CMS report adds more pressure on embattled Theranos and its blood testing device

Theranos' Palo Alto, CA, headquarters--Courtesy of Theranos

What began as a bad week for embattled blood-testing company and former Wall Street darling Theranos veered toward worse yesterday when a federal inspection report was released, finding the accuracy of the company's revolutionary device consistently failed to meet even its own standards.

The 121-page report released by the Centers for Medicare and Medicaid Services (CMS) late yesterday, which contained redacted information on Theranos' proprietary blood-testing device dubbed Edison, cited a number of issues uncovered during an inspection of the Newark, CA, laboratory in October. The report said 29% of the quality-control checks on the device were below company standards.

Inspectors also reported erratic quality control results from internal testing on the Edison device in February and June of last year, and in July 2014. The CMS report also said unqualified personnel were running tests at the lab, blood samples were stored at incorrect temperatures and there were long delays in notifying patients of flawed test results. The lab conducts about 890,000 tests a year, according to Theranos records.

Earlier this week, scientists at the Icahn School of Medicine at Mount Sinai published an independent study of Theranos' test and found the Palo Alto, CA-based company's finger-prick technology rejected samples 2.2% of the time when tested on 60 patients, which never happened when using rival tests from competitors Quest Diagnostics ($DGX) and LabCorp ($LH).

Theranos' test results also fell outside of the normal range more often than its competitors'. The company's tests were outside of the normal range 12.2% of the time, compared to 8.3% for LabCorp and 7.5% for Quest, according to results published Monday in the Journal of Clinical Investigation (JCI). The study, which was conducted in July before Theranos' testing fallout, collected samples for 22 measures including cholesterol.

A spokeswoman for Theranos, Brooke Buchanan, told The Wall Street Journal in response to the CMS report that the company had made mistakes in the past but has submitted a plan of correction to regulators.

"Theranos shares the same goal as CMS does, which is to provide best quality care to our customers," Buchanan told the newspaper. "This has only made the company stronger and we are better for it today."

However, citing unnamed sources, the WSJ reported that CMS officials find the Theranos plan inadequate and are looking to impose sanctions against the company, which could include suspending or revoking the lab's certification to test human samples. The agency declined to comment to the newspaper.

Theranos has struggled since articles published in the WSJ last year pointed to flaws in the company's proprietary testing technology. Theranos stopped collecting finger-prick blood samples for all but one of its more than 200 tests after the FDA found that "nanotainers" made and used by the company were uncleared medical devices. Another story showed that Theranos' lab tool only handled a small portion of tests sold to consumers.

- here's the CMS report (PDF)
- check out the WSJ story (sub. req.)

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