Theranos, the high-profile Silicon Valley company that promised to revolutionize blood testing, was warned by federal regulators this week that its Newark, Calif. laboratory has “deficient practices” that “pose immediate jeopardy to patient health and safety,” according to a letter sent to the company this week.
The letter from the Centers for Medicare and Medicaid Services defines "immediate jeopardy" as "a situation in which immediate corrective action is necessary because the laboratory's non-compliance ... has already caused, is causing, or is likely to cause, at any time, serious injury or harm, or death, to individuals served by the laboratory or the health and safety of the general public." The company is required to take action immediately and has 10 days to report to the government how it has responded.
Theranos, once valued at $9 billion based on its immense promise to make blood testing cheaper and more efficient, has been embroiled in questions about its technology and regulatory strategy for months. The scrutiny was sparked by a Wall Street Journal investigation that revealed that the intensely secret company's much-touted fingerprick blood tests were barely being used and employees had raised questions about the accuracy of its tests.
Up until that point, the company had attracted an outsized amount of attention for a startup in the relatively unglamorous business of making routine blood tests better. Theranos was profiled at length in magazines that ranged from the New Yorker to Inc. Much of that attention focused on Elizabeth Holmes, the company's college dropout chief executive, who drew comparisons to Steve Jobs, as well as its unusual board that included ex-military and government officials.
CMS, the agency that discovered the deficiencies, is responsible for overseeing clinical laboratories' compliance with federal standards. The deficiencies were discovered during an onsite survey required to recertify the lab in late November, according to the letter. But the process could not be completed until the agency received critical additional information from Theranos on Dec. 23. The letter, dated Monday, does not specify the details of the deficiencies, but lists a series of deficient conditions.
Those conditions included problems with the lab's analytic systems, the leadership of the laboratory, a supervisor and the testing personnel. The deficient condition that posed "immediate jeopardy" was hematology, a category that includes standards for comparison of test results and laboratory systems, among other requirements.
In an e-mailed statement, company spokeswoman Brooke Buchanan said the survey "does not reflect the current state of the lab."
"We are still reviewing the report, but we addressed many of the observations during the survey and are actively continuing to take corrective action," Buchanan wrote. "A full plan of correction will be submitted to CMS within days."
This is only the latest regulatory challenge to the company. Last year, the Food and Drug Administration told the company that its nanotainer, used for blood collection, was an unapproved medical device.
Buchanan stressed that the "immediate jeopardy" finding was only for one condition.
"To be clear, that finding does not apply to the whole lab, and none of these findings relate to our Arizona lab, where we currently process over 90 percent of our tests," Buchanan wrote.
Within 10 days, Theranos must respond to the problems with details of its corrective actions. If the agency does not deem the "immediate jeopardy" to have been removed, the company may receive onsite monitoring, loss of its federal certification or a $10,000 fine per day, the letter states.