The Centers for Medicare & Medicaid Services (CMS) has officially banned Theranos founder Elizabeth Holmes from owning or operating a blood testing laboratory, for a minimum two-year period. The federal health regulator has also slammed the company’s Newark, California facility with multiple penalties, including revoking the lab’s Clinical Laboratory Improvement Amendments (CLIA) certificate.
Last fall, the CMS identified multiple violations of proper laboratory practices during a routine inspection of the Newark facility. The severity of the violations prompted the CMS to take seriou
s corrective actions.
Theranos and Holmes have fallen dramatically since promising an inexpensive, rapid and less-invasive blood testing device. Even amid the growing problems with the CMS and the company’s decision to void thousands of test results from 2014 to 2015, Holmes remained a strong defender of her company and its technology.
In addition to a monetary fine, the CMS has also suspended the Newark lab’s ability to bill Medicare and Medicaid for any hematology or laboratory services. Theranos plans to continue offering its blood testing services out of its Arizona-based laboratory.
“We accept full responsibility for the issues at our laboratory in Newark, California, and have already worked to undertake comprehensive remedial actions,” said Holmes. “Those actions include shutting down and subsequently rebuilding the Newark lab from the ground up, rebuilding quality systems, adding highly experienced leadership, personnel and experts, and implementing enhanced quality and training procedures.”
Theranos’ Edison device was predicted to be a major innovation in the blood testing industry. Using a fingerprick to collect a small amount of blood to fill the company’s proprietary “nanotainers”, the test is significantly less-invasive compared to traditional blood-draws using an intravenous needle.
In October of 2015, the Wall Street Journal reported that the company didn’t use the Edison device as often as they claimed, suggesting the technology could be less accurate than previously thought. Instead, Theranos was using traditional diagnostic devices sourced from companies like Siemens.
As Theranos just lost its partnership with Walgreens – forcing the company to close all 40 of its blood testing centers in Arizona – it’s unclear what effect the additional sanctions issued by the CMS will mean for the future of the company. “While we are disappointed by CMS’ decision, we take these matters very seriously and are committed to fully resolving all outstanding issues with CMS and to demonstrating our dedication to the highest standards of quality and compliance,” Holmes continued.