Health Law Advisor

The order is in, and the LDT Final Rule is out.

In May 2024, the U.S. Food & Drug Administration (“FDA” or the “Agency”) published its Final Rule establishing its regulatory framework over laboratory developed tests (“LDTs”) as medical devices and, in effect, announced the end to decades of enforcement discretion by the Agency. The deadline to comply with the first phase of the Final Rule was set for May 6, 2025. On Monday, March 31, however, a federal judge in the U.S. Eastern District of Texas ordered that “FDA’s final rule exceeds its authority and is unlawful” and that “[t]herefore, consistent with controlling circuit precedent, the proper remedy is vacatur of the final rule and remand to FDA for further consideration in light of this opinion.”

Epstein Becker & Green’s Life Sciences Team is continuing to review and digest this order and its impact on the clinical lab industry, and we plan to release a more fulsome analysis in the coming days.

The potential plunge off the telehealth cliff that we warned you about in our March 3, 2025, blog post has been averted, for now.

With the passage of the Continuing Resolution (CR) by the House and Senate, and the subsequent signing by the president, current telehealth flexibilities and Medicare coverage for the benefit will not expire on March 31. With funding established through the end of the fiscal year—September 30, 2025—the CR provides at least a brief extension of telehealth flexibilities for those, particularly in rural areas or with mobility problems, who have come to rely on telehealth for access to critical health care services since March 2020.

As we noted on March 3, COVID-19 shifted perceptions of telehealth in a way that is not likely to ever return to pre-2020 notions, despite the wrangling over extensions. Between April and June of 2020, nearly half of all Medicare beneficiaries had at least one virtual medical visit. The COVID-19 public health emergency officially ended in May 2023, but the Medicare telehealth flexibilities have been extended several times.

On March 10, 2025, Robert F. Kennedy, Jr., Secretary of the U.S. Department of Health and Human Services (“HHS”), in a seismic shift, announced that the U.S. Food and Drug Administration (“FDA”) would “explore potential rulemaking” to eliminate the pathway allowing companies to self-affirm that food ingredients are Generally Recognized as Safe (“GRAS”). This means that companies seeking to introduce new food ingredients would be required to publicly notify the FDA of the ingredients’ intended use and underlying safety data. Presently, the FDA strongly encourages but does not require the submission of a GRAS notice. Given the importance of the issue, the food industry should closely monitor any change to the FDA’s regulation of GRAS ingredients.

Defining GRAS

Under the Federal Food, Drug, and Cosmetic Act, unless a substance is generally recognized among qualified experts as safe under the conditions of its intended use, food additives are subject to premarket review and approval by the FDA. The implementing regulations, 21 C.F.R. §§ 170.3 and 170.30, provide that the use of a food substance can be GRAS through scientific procedures or experience based on common use in food before 1958. Salt, pepper, vinegar, baking powder, and monosodium glutamate are some examples.

Those waiting anxiously for the rules expanding the prescribing of buprenorphine via telemedicine and the controlled substance prescribing for patients at the Department of Veterans Affairs to officially go into effect will now have to wait until New Year’s Eve—December 31, 2025.

Practitioners will, however, be allowed to continue prescribing via telemedicine without first having an in-person visit with the patient, owing to COVID-19 Telemedicine Flexibilities for Prescription of Controlled Medications, in effect through the same end-of-year date.

A seven-page document released by the Department of Justice’s Drug Enforcement Administration (DOJ, DEA) and Department of Health and Human Services (HHS)—scheduled to be published in the Federal Register on March 24—further delays the effective dates of the “Expansion of Buprenorphine Treatment via Telemedicine Encounter” Final Rule and the “Continuity of Care for Veterans Affairs Patients” Final Rule, both dated January 17, 2025 .

On February 20, 2025, the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR) announced the recission of “HHS Notice and Guidance on Gender Affirming Care, Civil Rights, and Patient Privacy” (the “Rescinded 2022 Guidance”) pursuant to recent Executive Order (“EO”) 14187 (“Protecting Children from Chemical and Surgical Mutilation”) and EO 14168 (“Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government”), issued under the current Trump administration. These executive orders directed HHS to revoke policies promoting gender-affirming care and reconsider its interpretation of civil rights protections and health information privacy laws as they relate to such care.

