What Are Laboratory Developed Tests (LDTs)? A Complete Overview

Unlike commercial in vitro diagnostic (IVD) devices, which must go through premarket clearance or approval by the FDA, LDTs have long been regulated under a policy of enforcement discretion. This means that while the FDA technically has the authority for oversight, it has generally allowed laboratories to validate and operate LDTs under the Clinical Laboratory Improvement Amendments (CLIA) framework, overseen by the Centers for Medicare & Medicaid Services (CMS).

Several features distinguish these tests from traditional IVDs in both development and oversight:

• The assessment is developed and validated entirely within a single lab environment, without involvement from external manufacturers or commercial distribution channels. This allows for more rapid iteration but limits external quality controls.
• Validation standards and quality systems can vary widely, depending on the lab’s internal protocols. As a result, performance characteristics such as sensitivity, specificity, and reproducibility may differ significantly between labs offering similar options.
• Modifications or updates can be made more quickly in response to new evidence or patient needs. However, this flexibility also requires vigilant documentation and re-validation to maintain integrity.

This regulatory carve-out has given laboratories greater freedom to innovate, especially in high-complexity areas like molecular diagnostics and next-generation sequencing. However, it also places greater responsibility on the laboratory to ensure each assay is analytically and clinically validated, supported by a quality system, and updated as needed to reflect the evolving regulatory landscape.

As scrutiny has grown, particularly for high-risk applications like oncology or prenatal screening, the regulatory conversation has shifted. Laboratories developing or using LDTs should expect increasing oversight, whether in the form of new FDA rulemaking or expanded CLIA expectations, and prepare accordingly with robust internal processes.

 

How LDTs Are Developed and Used in Clinical Practice

Developing LDTs requires more than scientific acumen. It demands a structured, risk-aware process that integrates regulatory understanding, clinical context, and operational discipline. These are not ad hoc solutions—they are clinical tools, and their development must reflect that level of rigor.

At the same time, their flexibility is precisely what makes them indispensable in real-world healthcare. When standard FDA-approved IVDs fall short—for example, in diagnosing ultra-rare diseases, targeting specific tumor mutations, or responding to new pathogens—LDTs often fill the gap. Understanding how these tests are developed, validated, and applied can help laboratories strengthen both compliance and patient impact.

 

LDT Development Process

Creating an LDT is a lifecycle. The process generally starts with identifying a need that cannot be adequately met using commercially available options. 

From there, development moves through research, design, validation, and implementation, with quality and regulatory checkpoints throughout.

Here is the typical development process:

• Defining the Intended Use: The first step is clearly articulating the intended use. This includes the condition or analyte being measured, the patient population, the specimen type, and the role of the assay in clinical decision-making (e.g., screening, diagnosis, monitoring). This intended use statement forms the foundation of its validation strategy and regulatory posture.
• Assay Design and Feasibility: Assay design includes choosing the right methodology (e.g., PCR, ELISA, mass spectrometry), optimizing reagents and protocols, and confirming it can consistently detect what it’s supposed to. Feasibility studies help determine whether an assay is analytically viable before moving to formal validation.
• Analytical and Clinical Validation: Analytical validation evaluates performance characteristics, such as sensitivity, specificity, precision, linearity, and limits of detection, against the intended use. Clinical validation demonstrates the assay’s ability to identify or predict a condition. For many diagnostic tests, particularly high-complexity examples, this step involves retrospective or prospective studies, often using well-characterized sample sets.
• Quality System Integration: Even though an LDT may be exempt from formal FDA review, it must be developed and maintained under a robust quality system. This includes document control, change management, training programs, equipment calibration, and ongoing quality assurance. Many labs follow ISO 15189 or adapt FDA’s QSR (Quality System Regulation) to fit their environment.
• Ongoing Monitoring and Updates: Once live, LDTs must be continuously monitored for performance. This includes post-market surveillance activities such as proficiency testing, complaint handling, lot-to-lot validation of critical reagents, and periodic review of assay performance. If guidelines evolve—or new risks are identified—they must be updated accordingly, and those changes must be documented and justified.

 

Clinical Applications of LDTs

LDTs are uniquely positioned to address unmet needs across a wide spectrum of medical disciplines. Their most valuable contribution often lies in their ability to quickly adapt to new questions, emerging scientific knowledge, and shifting public health threats.

