CMS plans to pull Palo Alto, Calif.-based blood-testing startup Theranos' federal license and prohibit the company's owners, including founder Elizabeth Holmes, from owning or operating any other lab for at least two years, according to The Wall Street Journal.
Those plans are included in a March 18 letter CMS sent to Theranos. The letter hasn't been released to the public, but WSJ obtained a copy of it for review. Theranos has responded to the letter and CMS is reviewing the response, a person familiar with the matter told WSJ.
Theranos spokeswoman Brooke Buchanan said the company hopes to avoid sanctions.
"Due to the comprehensive nature of the corrective measures we've taken over the past several months, which have been affirmed by several experts, we are hopeful that CMS won't impose sanctions," she told WSJ. "But if they do, we will work with CMS to address all of their concerns."
In the letter, CMS also proposed fining Theranos $10,000 per day for noncompliance and barring it from the Medicare program.
Barbara Cammarata, a lawyer at Sidley Austin who advises clinical labs on regulatory issues, told WSJ the penalties proposed by CMS are among the most severe within its power. "They're in a lot of trouble," she said.
Last November, a CMS inspection revealed five major categories of infractions at Theranos' California lab. The company submitted a correction plan in February, but CMS concluded it was insufficient. The March 18 letter stated Theranos failed to adequately correct 43 of 45 deficiencies identified by inspectors in 2015, according to the report.
More articles on Theranos:
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Federal inspection finds Theranos devices often failed its own quality tests: 6 things to know