Theranos CEO Elizabeth Holmes Banned From Operating a Lab for Two Years

Image: AP
Image: AP

The hammer has finally dropped on blood-testing startup Theranos and its beleaguered CEO Elizabeth Holmes. US federal health regulators have announced their decision to ban Holmes from operating a lab for two years, while withdrawing regulatory approval for its California lab.

In a statement issued late Thursday, Theranos announced that it had received notice from the US Centers for Medicare and Medicaid Services (CMS) that it is facing severe sanctions. In addition to the Holmes lab ban, the feds have revoked the company’s California lab license, issued an unspecified monetary penalty, and announced that Theranos will no longer receive Medicare and Medicaid payments for all lab services. The company was also given a list of corrective measures. It’s a huge setback for the biotech firm, once heralded as the future of the industry.

Theranos came under intense scrutiny last October following a scathing report in the Wall Street Journal questioning the company’s claim that it could perform a slew of blood tests using just a few drops of blood, while also citing deficiencies in its laboratory practices. Earlier this year, the CMS told the startup that its California facility posed “immediate jeopardy to patient safety,” and that it needed to get its act together. Theranos was unable to remedy the problems, resulting in the sanctions.

Advertisement

“We accept full responsibility for the issues at our laboratory in Newark, California, and have already worked to undertake comprehensive remedial actions,” declared Holmes in response to the CMS sanctions in a statement. “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.” Holmes said she was disappointed by the sanctions, but stated that her company is “committed to fully resolving all outstanding issues with CMS and to demonstrating our dedication to the highest standards of quality and compliance.”

Theranos certainly has work to do. In addition to attending to the CMS list of corrections, it’ll have the weather the storm of a criminal investigation, and somehow find a way to woo back partners and investors. Last month, Walgreens finally severed ties with Theranos, removing a critical service delivery channel for the biotech firm.

As for company founder Elizabeth Holmes, she now faces the daunting task of having to rebuild herself from the ground up, both financially and professionally. Once valued at $4.5 billion, she’s apparently now worth nothing. Holmes may find a way to salvage Theranos and her career, but re-building trust and credibility may ultimately prove to be the more challenging task.

Advertisement

[WSJ, Theranos]

George is a senior staff reporter at Gizmodo.

Share This Story

Get our newsletter

DISCUSSION

I would not say she is a liar. She is no different than any doctor who uses methods to determine what you have. Doctors all the time make incorrect diagnostics. What I see here is more a system being threatened by technology that could replace the whole health system eventually. If you were a large organization that’s institute could collapse wouldn’t you do everything in your power to try and stop it? No different than robots replacing people and taking jobs. using a single capture of ones DNA you can find out a lot from a person. using a drop of blood on a slide many doctors could point out many things. Using a robot system to do the same would give you the same results. Methods however in the industry are regulated by the very body that decides what is acceptable and the very body that protects current doctors. Its in their best interest to protect their jobs, their methods and theories. If this system she developed continues it threatens the whole institute as it would be replaced by diagnostic robotic equipment to do the job of many. If one looks back in history many great people were destroyed by both the science community and medical bodies.

If I had used her services I would still have gotten further testing done, just like some people get 2nd opinions. I work for a biotech firm in non medical industry and know first hand that even other accredited labs make mistakes all the time. We rely on multiple labs to test our samples along with our own and from that we prove our diagnostics and products. If we fail results that we passed in house we retest with multiple labs to ensure that either we or the other lab were correct and that no human error was the cause of the fail/pass.

My point is that people are people and errors always happen. failed tests from here happen with doctors too. people who trust a single diagnostic from any machine, doctor, lab on anything that could be life affecting really should have it verified regardless. There are cases everywhere of malpractice or hidden lawsuits with hospitals that never make it to media.

Just some food for thought based on my own experience and opinions as a manager of technologies for a bio company based on my experience with industry.