Federal health authorities last week revoked the laboratory license of embattled biotech startup Theranos and banned its founder from owning or operating a lab for two years.
The Centers for Medicare and Medicaid Services, which oversees the nation’s labs, released the findings of its investigation into the company on Friday.
The agency alleged that Theranos’ Newark, Calif., lab repeatedly failed to comply with laboratory oversight laws.
“The laboratory failed to indicate what measure has been put in place or what systemic changes have been made to ensure the deficient practice does not recur, or how the corrective action is being monitored to ensure the deficient practice does not recur,” CMS certification manager Karen Fuller wrote in a letter to company officials.
Most penalties, including the license revocation, the ban of founder Elizabeth Holmes and the suspension of Medicare and Medicaid payments, will take effect in September. Theranos can appeal the penalties. A fine of $10,000 per day until the deficiencies are corrected is slated to begin Tuesday.
“While we are disappointed by CMS’ decision, 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,” Holmes said in a statement to USA Today.
Theranos rose to prominence several years ago — after about a decade of relative secrecy — on the hope that its groundbreaking tests could detect a wide range of illnesses with only a small blood sample.
The U.S. Food and Drug Administration approved one of Theranos’ blood tests last year, but the company halted its tests after questions about their actual effectiveness were raised by the FDA and an investigation by The Wall Street Journal.
Federal investigators later released their findings of numerous problems with Theranos’ clinical procedures and quality control. The company remains under investigation by both the Justice Department and Securities and Exchange Commission.
“The clinical lab is just one of Theranos’ many opportunities to provide access to high-integrity, affordable and actionable health care information, and the company will continue to carry out its mission under the leadership of its founder and CEO,” the company said in a statement.