January 13, 2017
By Alex Keown, BioSpace.com Breaking News Staff
PALO ALTO, Calif. – Embattled Theranos is already facing a number of lawsuits over its blood testing technology and now the company will be facing at least one more. Arizona’s attorney general will file a lawsuit against the company, Reuters reported Thursday.
The lawsuit will be filed over a “long-running scheme of deceptive acts and misrepresentations” that are related to its blood testing technology. In particular, the attorney general said the California biotech company violated the state’s consumer fraud laws. The attorney general is seeking outside counsel to assist with the lawsuit, according to a state bidding document.
In the bidding document, the state outlines some of the problems surrounding Theranos and its blood-testing equipment. In particular, the AG’s notice points to problems the company had with the U.S. Centers for Medicare and Medicaid Services that led to a two-year ban imposed on founder Elizabeth Holmes from owning or operating a clinical laboratory. The state began its investigation into Theranos following a plethora of reports from various news agencies into the problems surrounding Theranos’ technology.
At its height, Theranos operated wellness centers in 40 Arizona Walgreen’s locations.
Since late summer of 2015, Theranos has been under siege as more and more questions arose about the efficacy of its blood-testing technology. Those questions ultimately led the U.S. Center for Medicare and Medicaid to investigate the company’s Newark, Calif. blood testing laboratory where investigators found egregious practices–which lead to the ban on operating clinical labs. The company has faced increasing scrutiny over its product efficacy as well as compliance issues at its California laboratory. Issues at the lab lead the company to void two years’ worth of data sent to customers. The voiding of data caused Walgreens to sever ties with Theranos and shutter the Theranos testing sites in the 40 Walgreens locations across Arizona. That was a big blow to the company as those testing sites were the company’s biggest source of revenue.
Theranos has remained mum so far about the Arizona lawsuit. In addition to the Arizona lawsuit, Theranos is facing several others, including a $140 million lawsuit filed by former partner Walgreens and a lawsuit filed by a Bay Area hedge fund that alleged the biotech company duped investors about the efficacy of its products in order to attract investments of nearly $100 million. Theranos is also the subject of a criminal investigation by the U.S. Department of Justice with investigations centering on whether or not Theranos and its executives misled investors as to the efficacy of its blood-testing products. An Arizona resident identified only as “M.P.B.” filed a lawsuit against Theranos in the U.S. District Court for Northern California in May 2016. It is unknown if that lawsuit prompted the Arizona attorney general in any way.
The past year has been rough for the company that was once the darling of Silicon Valley investors and worth, at its height, approximately $9 billion. Since the problems surrounding its technology became public, the company has initiated two rounds of layoffs, the most recent earlier this month, when it terminated 41 percent of its workforce.
Since the company has faced such scrutiny over its blood testing technology, tech that was supposed to revolutionize the industry, Theranos has drastically pivoted its business focus to development of miniaturized portable laboratory.
