Piling on to Theranos woes, the Securities and Exchange Commission and the U.S. Attorney’s Office for the Northern District of California have started probing into the blood analysis startup for possible criminal activity.
The microscope under which Theranos found itself for regulatory health and safety issues over the last year prompted both agencies to question operations.
Theranos sent a letter to outside partners earlier alerting them to the SEC’s investigation and that the Justice Department had also requested documents.
Theranos spokesperson Brooke Buchanan shared that letter with TechCrunch, adding, “The company continues to work closely with regulators and is cooperating fully with all investigations.”
Investigations also don’t mean Theranos did something unlawful and these types of inquiries often go nowhere. But where there’s smoke there’s often fire and the investigation is part of a growing list of concerns over the way founder Elizabeth Holmes is running her company.
The startup promising to detect hundreds of diseases using a device requiring only one drop of blood has fallen hard and far in a short amount of time.
The FDA has accepted only one test for herpes using Theranos proprietary ‘nanotainer’ technology so far, but the startup stopped using its own machines to get results at Wellness Centers covering Arizona.
Then there’s the Center for Medicare and Medicaid Services, which began a federal investigation last Fall for quality control issues at Theranos’ main facility in Newark, California involving erratic test results and unqualified personnel.
A redacted CMS report said Theranos’ labs put patients in “immediate jeopardy.”
Safeway grocery stores also pulled out of a potential partnership and Walgreens halted testing at Theranos’ Palo Alto, California location for further examination.
Theranos started farming tests out to other facilities, including ARUP and Intermountain Healthcare in Utah to get patients’ accurate results.
Holmes spoke to NBC’s “Today” show before the news broke of the criminal investigation this afternoon, saying she was ‘devastated’ about the blood test issues.
The company says it is working on the compliance issues with CMS, and in an effort to turn things around recently brought on medical professionals to the board and hired a new director for the Newark facility.
Will that be enough? Theranos has become a cautionary tale for med tech startups. You can’t hype the product on unsubstantiated claims when it comes to our health.
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