Embattled Theranos Plans to Appeal to Re-Open Its Lab in Newark, California
August 26, 2016
By Mark Terry and Alex Keown, BioSpace.com Breaking News Staff
Palo Alto, California - Theranos, the blood testing company, plans to appeal the sanctions from the Centers for Medicare and Medicaid Services (CMS) against the company’s laboratory in Newark, California.
In July, CMS ruled that the company’s founder and chief executive officer, Elizabeth Holmes, would be banned from owning or operating a blood testing laboratory for two years. In addition, it was revoking the laboratory’s CLIA (Clinical Laboratory Improvement Amendments) certificate. There was also an undisclosed civil fine. Other penalties include a “suspension of the laboratory’s approval to receive Medicare and Medicaid payments for any services performed for the specialty of hematology” and the “cancellation of the laboratory’s approval to receive Medicare and Medicaid payments for all laboratory services.”
At that time in July, the CMS ban had 60 days before it went into effect, but Theranos indicated it did not plan on performing patient testing in the Newark laboratory until further notice. While it was closed, it would conduct blood testing through its Arizona facility, which Theranos says handles more than 90 percent of all its laboratory work.
The ban was the result of several things, but top of the list was Theranos voiding two years of blood-testing data, invalidating test results for literally thousands of patients. There was also intense scrutiny of the company’s claims about its blood test, which led to Walgreens terminating its contract for 40 Theranos wellness centers in 40 of its Arizona stores.
A congressional committee also issued a letter to Holmes and Theranos inquiring about the company’s failure to comply with federal clinical laboratory testing standards, and the voiding of two years of data.
“Given Theranos’ disregard for patient safety and its failure to immediately address concerns by federal regulators, we write to request more information about how company policies permitted systematic violations of federal law and how Theranos is working with regulators to address these failures,” the lawmakers said in the letter.
The U.S. Department of Justice is also conducting a criminal investigation into whether Theranos and its executives misled investors regarding the efficacy of its blood-testing products.
Theranos’s most recent statement regarding the appeal said, in part, “Theranos is not conducting patient testing at its Newark facility. In addition, since CMS originally announced the sanctions, Theranos has made substantial progress toward correcting the deficiencies CMS identified, including appointing new laboratory leadership; enhancing Theranos’ clinical policies and procedures; and revamping training programs.
“While the appeal is pending, Theranos intends to continue communicating with CMS regarding the possibility of reaching a mutually agreeable resolution to this matter.”
In January, CMS, in an early part of its investigation, said that Theranos’s California facility created an “immediate jeopardy to patient health and safety.” When Theranos offered potential fixes, CMS rejected the offer and proposed sanctions in March.
As The Wall Street Journal writes, “Ms. Holmes founded Theranos in 2003 as a Stanford University dropout. The company was built largely on her personality and vision of revolutionizing medicine with a way to cheaply perform dozens of tests with just a droplet of blood. However, the true capabilities and accuracy of the company’s proprietary blood testing system have been challenged by former company employees.”