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Theranos' FDA Headaches Could Cost Them Dearly

Theranos' regulatory troubles could cost them over $1 million, according to one regulatory expert. Here's a timeline of how they got there.

Qmed Staff

Holmes
An image of Theranos CEO Holmes pulled from the company's website.

Blood testing firm Theranos will likely have to spend considerable money to address observations addressed in two FDA Form 483 documents, which list a total of 14 observations. "I'm guessing their remediation efforts can easily approach $1 million," says Jon Speer, founder of Creo Quality and co-founder of greenlight.guru (Indianapolis, IN). "With the publicity that this has garnered, Theranos has likely hired a big D.C. law firm like Hogan Lovells or King & Spalding that specializes in getting med device companies out of hot water. Those firms charge well north of $500 per hour," he adds.

A recent request for comment to Hogan Lovells on the Theranos case could support that theory; the request was denied, citing a conflict of interest.

"I suspect this is just the very beginning of FDA headaches for Theranos," Speer continues. "FDA works on an escalation approach. 483 observations are the results from a FDA inspection. Now someone at FDA office of compliance is reviewing the 483s to determine whether or not a warning letter needs to be issued in addition. My bet is yes. Theranos will obviously work to prevent that, hence they likely have hired a big D.C. firm," he says.

To Speer's point, some of the problems outlined in the 483 documents seemed to indicate significant problems. One such comment states: "Complaints involving the possible failure of a device to meet any of its specifications were not reviewed, evaluated and investigated where necessary."

Michael Drues, a regulatory consultant and president of Vascular Sciences (Boston), breaks down the problems cited in the Form 483 documents into two buckets. "The first is the documentation and quality problems. I consider those to be pretty basic. Those things are all regulatory 101 and should have never happened," he says. "Bucket number two is the whole question of whether they were marketing a Class II device without permission. It is not quite as simple as it might seem as they are in the gray area of LDTs," he says.

"Determining classification is not always black and white. It is also possible that Theranos was marketing the device for an indication that is Class II. There are a few unknowns here," says Speer.

Theranos founder and CEO Elizabeth Holmes, however, has repeatedly stressed that the company intends to obtain FDA's clearance for her company's tests. The company boasts on its website: "Theranos is a CLIA-certified laboratory. And the first and only lab to proactively begin submitting all our Laboratory Developed Tests to the FDA for clearance and approval."

A recent piece from Wired also speculates that lawsuits could follow the negative attention from a series of exposés from the Wall Street Journal. Theranos could potentially sue the Journal for libel, acknowledged famed attorney and newly appointed Theranos board member David Boies to Wired. "I would not preclude the possibility of a defamation case if this continues," he said.

Boies himself has been involved in several high-profile lawsuits, having represented Al Gore in Bush v. Gore, Napster, documentarian Michael Moore, the NFL, and Sony Pictures. He also helped overturn Proposition 8 in California and prosecuted Bill Gates in the late 1990s. Vanity Fair has called him "The Man Who Ate Microsoft," while Fortune has dubbed him "Corporate America's No. 1 Hired Gun."

Other attorneys interviewed by Wired also note the possibility that Theranos itself could be targeted by class action lawsuits on behalf of consumers or investors or from the government.

Below is a timeline detailing our coverage of Theranos from 2014 to present:

February 2014

Theranos CEO Elizabeth Holmes breaks her customary silence to grant Wired magazine a softball interview, published online on February 18. Something appears to be afoot at the futuristic blood testing firm, which says it can perform a "full range" of lab tests on a single drop of blood.

November 2014

Walgreens says it is teaming up with Theranos to open on-site laboratories within its stores in the Phoenix and Palo Alto areas, with plans for potential expansion across the United States.

February 2015

JAMA publishes an article shunning "stealth science," which specifically mentions Theranos, criticising its lack of peer review. 

Summer 2015

Theranos is now in about 40 Walgreens stores in Arizona, as well as a Walgreens in Palo Alto, CA. Holmes has meanwhile become an entrepreneurial celebrity, with Theranos valued in the billions of dollars.

July 2, 2015

Theranos gets its first FDA clearance, involving a test and system that can detect herpes simplex 1 virus with but a drop or two of blood. The clearance, which was not required, nevertheless adds weight to the company's claims that finger prick blood tests are the future.

July 23, 2015

Vice President Joe Biden provided a personal endorsement for the futuristic blood testing firm in a visit to the firm's manufacturing facilities in Newark, CA.

October 15, 2015

The Wall Street Journal, after spending months researching Theranos and interviewing several sources, published a nearly 3000-word article stating that the company had been misrepresenting the capabilities of its technology. Theranos quickly moved into full-fledged damage control mode after scathing press from the WSJ and other press outlets. In its second report, the Journal questioned the accuracy of the firm's trademark finger-prick blood tests and reported that the firm has stopped using them for all but a single test. As October draws to a close, the newspaper has continued to publish critical reports about the company.

October 26, 2015

The Wall Street Journal reports that Walgreens is scrutinizing the Theranos blood testing technology it uses in Arizona pharmacies, and has no concrete plans to expand it into more Walgreens pharmacies.

October 27, 2015

FDA inspection forms describe the young blood testing company's nanotainer as an "uncleared medical device" and cite a spate of other noncompliance with FDA standards and protocols.

Learn more about cutting-edge medical devices at Minnesota Medtech Week, November 4-5 in Minneapolis.

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