What if a single laboratory test could mean the difference between a missed diagnosis and life-saving treatment? For patients with rare diseases, emerging health threats, or conditions requiring personalized medicine, that possibility often depends on laboratory-developed tests (LDTs).
Recent regulatory developments underscore the essential role of LDTs in healthcare innovation. In March 2025, a federal court vacated the FDA’s LDT Final Rule, leaving oversight under the Clinical Laboratory Improvement Amendments (CLIA) and state programs. This ruling affirms what many in the field have long argued: LDTs are a vital pathway for laboratories to deliver specialized diagnostic solutions when patients need them most.
But beyond the regulatory headlines lies a more compelling story – one about how laboratories are using this framework to transform patient care, overcome resource barriers, and expand access to advanced diagnostics in the communities that need them most.
LDTs serve as a vital bridge between scientific discovery and clinical care. Unlike traditional in vitro diagnostic (IVD) products, which can take years to secure regulatory approval, LDTs allow laboratories to respond rapidly to emerging needs. When COVID-19 emerged, for example, labs developed and validated tests within weeks – not years.
This agility extends far beyond pandemic response. Consider a patient with a rare genetic disorder affecting fewer than 1,000 people worldwide. No commercial test exists because the market is too small to justify development costs. In such cases, LDTs become lifelines – enabling specialized laboratories to create targeted diagnostics that commercial manufacturers would never consider financially viable.
The economics underscore their value. Developing an LDT typically costs a fraction of what is required to bring a traditional IVD product to market. This efficiency allows laboratories to offer innovative testing options without passing along the massive development costs that characterize commercial diagnostics. For patients and healthcare systems already burdened by rising costs, that difference is significant.
But not all laboratories operate on equal footing, and today’s environment presents significant challenges. US laboratories average operating margins of only about 7 percent, with many tests performed at break-even or even loss-leader levels. Nearly one-third of molecular testing claims are denied, adding further financial strain.
The consequences for patients are not always visible at first glance. When laboratories cannot sustain operations economically, they cut test menus, lengthen turnaround times, or close altogether. Rural and independent labs bear this burden most heavily, sometimes leaving entire communities without adequate diagnostic access.
The solution is not to abandon LDTs, but to recognize how they can help address these pressures. LDTs allow laboratories to design diagnostics tailored to the needs of their local physicians and patient populations. A regional lab, for example, might develop targeted assays for genetic markers common in its community – delivering more relevant, sustainable care than generic, one-size-fits-all commercial alternatives.
Critics sometimes question whether CLIA provides sufficient oversight for increasingly complex diagnostic technologies. The concern is understandable – genomics, artificial intelligence, and other advanced tools demand rigorous validation processes that not all laboratories have experience with.
However, the framework to support quality development is already in place. Organizations such as the College of American Pathologists, the Association for Molecular Pathology, and the Clinical and Laboratory Standards Institute offer extensive resources, guidelines, and proficiency testing programs. The key is for laboratories to recognize their role as manufacturers when developing LDTs.
Adopting this “manufacturer mindset” means embracing three core responsibilities: developing tests to meet clear and specific performance criteria, validating performance according to established standards, and continuously monitoring outcomes against original claims. Laboratories that follow this approach are often better positioned for inspections and regulatory changes than those that view LDTs as minor extensions of existing tests.
Smart laboratories understand they don’t need to operate in isolation. Strategic partnerships with academic institutions, life science companies, and peer laboratories can lower development barriers while upholding quality standards.
These collaborations can take many forms. A smaller laboratory might partner with a university research center to access specialized expertise. Several labs may share development costs for tests serving similar patient populations. Life science companies might provide research-use-only products that serve as the foundation for assay development and clinical validation.
The key is active participation. When laboratories retain control over test design, validation, and ongoing monitoring, they preserve the flexibility and responsiveness that make LDTs so valuable – while gaining access to resources and capabilities that would otherwise be out of reach.
Modern laboratory technologies are reshaping what is possible for LDTs. Multiplex platforms now allow laboratories to test multiple analytes simultaneously, boosting efficiency while lowering costs. Automated sample handling and data management systems further reduce errors and accelerate turnaround times.
Perhaps most importantly, these tools are becoming increasingly accessible. Technologies that once required significant capital investment and specialized expertise are now more user-friendly and affordable. This democratization of advanced platforms enables even smaller laboratories to offer sophisticated testing that was once limited to major medical centers.
The true promise of LDTs extends beyond individual laboratories to entire communities that have historically lacked access to advanced diagnostics. Rural areas, underserved populations, and regions with limited healthcare infrastructure stand to benefit most from cost-effective testing solutions that deliver rapid clinical insights.
Government funding, grants, and partnerships with healthcare organizations are increasingly supporting these initiatives. When laboratories can demonstrate that improved diagnostic access leads to better patient outcomes and lower healthcare costs, they often find strong support for expansion efforts.
To thrive in this evolving environment, laboratories should focus on several key strategies.
First, align new test development with existing billing pathways whenever possible. Leveraging established CPT codes simplifies reimbursement and helps maintain cash flow during validation and launch phases.
Second, invest in automation and data management systems that can scale with growth. Laboratory information management systems (LIMS) and automated reporting workflows become increasingly valuable as test volumes and complexity expand.
Third, stay closely attuned to regulatory developments while keeping patient care at the center of operations. Although the regulatory landscape will continue to evolve, laboratories that consistently prioritize quality and patient outcomes will remain well positioned, regardless of specific rule changes.
The recent regulatory developments represent more than a victory for laboratory innovation – they validate a model that has already proven successful for years, placing patient needs and clinical insights ahead of bureaucratic processes. As healthcare becomes increasingly personalized, and as precision medicine advances, the ability to develop targeted diagnostics quickly and cost-effectively is becoming more valuable than ever.
The laboratories that will thrive are those that view LDTs not just as tests, but as tools for solving real healthcare challenges. That may mean serving patients with rare diseases, responding rapidly to emerging threats, or bringing advanced diagnostics to underserved communities. The opportunities are substantial.
Success requires embracing both the responsibilities and the possibilities of being a diagnostic manufacturer. It means building quality into every step of development, forging partnerships that amplify capabilities, and never losing sight of the patients whose lives depend on accurate and timely answers.
For laboratories willing to take on this challenge, LDTs are more than a matter of regulatory flexibility – they offer a pathway to becoming true innovators in healthcare delivery.
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