April 27, 2016
By Alex Keown, BioSpace.com Breaking News Staff
PALO ALTO, Calif. – Embattled Theranos has repeatedly failed to meet federal guidelines for blood-testing labs despite being granted extra time to address the failures, a letter from the U.S. Centers for Medicare and Medicaid Services (CMMS) that was recently made public revealed.
The lightly redacted 45-page letter dated March 18 highlights deficiencies the CMMS found at the testing site. In the letter, 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.” The phrase is used to indicate how Theranos’ addressing of issues that fail to meet federal Clinical Laboratory Improvement Amendments (CLIA) guidelines. While many of the errors could be considered minor, the overwhelming number is concerning—something CMMS investigators noted in their letter.
“In general, we find that the statements made in the allegation of compliance and evidence of correction: 1) failed to adequately address the deficient practice cited; 2) are incomplete and failed to meet the criteria of acceptable evidence of correction; 3) do not ensure sustained compliance; and 4) show a lack of understanding of the CLIA requirements,” the letter said.
In addition to criticizing the company’s lack of understanding of CLIA requirements, the CMMS letter details sanctions against the company, including the possibility Elizabeth Holmes, founder and chief executive officer of Theranos, could be banned from operating a blood-testing center for two years, as well as the shutting down of Theranos’ California lab. The possible sanctions have yet to be imposed and Theranos has said on several occasions that it is working to meet the criteria so they are not imposed.
For more than six months, Theranos has faced criticism over its blood-testing device, with questions as to its efficacy. The company has also faced scathing criticism over one of its labs in Newark, Calif. –so much criticism that federal regulators have suggested they may shut down the facility. Holmes could a possible federally-mandated two-year suspension from the blood testing industry over failures to address deficiencies at lab facilities in California. Not only could Holmes face suspension, but the company could also face crippling sanctions, including the shuttering of its heavily criticized Newark, Calif.-based lab, as well as suspension of its eligibility to receive payments under Medicare. The possible suspension, which could also include company president Sunny Balwani, stems from an investigation into the company’s Newark, Calif. laboratory by the Centers for Medicare and Medicaid Services.
Earlier this month, Theranos revealed the U.S. Department of Justice has launched a criminal investigation into the company. The investigations center on whether or not Theranos and its executives misled investors as to the efficacy of its blood-testing products. Walgreens, Theranos’ biggest client, has been subpoenaed by the government to provide information as to how Theranos described its technology. While investigation are ongoing, it is important to note that there are no formal charges that have been made and charges may never come from the authorities.
Earlier this year, Theranos took another hit to its reputation after a scathing government report shows Theranos’ Edison blood testing devices has failed to meet the company’s own standards. The U.S. Centers for Medicare and Medicaid Services released a 121-page report of its findings following a series of inspections at Theranos’ Newark, Calif. lab and the news for the company valued at $9 billion based on its proprietary blood-testing is not good. The CMMS report showed 29 percent of quality control checks performed on Theranos’ Edison devices in October 2014 “produced results outside the range considered acceptable by Theranos,” the Journal reported. A February 2015 test using the Edison device to measure testosterone levels failed quality control checks 87 percent of the time. The CMMS report shows several months-long stretches of quality control issues when it comes to the Edison device.
