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Theranos Lab Ban Imposed By U.S. Regulator

Theranos Inc. founder Elizabeth Holmes has been banned from maintaining a blood-testing laboratory for at least two years.

U.S. Federal health regulators imposed the ban while also withdrawing approval for the Theranos lab in California. The sanctions were imposed by the Centers for Medicare and Medicaid Services, and were confirmed by the company in a press release published late Thursday, writes Michael Siconolfi for The Wall Street Journal.

Sanctions handed down to one-time technology darling

Other sanctions include a monetary penalty, the amount of which has yet to be confirmed. Theranos had looked set to revolutionize blood testing, but has come under massive scrutiny since The Wall Street Journal questioned the technology behind the company in an article published last October.

Theranos promises that it can carry out a wide range of blood tests using just a few drops of blood. However scientists have expressed their doubts on the effectiveness of the technology. Theranos was valued at $9 billion in 2014 and shot to prominence as part of the tech boom before the story began to unravel.

“We accept full responsibility for the issues at our laboratory in Newark, California, and have already worked to undertake comprehensive remedial actions. 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,” Ms. Holmes said in a statement.

Theranos in choppy waters

“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,” Ms. Holmes said.

Under the terms of the sanctions the California laboratory will no longer be able to receive Medicare and Medicaid payments for its services. The company said it plans to work with CMS to “resolve and remediate outstanding issues in the Newark lab, and will continue to provide services to its customers through its Arizona lab.”

Other issues for Theranos include the recent loss of Walgreen Co. as a major retail partner.

There is a chance that the company could appeal the decision, which would at least delay some of the sanctions. That could mean that the lab would still have its license until the appeals process was completed. The process could take months to complete and appeals are rarely successful.