January 18, 2017
By Alex Keown, BioSpace.com Breaking News Staff
PALO ALTO, Calif. – Before shuttering its clinical laboratories last year, embattled Theranos failed to disclose a lab in Scottsdale, Ariz. that had also failed a Sept. 29, 2016 inspection by the Centers for Medicare and Medicaid Services, according to a report in the Wall Street Journal.
The inspection came five days before Theranos announced it was shutting down all of its clinical labs and wellness centers as company founder Elizabeth Holmes faced a two-year ban on operating a clinical laboratory. Holmes said the company was shifting out of the clinical lab area to focus its “undivided attention” on development of the portable miniature laboratories the company unveiled earlier in the summer at the American Association for Clinical Chemistry.
According to the Journal’s report, the Scottsdale, Arizona lab investigated by the CMS was found to have “deficiencies.” The Journal said the CMS typically publicizes its reports within 90 days of delivering it, but it’s unclear why this report has not been released.
This is not the first Theranos lab the CMS found deficient. Earlier in 2016 the federal organization investigated the company’s Newark, Calif. blood testing laboratory where investigators found egregious practices. Issues at the lab lead the company to void two years’ worth of data sent to customers. The voiding of data caused Walgreens to sever ties with Theranos and shutter the Theranos testing sites in the 40 Walgreens locations across Arizona.
David Taylor, Theranos’ general counsel, told the Journal the company was continuing to respond to the issues raised by the Centers for Medicare and Medicaid Services. Taylor said they will also “continue the process of revising or voiding test results as appropriate until we are satisfied that we have taken all necessary remedial action.”
Since the company has faced such scrutiny over its blood testing technology, tech that was supposed to revolutionize the industry, Theranos has drastically pivoted its business focus to development of miniaturized portable laboratory. This morning the company unveiled its new technology advisory board that will help guide its new tech endeavors.
While Theranos has shifted its focus, it is still facing multiple lawsuits related to its blood-testing labs. Last week, Arizona’s attorney general said he planned to file a lawsuit against the company over a “long-running scheme of deceptive acts and misrepresentations” that are related to its blood testing technology. Other lawsuits 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.
