The Centers for Medicare and Medicaid Services has decided that Theranos' Newark, California, facility poses "immediate jeopardy to patient safety." A letter sent to the company on January 25th says that the lab has been given 10 days to provide "acceptable evidence of correction."
Specifically, the document cites problems with the laboratory director, the technical supervisor, hematology, and the lab's analytic systems during an inspection completed in December. CMS has not released the laboratory inspection report that led to this letter, so the details of these infractions remain unclear. But the level assigned to these determinations — "Condition-level deficiencies" — are among the most serious that CMS can make. They mean that Theranos’ Newark lab was found to be in violation of accepted professional standards. CMS declined to comment on the letter.
If Theranos doesn't take immediate action, the lab could lose its certification, which would bar the lab from performing testing. CMS may also decide to cancel that lab's approval for Medicare payments or fine the lab up to $10,000 per day.
The findings "do not reflect the current state of the lab."
In an email, Theranos told The Verge that the inspection of the Newark lab "began months ago and does not reflect the current state of the lab." Theranos further explained that CMS found a number of deficiencies, including one finding at the "immediate jeopardy" level, based on a condition-level deficiency in hematology. "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."
Theranos, a company that's been valued at $9 billion, has been under fire since an October Wall Street Journal report suggested that the company’s inventions — including the now-famous Edison blood analyzer, as well as the Nanotainer, a blood collection device — were only used on a small number of tests sold to patients. Then, in December, a follow-up report said that Theranos had actively hidden its proprietary technology from lab inspectors during previous inspections, opting only to show its commercial machines to regulators. Days later, an investigation by The Verge revealed that federal officials inspected Theranos’ inventions for the first time in August 2015 — almost two years after Theranos first started testing patients commercially — during a surprise inspection by the FDA. The deficiencies cited by CMS today represent the most serious actions taken by the federal government against the company thus far.
This isn't Theranos' first run-in with CMS, the federal agency that's responsible for making sure that Theranos tests and technologies function properly. In December 2013, a lab inspector found that the lab didn't meet the required standards for at least 10 different blood tests.
This isn't Theranos' first run-in with CMS
The inspector's observations in 2013 "did not affect any patient samples," Brooke Buchanan, a Theranos spokesperson, told The Verge in an email in December after we raised the issue with them. "It is not uncommon for [inspectors] to identify standard-level issues during a survey," she said, and "Theranos implemented a detailed plan of correction for each of the standard-level issues identified during this survey, which it provided to CMS." All issues were addressed by January 2nd, 2014, she told us.
Despite the changes that Theranos implemented after the 2013 inspection, the company's California lab failed even the simplest of tests the next year. The company obtained "unsatisfactory" scores — 70 percent and 40 percent — for two blood typing tests in early 2014, according to documents The Verge obtained through a public records act request with the California Department of Public Health.
In April 2015, Theranos was caught once again skipping over a fundamental safety procedure, at a lab in Scottsdale, Arizona. Theranos couldn't produce data showing that its staff has tested the lab's commercial instruments before using them on customer samples, according to a lab inspection report. At the time of the inspection, the facility had been operating for almost two months.
Theranos' response to an inspection was deemed inadequate earlier this year
Theranos' initial response to the April report was deemed inadequate, a letter from the Arizona Department of Health Services to Theranos shows. Among the objections raised by Arizona officials is the fact that Theranos "did not address patient outcome."
Theranos' sloppy documentation was also cited by the FDA in the agency's first inspection of two California labs in August. The FDA also told the company that its Nanotainer was an unapproved medical device. The inspector's observations are common "deficiencies we see with medical device manufacturers that have not fully implemented a quality management system" that complies with regulations, Richard Vincins, vice president for quality assurance at Emergo, told The New York Times at the time.
Theranos told The Verge today that it has made policy and personnel changes in its Newark lab — including adding a new lab director. But after each inspection Theranos’ response has been the same: that the lab has made changes and all problems have been fixed. Yet the critical reports continue, and today’s was the most damning yet.
Elizabeth Lopatto contributed reporting to this story.