Below are some common applications:

• In precision oncology, they are commonly used to detect tumor biomarkers or genetic alterations that inform treatment selection. Many of these tests are built around next-generation sequencing panels customized for a particular cancer type or therapeutic pathway. Because commercial kits may not cover every relevant mutation—or may take too long to update—labs frequently develop their own panels to stay aligned with the latest research and treatment guidelines.
• Commercial tools often don’t exist for rare diseases or newly identified pathogens. LDTs allow labs to develop in-house assays based on published literature, public health data, or collaborative research. This responsiveness proved especially critical during the early stages of the COVID-19 pandemic, when many laboratories developed their own SARS-CoV-2 tests under emergency use authorization (EUA) or local CLIA oversight.
• They often support population-level strategies in areas like carrier screening, prenatal testing, or antimicrobial resistance surveillance. These tests may be regionally tailored, focus on specific gene variants, or incorporate locally relevant data, which can improve their sensitivity and specificity for the target population.
• Even when FDA-cleared options exist, they may not meet every need. Labs may use an LDT to increase throughput, support reflex testing strategies, or enable multiplexing that commercial assays don’t offer. In some cases, it is a modified version of an existing IVD—a scenario that may trigger additional regulatory requirements, depending on the extent of the changes.

 

Regulatory Considerations for LDTs

The regulatory framework for clinical tests is in flux. While the FDA has historically exercised enforcement discretion, recent developments suggest that formal oversight is expanding, especially for higher-risk applications.

In 2023, the FDA proposed a rule to bring them under its medical device authority more explicitly, phasing out enforcement discretion in a tiered approach. The rule aims to close perceived gaps in oversight while maintaining pathways for innovation. 

If finalized, this would require many labs to submit premarket notifications (510(k)), de novo requests, or PMA applications, depending on the risk level.

Key takeaways for regulatory strategy:

• Stay current on FDA rulemaking, including proposed timelines and exemptions.
• Develop documentation with regulatory rigor, even if FDA submission is not currently required.
• Engage with regulatory experts to assess your LDT portfolio and prepare a regulatory roadmap.
• Maintain traceability for all validation, labeling, and quality system activities in anticipation of future audits or submissions.

Also keep in mind that, although CLIA certification is necessary, it’s not sufficient to fully demonstrate safety and efficacy in a future FDA-regulated environment. Labs should build quality systems that align with both CLIA and IVD device expectations, including design controls, risk management, and post-market procedures.

 

Key Challenges and Risks Associated With LDTs

Developing and operating LDTs presents significant challenges not just technically, but operationally and strategically.

One of the biggest challenges is the lack of a stable regulatory baseline. As FDA rulemaking progresses, labs may face new obligations around premarket review, adverse event reporting, labeling, and manufacturing practices. Forward-looking labs are already incorporating FDA-like quality systems to mitigate the risk of not complying down the line.

Another major hurdle is the lack of standardized methods across laboratories. Unlike commercial kits, which undergo uniform regulatory testing, these tests can vary in design, validation rigor, and documentation. This variability can impact reproducibility, especially when they are used across multi-site health systems or in collaborative studies.

Small and mid-sized labs may struggle with the resources needed to support high-quality development, particularly if additional regulatory burdens are imposed. Investing in staff training, validation protocols, regulatory documentation, and ongoing monitoring systems is essential, but it can be cost-prohibitive without clear ROI or reimbursement.

As scrutiny increases, so does the risk of enforcement. FDA warning letters, recalls, or third-party lawsuits related to performance can have serious reputational and operational consequences. Proactively aligning with FDA expectations—even before they’re formally enforced—can help reduce these risks.

Labs should keep the following pressure points in mind as they evaluate their programs:

• Quality system gaps can be easy to overlook when no formal audits are required. But without structured internal controls, critical errors in development or validation may go undetected until they cause harm.
• Documentation inconsistencies across teams or sites can undermine a lab’s ability to defend the integrity of its data. This becomes especially risky in collaborative research settings or during regulatory inspections.
• Supply chain instability can delay delivery or compromise component quality. Vendor qualification, lot tracking, and redundancy planning are increasingly necessary even for labs not currently under FDA oversight.
• Staff turnover or lack of specialized expertise can stall innovation and increase regulatory risks. Continuous training and cross-functional knowledge sharing are vital to sustaining a compliant and adaptable LDT program.

 

The Future Landscape for LDT Oversight and Innovation

With this being on the cusp of significant change, the push for more structured oversight is happening in parallel with rapid diagnostic innovation. 

For laboratories, this presents both a challenge and an opportunity. Those who prepare now will be better positioned to thrive in a more regulated, data-driven environment.

 

Evolving Regulatory Frameworks

The FDA’s 2023 proposed rule for oversight is part of a larger trend toward harmonizing diagnostic regulation. Whether or not this specific rule is finalized, most experts agree that increased scrutiny is here to stay.

Here’s what labs should watch:

• The proposed rule introduces a staged implementation, phasing in requirements over several years based on risk and current regulatory standards.
• The FDA is considering expanded use of third-party reviewers and accreditation bodies, which could ease the burden for some labs while raising consistency expectations.
• Ongoing public comments and lobbying may affect the final rule, especially around grandfathering existing tests or exempting low-risk options.

