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Embattled Theranos founder Elizabeth Holmes banned from blood-testing business for two years

Centers for Medicare and Medicaid Services has barred Holmes from the blood-testing business for two years.

Jeff Lagasse, Associate Editor

The Centers for Medicare and Medicaid Services announced Thursday that it has barred Theranos founder and CEO Elizabeth Holmes from the blood-testing business for two years, according to a statement on the company's website.

It's the latest setback for the California-based blood-testing startup. Just last week, The United States House of Representatives' Committee on Energy and Commerce sent a letter to Theranos demanding to know how the company planned to address several of its deficiencies; the group cited clinical laboratory failures that led Theranos to void two years of test results from its proprietary Edison blood-testing device, affecting patients who may have received inaccurate or unwarranted medical care on the basis of those results.

CMS issued a number of sanctions in response to Theranos' alleged methodological failures. The sanctions include revocation of the laboratory's Clinical Laboratory Improvement Amendments of 1988 certificate -- which, as dictated by the regulations, includes a prohibition on top brass from owning, operating or directing a lab for at least two years from the date of revocation, which has yet to be determined.

[Also: Theranos founder Elizabeth Holmes asked by Congressional committee to detail company's compliance efforts]

The sanctions also include a limitation of the laboratory's CLIA certificate for the specialty of hematology; a civil monetary penalty, the amount of which has not been disclosed; a plan of correction; suspension of the laboratory's approval to receive Medicare and Medicaid payments for any services performed for the specialty of hematology; and cancellation of the laboratory's approval to receive Medicare and Medicaid payments for all laboratory services.

The revocation was not set to take effect for 60 days, but in a statement on its website, Theranos said it will not conduct any patient testing in its Newark, California lab until further notice, though it will continue to provide services through its Arizona lab.

"We accept full responsibility for the issues at our laboratory in Newark, California, and have already worked to undertake comprehensive remedial actions," said Holmes in the statement. "Those actions include shutting down and subsequently rebuilding the Newark lab from the ground up, rebuilding quality systems, adding highly experienced leadership, personnel and experts, and implementing enhanced quality and training procedures.

"While we are disappointed by CMS' decision," she said, "we take these matters very seriously and are committed to fully resolving all outstanding issues with CMS and to demonstrating our dedication to the highest standards of quality and compliance."

[Also: Walgreens to close all Theranos centers, gives embroiled blood-testing firm the boot]

On May 19, Theranos conceded that it had informed regulators it had voided the blood testing results from its Edison machines, as well as tests run on traditional machines, from 2014 and 2015. In April, CMS claimed that Theranos' proprietary testing devices often failed to meet the company's own accuracy requirements for certain tests -- in one instance, failing to accurately detect prostate cancer.

Last week's letter from the Committee on Energy and Commerce, drawing on 2015 inspection reports from the Food and Drug Administration, accused Theranos of a number of additional deficiencies, including recordkeeping failures, failure to conduct quality audits, and failures in validation processes to ensure that an unnamed device "conforms to defined user needs and intended uses."

Twitter: @JELagasse

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