Getting Off Easy? Embattled Theranos Could Have a Lab Again in 2019
April 18, 2017
By Alex Keown, BioSpace.com Breaking News Staff
PALO ALTO, Calif. – Theranos has reached a settlement with the Centers for Medicare and Medicaid Services (CMMS), which means the company could be eligible to operate a clinical laboratory within the next two years.
On Monday, the embattled company announced the settlement, which included a payment of $30,000. In its statement, Theranos said the settlement agreement with the CMMS “resolves all outstanding legal and regulatory proceedings between CMS and Theranos.” As part of the agreement, the CMMS is no longer revoking the company’s CLIA (Clinical Laboratory Improvement Amendments) certification–the requirement needed to run a blood-testing lab that the company operated until last year. Theranos is also withdrawing its September 2015 appeal of the sanctions imposed by CMMS on its Newark clinical laboratory, the company said.
In July, the CMMS handed down its ruling revoking the CLIA certificate. In a lightly redacted 45-page letter dated March 18 laying out its concerns about the laboratory, the CMMS repeatedly used the bold-texted phrase “The laboratory’s allegation of compliance is not credible and the evidence of correction is not acceptable.” As a result, Theranos shuttered its clinical labs and also closed down its retail blood-testing centers.
Although Theranos could be cleared to get back into the blood-testing game, the company gave no indication that was part of its plan. In its statement, Theranos said it is “focusing on its miniaturized, automated testing platforms and related chemistries.” Theranos made the decision to pivot its business focus on the miniature laboratory. In October 2016 Elizabeth Holmes, founder and chief executive officer of Theranos, said the company’s ultimate goal is “to commercialize miniaturized, automated laboratories capable of small-volume sample testing, with an emphasis on vulnerable patient populations, including oncology, pediatrics, and intensive care.” Holmes expects new portable laboratory system, dubbed Edison , to be able to run multiple diagnostic tests, such as checking the count of red blood cells or determine if a disease is present in the body, such as HIV.
Although Theranos has shifted its focus to the miniature laboratory, the company is still facing multiple lawsuits related to its blood-testing labs. Lawsuits filed against the company include a $140 million lawsuit filed by former partner Walgreens and a lawsuit filed by a Bay Area hedge fund that alleged the biotech company duped investors about the efficacy of its products in order to attract investments of nearly $100 million. Theranos is also the subject of a criminal investigation by the U.S. Department of Justice with investigations centering on whether or not Theranos and its executives misled investors as to the efficacy of its blood-testing products.
While Theranos faces these lawsuits, the company’s financial standing is said to be shaky at best. According to reports earlier this year, Theranos closed out 2016 with approximately $200 million in its bank accounts–a far cry from the $9 billion the company was once reportedly worth. According to reports, Theranos had no material revenue in 2015 or 2016 and no funds set aside for legal liability.