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Walgreens Terminates Relationship with Theranos

June 13, 2016
by Heather Landi
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As blood testing startup Theranos faces possible federal sanctions, Walgreens announced it has terminated its relationship with the company, and is closing operations at all Theranos Wellness Centers at its stores in Arizona.

Palo Alto, Calif.-based Theranos is a biomedical startup that has developed proprietary testing technology for blood testing. The company is facing increased scrutiny after voiding or correcting thousands of tests and faces possible federal sanctions for repeated failures at one of its labs.

Walgreens has partnered with Theranos for nearly three years, and its decision to sever ties follows an earlier announcement in January that it ceased Theranos laboratory testing services at its Palo Alto, Calif. location.

Walgreens will no longer offer Theranos services at any of its stores. The company said it will be working over the next several days to help transition customers.

Theranos has been under fire since a Wall Street Journal report last October suggested that the company’s inventions, including its Edison blood analyzer and its Nanotainer were only used on a small number of tests sold to patients.

As previously reported by Healthcare Informatics, back in October the U.S. Food and Drug Administration founds flaws in the process that Theranos used to validate its blood-testing products. In two inspection reports, the FDA referred to the company’s capillary tube nanotainer (CTN), a blood specimen collection device, as an “uncleared medical device.”

In January, The Centers for Medicare & Medicaid Services (CMS) sent a letter to blood analysis startup Theranos citing “deficient practices” at the company’s northern California lab which pose “immediate jeopardy to patient health and safety.”

The CMS letter dated January 25th, which was posted online, stated that the company had 10 days to provide “acceptable evidence of correction.” The document specifically cited problems with hematology, analytics systems, the laboratory director, the technical supervisor and laboratories performing high complexity testing that were found during an inspection late last year at the company’s Newark, California lab.

Theranos asked for an extension from CMS in February, which CMS granted.

At that time, Walgreens informed Theranos that it must immediately cease sending clinical laboratory tests provided through its Wellness Centers at Walgreens to the Theranos lab in Newark, Calif., which has been the subject of ongoing CMS review. At the same time, Walgreens also informed Theranos that tests collected at its Wellness Centers at Walgreens stores in Arizona must be sent only to Theranos’ certified lab in the Phoenix area or to an accredited third-party lab for analysis. No patient samples were to be sent to the Newark lab until all issues raised by CMS have been fully resolved.

More recently, in a letter dated March 18, CMS officials cited concerns that Theranos continued to fail compliance requirements and CMS proposed sanctions against the company, including revoking the license for its Newark, CA, lab and banning CEO Elizabeth Holmes from Theranos for at least two years.

With regard to Walgreens ending its business relationship with Theranos, Brad Fluegel, Walgreens senior vice president and chief health care commercial market development officer, said in a statement, “In light of the voiding of a number of test results, and as the Centers for Medicare and Medicaid Services (CMS) has rejected Theranos’ plan of correction and considers sanctions, we have carefully considered our relationship with Theranos and believe it is in our customers’ best interests to terminate our partnership.”

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