Federal agencies are investigating whether Theranos made misleading statements about the effectiveness of its medical tests, according to The Wall Street Journal. The US Attorney's Office has reportedly begun issuing subpoenas to Theranos partners, like Walgreens, to learn how the company pitched its technology.
The investigation is said to be early. It's not known whether prosecutors are actively seeking charges, but the Journal points out that misleading government officials can be a crime. Investigators are trying to determine if that happened.
DOJ and SEC want to know what Theranos said it would be able to do
In addition to the Justice Department's investigation, the US Securities and Exchange Commission is also reported to be looking into whether Theranos misled investors. Theranos is not a public company, but it had privately raised $752 million as of last October, according to the Journal.
Theranos acknowledged the investigations in a memo sent to its partners. In an email to The Verge, a company spokesperson characterized them as little more than basic responses to the negative news coverage surrounding Theranos. "The company continues to work closely with regulators and is cooperating fully with all investigations," the spokesperson said. Both investigations are still ongoing, says the memo, which was sent out today.
Theranos has been under close scrutiny since a series of reports last year, starting in The Wall Street Journal, indicated that the company was incapable of doing much of what its technology promised to accomplish. Theranos claimed to be able to perform over 240 tests on a single drop of blood; in reality, many of its tests were being run by older lab equipment.
Below is the full text of Theranos' memo to partners.
As we've previously shared with you and as could be expected, surrounding critical Wall Street Journal articles a number of regulators began investigations.
In the past, we have generally not commented on the specifics of these inquiries out of deference to our regulators and in light of specific requests for confidentiality. However in light of consistent press attention in this area we want you to hear about them from us.
Investigations or inspections were opened by the State Departments of Health in Pennsylvania and Arizona; CMS, FDA, the Securities Exchange Commission (SEC), and the U.S. Attorney's Office for the Northern District of California. The investigations by the Departments of Health of Pennsylvania and Arizona and the FDA have been successfully closed out. The investigations by the SEC and the U.S. Attorney's Office, which began following the publication of certain news articles, are focused on requesting documents and ongoing, in addition to the CMS inspection. The company continues to work closely with regulators and is cooperating fully with all investigations.
We welcome further review of our technologies, performance, and data, which is why we voluntarily engaged with FDA years ago. We recently hosted three scientific review sessions in Palo Alto with leading laboratory and medical experts, many of whom joined our Scientific and Medical Advisory Board as a result, and are now working with us to introduce our technologies through peer reviewed publications.
Update April 18th, 9:19PM ET: This story has been updated to include a statement from Theranos, as well as the text of Theranos' memo.