Blood test goddess fell to the mortal, Theranos, valued at $9 billion, faced bankruptcy

Release date: 2016-04-18

The US media has recently disclosed that the new venture company, Theranos, in the blood testing field, received a notification from the US Medical Insurance and Medical Assistance Service Center (CMS) in March 2016 that it may be revoked. Moreover, the company's two founders, Elizabeth Holmes and Sunny Balwani, will face a more severe punishment: CMS may ban them from engaging in at least two industries. year.

Since 2014, Holmes and her startup, Theranos, have been arguably one of the most dazzling stars in the US health services industry. Theranos' valuation was as high as $9 billion, and even IPO news.

The most eye-catching technology of Theranos is that it claims that patients only need to collect a few drops of blood at their fingertips, they can perform more than 240 tests, and the results can be obtained within 4 hours. But in October last year, the Wall Street Journal exposed its existence to fraud. According to the former employee who had left the company, Edison, which can detect up to 240 indicators (such as high cholesterol and cancer) through a few blood tests, can only detect it. There are 15 kinds, and the reliability and accuracy of the test results also have big problems, and more indicators are actually obtained through the detection of mature equipment on the market. At the same time, David Boies, a lawyer with Theranos, said that Theranos did not test all of the blood tests it advertised on Edison equipment, but only on the road to this goal. Then, CMS launched the related business of Theranos. look deep into. It is worth mentioning that during this controversial and CMS investigation, Theranos also received a new round of financing of 633 million US dollars, but the valuation has not changed, still maintained at 9 billion US dollars.

The Wall Street Journal disclosed on April 13 that CMS sent a letter of more than 40 pages on March 18, proposing to revoke Theranos's California Laboratories license. Moreover, this penalty offer may affect Theranos's last laboratory in Arizona. These two laboratories were originally the hopes of Theranos to subvert the blood testing market and contribute most of the company's revenue.

In addition, recent exposures detail six proposed penalties for the company, including the suspension of California lab licenses and the cancellation of Medicare paying qualifications; the revocation of licenses will result in the two founders not having to own and operate any labs for two years.

Moreover, CMS may impose a fine of $10,000 per day, forcing Theranos to surrender the names and addresses of all customers who use laboratory services since January 2014. With this information, it is possible for the CMS to inform potential victims.

According to normal procedures, Theranos has 10 days to provide evidence to the CMS to prevent the implementation of the penalty. Of course, if the company's response does not satisfy the regulatory authorities, CMS stated in the letter that it will continue to implement the above penalties. Once the punishment begins, some of the penalties will take effect within 8 days. Although other penalties may be slightly later, the cancellation of the California Lab License will take effect within 60 days. In addition, Theranos can also appeal and resolve through administrative litigation.

Although Theranos is making every effort to solve the problem, the situation is not optimistic. There are few precedents for similar appeals. The CMS website showed that they had not lost a similar lawsuit from 2001 to 2010. Moreover, in 2015 alone, CMS revoked 24 of its licenses in thousands of medical laboratories within its jurisdiction.

Source: Medical Valley Comprehensive Report

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