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Theranos founder has been banned from working in the industry for two years
By Maria Gabriela Méndez / Friday, 08 Jul 2016 11:04AM
Elizabeth Holmes, Theranos founder and owner, received a notification on Thursday in which she wouldn't be allowed to own or run a lab for at least two years. The Centers for Medicare and Medicaid Services (CMS), who had been performing investigations for the last year, ultimately banned Holmes.
Blood testing company Theranos, has had a strong response from U.S. regulators after a series of investigations involving the veracity of the company's lab tests. Since last year, the company has received strong comments about its performances.
Theranos founder and owner Elizabeth Holmes has been banned by the Centers for Medicare and Medicaid Services to own or run a lab for at least two years. Credit: Forbes
U.S. regulators have also stopped the company from receiving Medicare and Medicaid payments. The company issued a press release on Thursday, announcing its Palo Alto Calif. Lab had been forced to pay a civil fine.
Theranos started as an innovative answer to blood testing. Its founder Elizabeth Holmes dropped out of Stanford University in 2003 when she was 19 years old, to develop the company.
The major eye-catcher of the company, was the way they performed blood testing by using only a few drops of blood for general tests. According to Holmes, the idea was born thanks to her phobia of needles.
The company was the highest start-up company in the industry, valued in 2014 at $9 billion, offering patients cheapest blood tests than any other laboratory and with less needles in the process.
Despite its success, the company has been under the federal eye after several complaints that questioned Theranos veracity of results and their innovative blood testing. Authorities had been reviewing lab results and finding errors.
"We accept full responsibility for the issues at our laboratory in Newark, California, and have already worked to undertake comprehensive remedial actions," said founder Elizabeth Holmes, as a response to the errors found.
Elizabeth Holmes, featured a young, strong, successful woman, who managed to build a company from the ground up. At some point, she was compared with former Apple CEO, Steve Jobs, because of her long black turtlenecks and strong positions.
The decision made by the CMS takes place in 60 days, yet the Palo Alto laboratory has already announced its services will be stopped. Although the Arizona lab will continue to work for the next few days.
.@theranos founder Elizabeth Holmes is banned for two years https://t.co/4gH8wpwgQV pic.twitter.com/z0rR84FSqU
— CNNMoney (@CNNMoney) July 8, 2016
Investigations on the start-up company
Theranos has been facing investigations by U.S. regulations for the last year, because of the main product the company offered to its consumers. Blood testing with a simple drop, was Theranos innovative product, yet the company used machines from other labs.
The company's Edison device was in charge of testing these small drops of blood, but last year, investigations and comments of former employees didn't reflect that. It appears the company has been performing the vast majority of its tests in regular laboratory machines, such as Siemens.
Recent investigations also informed the company's lab results were more likely to appear higher or lower than with the regular machines, which translates as unreal lab results for patients. The company apologized for the mistakes and promised to fix them.
Theranos had also sent thousands of corrected reports to patients and physicians last year, due to errors given by the machines, the Wall Street Journal reports. After many investigations, the company decided to use the Edison device to only test Herpes, while waiting for the FDA's review.
The company collected the small blood samples with vials called nano trainers, yet the FDA hadn't approved the use of the vials. Later on, the FDA issued a statement, in which nano trainers were classified as an "unclear medical device."
Since the investigations started, Theranos has faced a strong journey to recover from previous errors and malpractices. The company also had previously struck a deal with Walgreens, the giant retailer, in which they created "wellness centers."
Patients could attend these wellness centers in Arizona, to perform tests made by Theranos and obtained results in less than 15 minutes. Walgreens had announced its intentions of bringing the initiative nationwide but stopped after the investigations on Theranos started.
Meetings between Theranos founder and Walgreens representatives started in October 2015, as the Wall street journal reports, yet Walgreens executives weren't satisfied with the responses from the start-up company.
Theranos had also been reporting losses on its blood tests since a great number of their tests were being outsourced and performed by the University of California, San Francisco (UCSF). Using the University for simple tests that in their own laboratories cost only $7.
Former Theranos employees went undercover to claim the company had lied to the FDA and the CMS about the accuracy of their tests results. When being evaluated for the veracity of the Edison device, employees were asked to perform then on regular machines, The Wall Street Journal reported last year.
It is unclear what the company's future will be, especially with Elizabeth Holmes being unable to "own, operate or direct a lab." The founder hasn't discussed with the media the decision of the U.S. regulators
Source: WSJ
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