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Theranos Appealing Tough CMS Sanctions

The company has halted tests at its California lab and says it has made improvements.

Nancy Crotti

Elizabeth Holmes Theranos
Theranos and its founder Elizabeth Holmes were once Silicon Valley stars, touting a technology supposedly able to find disease in a single drop of blood. (Image courtesy of Theranos)

Theranos has decided to appeal the federal sanctions imposed on its Newark, CA, blood-testing lab for using unsafe practices.

The company recently announced in a statement that it has filed a notice of intent to appeal the sanctions that the Centers for Medicare and Medicaid Services (CMS) imposed July 7. CMS also banned Theranos founder and CEO Elizabeth Holmes from the business for at least two years.

"Theranos is not conducting patient testing at its Newark facility," the statement said. "In addition, since CMS originally announced the imposition of sanctions, Theranos has made substantial progress toward correcting the deficiencies CMS identified, including appointing new laboratory leadership; enhancing Theranos' clinical policies and procedures; and revamping training programs."

The lab's license revocation was to take effect 60 days from CMS' decision. Sanctions also include a $10,000-a-day fine that CMS imposed July 12. The company cannot avoid sanctions by closing the lab, stopping tests, withdrawing voluntarily from federal laboratory programs or changing its licensing certificate to a lower level of testing, CMS said at the time.

"While the appeal is pending, Theranos intends to continue communicating with CMS regarding the possibility of reaching a mutually agreeable resolution to this matter," the company said.

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Theranos was once a Silicon Valley darling, with Holmes' bold vision of reliable tests conducted off only a single drop of blood from a finger prick. Things started to unravel, though, in October after a Wall Street Journal exposé called into question the accuracy of Theranos' tests.

Things got worse from there. A CMS report in January described hematology testing practices at the Newark lab as "deficient," saying they posed "immediate jeopardy to patient health and safety." Two months after that, a study in the Journal of Clinical Investigation found that Theranos's blood tests were unable match the accuracy of more conventional tests. Another Wall Street Journal article claims the company knew its technology had problems, but still used it on patients. CMS has since disclosed that the company failed 87% of its quality-control tests for one hormone test.

Walgreens in June announced it was severing ties and booting the struggling blood-testing company out of 40 of its Arizona drugstores. Meanwhile, Theranos is facing a string of federal class-action lawsuits, and the company is reportedly under investigation by the U.S. Justice Department and the SEC. 

Holmes tried to turn the corner with an Aug. 1 appearance at the American Association for Clinical Chemistry annual meeting in Philadelphia. She released data about the company's testing platform. But she also garnered some criticism because she focused on the company's desktop robotic blood testing system, with less information about the finger stick blood collection technology. 

Nancy Crotti is a contributor to Qmed.

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