Theranos plans to appeal CMS sanctions

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Theranos announced on Aug. 25 that the company plans on appealing sanctions the CMS levied against Theranos last month.

On July 7, CMS revoked the certification for Theranos’s blood testing laboratory in Newark, California, and prohibited CEO Elizabeth Holmes from owning, operating or directing a laboratory for at least two years.

The penalties stem from a visit CMS made to Theranos’s facility in Newark last fall. A Wall Street Journal article from March noted that CMS’s inspection report found that 20 percent of quality-control checks performed on Theranos’s blood-testing devices in October 2014 were outside the acceptable range.

Theranos said in a statement on Aug. 25 that it was not conducting any tests at its Newark facility.

“In addition, since CMS originally announced the imposition of sanctions, Theranos has made substantial progress toward correcting the deficiencies CMS identified, including appointing new laboratory leadership; enhancing Theranos’ clinical policies and procedures; and revamping training programs,” the company wrote. “While the appeal is pending, Theranos intends to continue communicating with CMS regarding the possibility of reaching a mutually agreeable resolution to this matter.”

Theranos, a privately held company which was once valued at $9 billion, developed a device that collects blood samples through a finger prick. The company touted the device as better and less invasive than tests performed by Quest Diagnostics and LabCorp, which collect blood through venipuncture.

However, in March, a study in the Journal of Clinical Investigation found that Theranos’s cholesterol tests were on average 9.3 percent lower than the ones administered by Quest and LabCorp.

Holmes, who founded Theranos in 2003, continues to serve as the company’s CEO despite the CMS sanctions against her. Earlier this month, she revealed that Theranos had developed a new blood testing device that can run tests from a finger prick. However, she did not discuss the company’s issues with CMS.