualized cost savings of $1,444.45 million represent $1,365.53 million to domestic entities and $78.92 million in pass-through cost savings from foreign entities at a 7 percent discount rate. Similarly, the annualized cost savings of $1,539.50 million represent $1,455.14 million to domestic entities and $84.35 million in pass-through cost savings from foreign entities at a 3 percent discount rate.^[3] Portions of the broader benefit and cost uncertainty ranges overlap, thus indicating the possibility of negative net benefits of the Rule and positive net benefits of its no longer being in effect. Moreover, the quantitative estimates omit various regulatory consequences that are especially challenging to assess, such as any possible effect on innovation related to laboratory-developed tests (LDTs) associated with the Rule.

In line with Executive Order 14192, in Table 2 we estimate present and annualized values of costs, cost savings, and net costs over a perpetual time horizon. For this analysis, we assume that the costs of the Rule in years 21 and beyond would be equal to the costs of the Rule in year 20. When estimating the cost savings of the vacatur of the Rule, we include cost savings that will similarly extend in perpetuity. We estimate that this action is associated with $1,423.23 million in annualized net cost savings at a 7 percent discount rate, discounted relative to year 2024, over a perpetual time horizon.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 809 is amended as follows:

90 FR 45134