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CMS Plans to Ban Theranos Founder From Blood-Testing Business

Company failed to correct 43 of 45 lab deficiencies

In a letter dated March 18, officials at the Centers for Medicare and Medicaid Services (CMS) proposed banning Theranos Inc. founder Elizabeth Holmes and the company’s president, Sunny Balwani, from owning blood-testing laboratories for at least two years after determining that Theranos failed to fix problems at its California lab, according to an article in the Wall Street Journal. The letter hasn’t been released to the public, but the Journal reviewed a copy.

The CMS also considered fining Theranos $10,000 a day and said it wanted the company to submit the names and addresses of all doctors and patients who used the lab’s services since January 2014.

The agency gave Theranos about 10 days to provide adequate evidence of why the sanctions should not be imposed, after which the agency would proceed, the Journal reported. On April 13, a Theranos spokesperson told Reuters that the CMS had not imposed any sanctions on the company as yet.

During the past six months, Theranos has faced questions about the proprietary blood-testing devices it invented, code-named Edison; about the accuracy of patients’ test results; and about its laboratory practices. The Journal reported in October 2015 that former employees had doubts about the accuracy and reliability of the Edison devices. CMS inspectors found that some tests run on those machines routinely missed Theranos’s own accuracy requirements.

The CMS completed an inspection of the California lab in November and found five major categories of infractions that violated the federal law governing clinical laboratories. In February, Theranos submitted a correction plan to address the problems, but CMS officials concluded it was insufficient, according to the March 18 letter.

The CMS claims that Theranos failed to adequately correct 43 of 45 deficiencies identified by inspectors last year. The failures included not providing evidence that Theranos sent corrected reports to patients who received flawed test results.

Sources: Wall Street Journal; April 13, 2016; and Reuters; April 13, 2016.

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