Background on the Rescinded 2022 Guidance

The Rescinded 2022 Guidance, originally issued on March 2, 2022 under the Biden administration, and which we previously discussed here, established a framework for applying federal civil rights protections and patient privacy laws to gender-affirming care in three key ways:

In our latest upcoming series of blog posts, we will look at several key points to consider when negotiating commercial real estate purchase and sale agreements from the perspectives of buyers and sellers. The first post in our series offers suggestions for negotiating the letter of intent. The letter of intent, although usually non-binding, is an important first step in the commercial real estate contract process. It makes the agreement as to business terms clear, sets expectations of the parties, and serves as a guide for the contract negotiation process going forward.

The following are the key points to address in the letter of intent (the “LOI”):

• Purchase Price: The LOI should specify the purchase price and how the purchase price shall be paid. The Seller and Buyer should consider the amount of the deposit and whether there will be an additional deposit after expiration of any due diligence period. In addition, the Seller and Buyer may agree to a purchase money note at closing, rather than cash due at closing. In such cases, the terms of such purchase money note and any security should be specified in the LOI.

A new year brings about new legislation. Given the recent trend of health care transactions coming under increased scrutiny at the state level, EBG has released its map summarizing states that already have laws regulating health care transactions. As legislatures reconvene around the country, there continues to be regulatory scrutiny of health care transactions and private equity investment in health care. Below is a brief summary of recently proposed legislation.

California

On February 12, 2025, the California Senate introduced SB 351, which is remarkably similar to AB 3129, a bill the EBG team wrote about extensively in 2024 and that Governor Gavin Newsom vetoed in September 2024. The proposed legislation has three key components: (i) it adds new defined terms, including “hedge fund” and “private equity group,” in an attempt to capture all parties involved with Management Service Organizations (“MSOs”) and Dental Service Organizations (“DSOs”); (ii) it provides a list of prohibitions for any “private equity group” or “hedge fund” that is “involved in any manner with a physician or dental practice doing business in the state; and (iii) it contains a provision that restates existing California law on restrictive covenants and California’s prohibition on restrictions barring a provider from competing with a practice in the event of termination or resignation. Whether this bill advances and is ultimately signed remains unclear. EBG is actively monitoring this legislation.

On March 3, 2025, the Secretary of Health and Human Services published a policy statement in the Federal Register that reverses a policy adopted over 50 years ago that was intended to expand public participation in the process of rulemaking at the Department of Health and Human Services (the “Department”).  90 Fed. Reg. 11029 (2025).  This action is at odds with the “radical transparency” that Secretary Kennedy had promised previously, and may affect many programs and financial relationships between individuals, organizations, and others that interact with Health and Human Services (“HHS”).

Regulatory agencies such as HHS and its components, including the Centers for Medicare and Medicaid Services (“CMS”), the Food and Drug Administration (“FDA”), and the National Institutes of Health (“NIH”) must follow rulemaking procedures set out in the Administrative Procedure Act (“APA”) when they formulate and publish regulations that are intended to implement a statute and have the force of law. Those procedures include offering the public an opportunity to be notified of proposed regulations and to submit comments to the agency. The APA also contains several exceptions to the notice and comment requirement, including one for matters relating to “public property, loans, grants, benefits, or contracts.” Nevertheless, HHS and several other federal departments adopted policies that voluntarily waived these exceptions.

Once again, Congress is quickly approaching a telehealth cliff. Without passing additional legislation, current Medicare telehealth flexibilities will expire on March 31, 2025. If this happens, millions of beneficiaries who have used telehealth as a means for receiving needed and often critical health care services, especially since 2020, will lose coverage for this benefit starting on April 1, 2025. This will mean, with limited exceptions, that Medicare beneficiaries will have to travel to a health care provider’s office or a health care facility to receive most telehealth services.

Clinical laboratories still face uncertainty and the difficult decision of whether to start the work needed to comply with the with Phase 1 expectations under FDA’s Laboratory Developed Tests Final Rule (the “LDT Final Rule”), which remain set to go into effect on May 6, 2025. To be sure, the shift in priorities of the new administration has kept the health care industry on its toes for the last few weeks, especially as the leadership and messaging of the Department of Health and Human Services (“HHS”) has started to come into sharper focus. The theme of ‘deregulation’, particularly when it comes to the activities of the Food and Drug Administration (“FDA”), has sparked interest and discussion among stakeholders in the life sciences industry – including clinical laboratories that are weighing how to approach the upcoming May 6 deadline for compliance.

We discussed the details of the LDT Final Rule in a previous Insight, explaining that as of the May 6, 2025 Phase 1 deadline FDA will expect all laboratories that manufacture LDTs to comply with medical device reporting (“MDR”) requirements, correction and removal reporting requirements, and quality system (“QS”) requirements regarding complaint files.