Theranos flunks CMS review. Is there a there, there?

There is no kinder way to put it. The impression that Theranos is equivalent to what writer Gertrude Stein said of her vanished home in Oakland, California–‘there is no there there’–is building. The US Center for Medicare and Medicaid Services (CMS) after multiple inspections in 2014 and 2015, found that the company failed its own standards on its proprietary Edison blood-testing and analysis system. Cited by the Wall Street Journal, which had access to the full 121-page report, is that “erratic quality-control results for Edison-run tests were frequent in July 2014 and from February 2015 to June 2015.” Overall, Edison devices produced test results that differed widely from traditional lab machines for the same blood samples. Additional problems were unqualified staff, blood samples at the wrong temperature and delays in notifying patients of flawed tests.

Theranos has promised to make further corrections at its Newark, California testing site but it may be too late. “CMS has deemed the company’s plan inadequate and plans to impose sanctions against Theranos, according to people familiar with the matter. In January, the agency said the punishment could range from fines to suspending or revoking the lab’s certification to legally test human samples.” (WSJ)

No stronger case has been made for an early-stage company under-promising and over-delivering than this, especially in health. There is no joy in hearing the grand slam of its $9 billion valuation cratering, but on the other hand, there are a lot of other worthy startups and early-stage companies which could have used the funding. A high profile fail such as this scares off investors from angels to VCs worldwide and tarnishes the entire health tech sector as well as young entrepreneurs. Also many of us looked forward to inexpensive, retail driven, minimally sampled blood testing.

In this Editor’s view, the wide-eyed CEO Elizabeth Holmes should attend more to the integrity of her company’s operations and less to working political connections such as Hillary Clinton fundraisers (last month) and putting everyone from Henry Kissinger, George Shultz and retired Marine Gen. James Mattis on the company’s board of governors (BioSpace). In Marine-speak, knock it off.

Ed. note: If the WSJ is paywalled (search on the headline “Theranos Devices Often Failed Accuracy Requirements” to get around it), see BioSpace. Previous coverage in TTA here.

Update 7 Apr: Some effort in the operations integrity area was made with another Theranos announcement of eight Scientific and Advisory Board members appointed (only two with any previous connection to the company) and three scientific review sessions at their Palo Alto HQ. MedCityNews

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