"Serious deficiencies" have been found at one of Theranos’s labs in Northern California, which could see its blood tests suspended from the Medicare program, reports the Wall Street Journal, citing sources.
The health tech startup in Silicon Valley has endured a rocky road in the last few months. Founded by then-19-year-old Stanford University sophomore Elizabeth Holmes in 2003, Theranos was valued at $9 billion as recently as 2014. The company’s claim to fame is a blood-testing device called Edison that, via a single pin prick, obtains only a few droplets of a user’s blood, on which Theranos says it can then run almost 200 different tests, including tests for HIV, measles, and opiate use. Traditionally, most of the tests Edison runs require a vial of blood from the patient taken via a vein.
In October the FDA said that Theranos's Edison device was an "Uncleared Medical Device" and ordered the company to stop using it for all but one of its 200 tests. The only test for which the Edison device is still approved by the FDA is to detect herpes. Since October, Theranos has been using traditional blood testing machines in its own and outsourced labs to run its other tests, according to the Journal, as the company waits for the FDA to review its application for wider uses of the Edison device.
However, now the Centers for Medicare and Medicaid Services (CMS), which regulates clinical labs in the United States, has found "serious deficiencies" at one of Theranos’s labs in Newark, California, says the Journal. These deficiencies are reportedly "far more severe" than previous deficiencies the CMS cited at the same lab during its last inspection there in 2013. Those deficiencies, Theranos says, were promptly resolved.
A CMS spokesperson said the organization can’t comment on unreleased reports, but that the inspection results will be publicly released soon. A Theranos spokesperson told the Journal that the company doesn’t yet have the CMS report but noted that Theranos "has continued its ongoing work to build best-in-class systems and engage in partnership with its regulators." The company spokesperson also said that the company has recently seen "record-breaking" customer volume and referrals from medical providers.
If the CMS report is as negative as the Journal’s sources contend, it could spell bad news for one of Theranos’s biggest partnerships: that which it has with Walgreens. The drugstore chain has 41 blood-drawing "wellness centers" in California and Arizona, which the Journal says are Theranos’s primary access to consumers. Walgreens had planned to expand its Theranos "wellness centers" nationwide but put those plans on hold until Theranos answers questions about the accuracy and efficiency of its technology. The Journal’s sources now claim that Walgreens has debated closing its wellness centers and "the results of the latest inspection by CMS could lead the retailer to take an even harder look at what remains of its partnership with Theranos."