U.S. Federal health regulators have just hit Theranos Inc with a huge wake up call. The agency has banned Theranos founder Elizabeth Holmes from blood-testing laboratory operation for at least two years. Of course, they have also pulled the firms regulatory approval for its laboratory in California.
The sanctions—set by the Centers for Medicare and Medicaid Services (CMS)–conclude 8 months of public scrutiny which began in October after questions arose about Theranos’ ability to effectively perform myriad blood tests with only a few drops of blood. During the following investigation, government inspectors found various federal testing standards violations, which is what has resulted in this recent court ruling.
While she is not exactly happy about the ruling, Holmes has stated: “We accept full responsibility for the issues at our laboratory in Newark, California, and have already worked to undertake comprehensive remedial actions. 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.”
She goes on to say, “While we are disappointed by CMS’ decision, we take these matters very seriously and are committed to fully resolving all outstanding issues with CMS and to demonstrating our dedication to the highest standards of quality and compliance,” Ms. Holmes said.
Regulatory experts admit that this ruling—by the CMS—is rare for a lab of this size and notoriety and certainly lays foundation for uncertainty in regards to the company as a whole.
“I can’t think of anything this severe ever happening to a clinical laboratory of this size and scale,” explains Geoffrey Baird, who is an associate professor of laboratory medicine at the University of Washington. “I think the company will have to show [Ms. Holmes] the door somehow, which might not be possible under the current governance. This is so rare, and essentially unprecedented in a company of this size, that it is hard to know exactly how they will proceed. Personally, I believe she is obligated to step down immediately.”
Of course, Theranos could appeal the ruling to an administrative law judge and then through its departmental appeals board, but that could also delay the date some of the sanctions could become effective. If the company were to appeal, the laboratory would be able to keep its license, but experts advise that fighting this ruling could be near impossible.