Scientific and regulatory troubles continue to mount for Theranos, the much-touted blood-testing startup.
A letter from federal regulators is now threatening to strip away the company’s ability to run its two laboratories, according to the latest update in The Wall Street Journal.
The potential sanctions would cap a startling and dramatic reversal of fortune over the last six months for Theranos.
The company was founded 12 years ago by Elizabeth Holmes, a Stanford University dropout, in her dorm room. Based on promises of diagnostics based on a tiny finger prick, the company’s worth rocketed into the billions. But The Wall Street Journal reported in October a sobering reality: the technology was not actually being used in the company’s testing practices, based on company records and interviews with former employees.
Now the WSJ reports that the Centers for Medicare and Medicaid Services threatened to revoke the certifications for Theranos main California laboratory, and to suspend its Medicare eligibility. Such an action would also ban Holmes and the company’s chief operating officer from owning or operating a laboratory for two years.
Federal regulators made inspections of Theranos’s operations last fall and required changes. But the March 18 letter acquired by the WSJ indicates that the company had failed to correct 43 of 45 deficiencies. A particular failing was a blood-clotting test which placed patients in “immediate jeopardy.”
The company said in a March 31 statement they were working with federal regulators to address the complaints.
“We will continue to work with CMS to ensure every issue has been fixed completely,” said Brooke Buchanan, a Theranos spokeswoman. “We recognize the critical role they play in the laboratory industry, and will continue our work to implement best-in-class policies and procedures. Theranos shares the same goal as CMS, which is to provide best quality care to our patients. This has only made the company stronger and we are better for it today.”
The Palo Alto-based company was started 12 years ago in Holmes’s Stanford dorm room. Some estimates placed its worth at $9 billion two years ago.
An employee blew the whistle by contacting authorities to report testing inaccuracies in New York in March 2014, according to the WSJ. A biochemist who was part of the development team allegedly bemoaned the failures of the technology before committing suicide in 2013, the WSJ adds.
In the wake of the first story, the company immediately denied the allegations in the WSJ, claiming they gave the newspaper 1,000 pages of statements and documents “that disproved the many falsehoods in the article.”
Last week the company touted the addition of eight medical experts to its Scientific and Medical Advisory Board as part of its new oversight.
“We are honored and humbled to bring together, and have the support of, such a distinguished and respected group of laboratory and medical leaders,” said Holmes, in a statement.
But it’s not just the feds who are curious in the Theranos operations. The Seattle-based law firm Hagens Berman Sobol Shaipro is publicly investigating Theranos for “potential investor fraud.”
“If you are an investor… or have information relevant to our investigation, please feel free to contact us,” the law firm said in a statement. “At this stage, Hagens Berman is only investigating this matter and Theranos’s claims.”
Filed Under: Drug Discovery