Regardless of the final form, labs should treat this as a call to action: assess your portfolio, upgrade your systems, and develop submission-ready documentation sooner rather than later.

 

Advancing Diagnostic Technologies

Innovation is driving the future, and regulatory systems are trying to catch up. As molecular diagnostics, bioinformatics, and artificial intelligence reshape the way we approach testing, labs will need to adapt their internal processes to match the pace of change.

What to expect moving forward:

• Greater demand for customization is reshaping expectations, as patients and providers seek tests tailored to the individual, not just the population average.
• Faster turnaround expectations are putting pressure on labs, with turnaround time quickly becoming a key competitive differentiator.
• Integration with digital health platforms is changing the landscape, as interoperability with EHRs, data-sharing tools, and real-time decision support systems becomes essential.
• AI-driven assay development is gaining traction, with machine learning tools helping to optimize assay design, predict outcomes, and support ongoing quality monitoring.

Labs that invest now in scalable infrastructure, regulatory readiness, and smart innovation will be best equipped to lead in this new era of diagnostic testing.

 

Frequently Asked Questions:

 

1)  What Types of Diseases Are Commonly Tested Using LDTs?

LDTs are often used in diagnosing and managing diseases that require nuanced, highly specific testing, primarily when no FDA-approved alternative exists. They’re frequently applied in oncology, where tumor profiling can inform targeted treatment decisions, and in infectious disease detection, particularly when rapid response is critical or when standard assays fall short. 

They are also valuable in identifying genetic disorders and monitoring autoimmune diseases, where commercial assays may not offer the sensitivity or customization needed for accurate interpretation. Because these tests are developed and validated in-house, labs can adapt them to serve emerging needs or specific patient populations, allowing for more responsive and personalized options.

 

2)  How Do LDTs Differ From FDA-Approved Tests?

The key difference lies in how the tests are regulated and validated. FDA-approved tests must undergo a structured premarket review, including performance data submission and quality system inspections, before they can be marketed. 

In contrast, LDTs are developed and validated internally by the performing lab, without FDA clearance, though they are still subject to CLIA oversight. This flexibility can support faster deployment, especially during public health emergencies or when dealing with rare conditions. 

However, the tradeoff is that they may lack standardized external review, which can lead to variability in performance if not properly controlled. Understanding these differences is critical when evaluating reliability, especially in high-impact scenarios.

 

3)  How Much Does Developing an LDT Cost?

Depending on various variables, development can cost anywhere from $50,000 to several million dollars. 

Costs are influenced by the complexity of the assay, whether studies are required to support validation, and the infrastructure already available within the lab. In addition to materials and labor, expenses may include data analysis tools, quality system updates, and ongoing performance monitoring. 

Labs should also account for time and resources needed for internal documentation, adherence with CLIA or CAP standards, and any future shifts in FDA policy. Early consultation with experienced regulatory teams can help prevent cost overruns and streamline decision-making across development stages.

 

4)  Can LDTs Be Used for At-Home Testing?

Yes, some are developed for at-home sample collection, typically through self-administered kits that allow patients to send specimens back to the lab for analysis. These models became especially prominent during the COVID-19 pandemic and remain relevant for conditions like STIs and genetic screening. 

However, not all are suitable for at-home use. They must be explicitly validated for remote collection and must demonstrate that accuracy and sample integrity are maintained outside a clinical setting. Labs also need to meet regulatory and labeling requirements and ensure clear instructions are provided to minimize user error. 

If considering an at-home option, confirm the test’s intended use and validation scope before implementation.

 

5)  What Are Potential Ethical Concerns Surrounding LDTs?

Ethical concerns around LDTs typically center on accuracy, transparency, and equitable access. 

Because they don’t require FDA approval, validation standards are less uniform, which can lead to inconsistent test performance across labs. This raises questions about how results are communicated and whether patients are receiving reliable information. Informed consent also becomes more complex when results could drive high-stakes treatment decisions. 

Additionally, disparities in access, due to cost, geography, or insurance coverage, can limit availability for underserved populations. These challenges underscore the need for strong internal oversight, clear reporting protocols, and thoughtful engagement with both clinicians and patients throughout the testing process.

 

Conclusion

LDTs remain a cornerstone of modern diagnostic testing, particularly in areas where commercial tests fall short. Their ability to address nuanced clinical questions makes them valuable tools in precision medicine. That said, the evolving regulatory landscape, along with the growing push for more standardized oversight, adds a level of complexity that teams must actively manage. 

Staying current with FDA policy updates, quality system expectations, and clinical validation standards is key to creating a compliant, utilitarian device. As innovation continues to shape the field, understanding the full development life cycle and oversight process will help maintain scientific integrity and patient trust. Ultimately, a thoughtful, informed approach is the best way to navigate this shifting environment.

 

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