April 29 (Reuters) - The U.S. Food and Drug

Administration (FDA) on Monday tightened regulations for

clinical laboratories with a new rule that gives it more

oversight of diagnostic tests developed by them.

For years, the agency had allowed labs to use their in-house

tests to diagnose a range of conditions, such as COVID-19 and

other diseases, if they met certain standards, without a

traditional authorization process.

However, the risks associated with most modern lab-developed

tests (LDTs) are much greater now with the increase in the use

of the tests, the agency said.

"LDTs are being used more widely than ever before - for use

in newborn screening, to help predict a person's risk of cancer,

or aid in diagnosing heart disease and Alzheimer's," said FDA

Commissioner Robert Califf.

The final rule announced today aims to provide crucial

oversight of these tests to help ensure that important health

care decisions are made based on test results that patients and

healthcare providers can trust, Califf said.

Jefferies analysts estimated that roughly 5% of lab operator

Labcorp's diagnostic testing volumes are made up by LDTs,

while 10% of rival Quest Diagnostics ( DGX ) testing volumes are

LDTs.

Under the new rules, these tests would be subjected to the

same requirements as other diagnostic tests from medical device

makers, including the FDA's review of their applications and a

requirement for reporting adverse events.

The FDA said it will phase out its earlier approach for LDTs

over a period of four years.

It plans to continue regulating some LDTs through its older

approach, including those that were first marketed prior to the

final rule, and those which do not have an FDA-authorized

counterpart available.