November 16, 2016
By Alex Keown, BioSpace.com Breaking News Staff
PALO ALTO, Calif. – Embattled Theranos is facing another lawsuit. This time, drugstore giant Walgreens has filed a $140 million breach of contract lawsuit against Theranos, claiming the company voided 11.3 percent of all blood tests the California-based company provided to customers, the Wall Street Journal reported.
According to the lawsuit, Walgreens said Theranos voided 31,000 blood test reports to customers who used the 40 Theranos sites in Walgreens stores. Additionally, a Theranos official told Walgreens it was forced to void 1,000 test results from blood-coagulation tests that were conducted at another lab, the Journal reported.
As more and more bad news was reported about the troubles Theranos was having over the past year, its partner Walgreens was reportedly looking for ways to terminate its agreement with Theranos, especially after concerns were raised by the U.S. Center for Medicare and Medicaid Services about Theranos’ California laboratory. The warning letter from the Centers for Medicare and Medicaid Services told Theranos the company’s hematology practices at that site “posed immediate jeopardy to the health and safety” of patients.
Those problems at the Newark, Calif. lab led to the company invalidating two years of its test results to doctors and customers. That voiding has sparked several individual lawsuits against the company, as clients based medical decisions off of the lab results. The Theranos lab in Newark, Calif. has since shut down.
In the lawsuit, Walgreens says Theranos misled Walgreens even before the two companies forged an alliance. Additionally, Walgreens said Theranos continued to mislead the company over the past year as the tech company faced growing criticism over its blood-testing technology, the Journal said.
Deerfield, Ill.-based Walgreens said Theranos initially approached it in 2010 about its blood testing technology. Theranos, according to the report, told Walgreens that its technology “had been validated by drug companies and researchers at Johns Hopkins University.” While Hopkins researchers did get a chance to look at the device at the time, the Journal said people at the meeting reported those Hopkins researchers never tested the device.
The lawsuit goes on to say that Theranos was not forthcoming with information about its practices and only learned about the voiding of two-years-worth of data from news reports and not Theranos. Then, one month after that, Theranos notified Walgreens that it needed to void the 31,000 tests for Walgreens’ customers. The next day Walgreens severed its ties with Theranos.
Walgreens is seeking $140 million, which is apparently the amount the company invested in Theranos, the Journal reported.
But Theranos claims it was Walgreens who failed to meet its commitments. Theranos said it adapted its own business plans several years ago when it entered into an agreement with Walgreens. That agreement caused the company to turn into something more of a clinical lab. Theranos said it “relied on Walgreens’ promise” to help the company build a “substantial commercial footprint,” but Walgreens failed to do that.
“Through its mishandling of our partnership and now this lawsuit, Walgreens has caused Theranos and its investors significant harm. We will respond vigorously to Walgreens’ unfounded allegations, and will seek to hold Walgreens responsible for the damage it has caused to Theranos and its investors,” Theranos said in a statement.
