The bad news keeps on coming for Theranos, the medical-testing startup with an eye-popping $10 billion valuation. U.S. government regulators said in a public letter to the company today that its deficiencies pose “immediate jeopardy to patient health and safety.”
Those deficiencies include at least five regulations that govern clinical labs. Three of the deficiencies are related to personnel issues; the rest concern hematology, documentation, and oversight. The Centers for Medicaid and Medicare Services, or CMS, said Theranos has 10 days to fix these issues or it threatened to impose “sanctions,” and/or enforcement actions. CMS visited Theranos’s Newark, CA, laboratory on November 20, 2015 and completed its survey of the lab on December 23.
“This survey of our Newark, CA lab began months ago and does not reflect the current state of the lab,” said Theranos spokeswoman Brooke Buchanan in an emailed statement. Buchanan stressed that the Newark lab isn’t the company’s only testing facility. Its Arizona lab processes about 90% of the company’s tests.
Buchanan says a “full plan of correction” will be provided within days to CMS.
This letter from CMS is a major setback for Theranos, which has been the subject of negative headlines in recent months for failing to prove the efficacy and reliability of its proprietary technology. The company burst onto the scene in 2014 with the claim that its innovative—and highly secretive—technology could perform “hundreds of blood tests” with a mere drop of blood. Then, in October of 2015, the U.S. Food and Drug Administration, or FDA, released two reports saying the company had used an unapproved medical device to collect samples from its patients.
Experts say the consequences will be serious if Theranos doesn’t take immediate action to alleviate CMS’s concerns.
“If CMS revokes their license, at a minimum that makes it challenging to get reimbursement for the tests they perform,” says Bradley Merrill Thompson, a health policy expert and lawyer with the firm Epstein, Becker & Green. “They really need to correct the issues quickly.”
In response to CMS’s complaints, Theranos said it has made “policy and personnel changes” at its Newark lab, including appointing a new lab director, Dr. Kingshuk Das. The company also brought on a new consultant, Dr. Waldo Concepcion, a surgical professor at Stanford University.
Here is the letter: