Theranos in More Hot Water as Walgreens Looks for Ways to Close Its 40+ Blood-Testing Wellness Centers

Theranos in More Hot Water as Walgreens is Looking for Ways to Close 40+ Blood-Testing Wellness Centers
March 1, 2016
By Alex Keown, Breaking News Staff

PALO ALTO, Calif. – The partnership between embattled Theranos and its biggest partner Walgreens may be coming to an end, as the drugstore chain is reportedly looking to close the 40 blood testing sites in its Arizona stores.

Citing a report in the Financial Times (subscription required) Fortune reported Walgreens is going through its contract with the embattled blood testing company to find a legal maneuver to close those sites. According to the report, Walgreens management is not happy with the negative attention Theranos has received regarding its testing efficacy, its lab practices, among others. Walgreens terminating its relationship with Theranos would likely be devastating to the California-based company as the drugstore chain is Theranos’ largest source of income.

Walgreens’ relationship with Theranos has been deteriorating for months, but the drugstore company announced its displeasure with Theranos in January following a negative report from the U.S. Centers for Medicare & Medicaid Services about one of Theranos’ labs. “Walgreens informed Theranos that tests collected at 40 Theranos Wellness Centers located at 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 will be sent to the Newark lab until all issues raised by CMS have been fully resolved,” Walgreens said in its Jan. 28 letter to Theranos. However, the Financial Times reported many of Walgreens’ executives do not believe Theranos will meet that deadline.

The warning letter from the Centers for Medicare and Medicaid Services told Theranos that its laboratory practices at the Newark site were not in compliance with conditions set forth by the federal Clinical Laboratory Improvement Amendment (CLIA). The letter said the company’s hematology practices at that site “posed immediate jeopardy to the health and safety” of patients. The letter defined immediate jeopardy a situation in which corrective action is necessary due to the laboratory's non-compliance, which “has already caused, is causing, or is likely to cause, at any time, serious injury or harm, or death, to individuals served by the laboratory or the health and safety of the general public."

In February, Brooke Buchanan, vice president of communications at Theranos, told BioSpace the company is working to fix the issues identified at the Newark facility. She also said the company continues to work with Walgreens to provide access to “reliable, high quality, and low-cost lab testing services.” Buchanan added Theranos remains confident in its technologies. BioSpace reached out to Buchanan this morning, but has not yet received a response.

Walgreens operates 40 stores in Arizona where patients can have their blood tested by Theranos. The tests have typically been sent to labs in either Arizona, where the company does the bulk of its work, or the California site that has been under scrutiny. There had been talks of Walgreens expanding its partnership with Theranos into other stores, but so far those plans have been put on hold since the Wall Street Journal first began scrutinizing the company and its practices in the fall of 2015.

Most recently, a Rice University study questioned the accuracy of blood-testing devices that rely on a single drop of blood, which includes Theranos’ tests. According to the new study, published in The American Journal of Clinical Pathology, Rice bioengineers said different drops from the same blood sample produced wildly different results for “basic health measures like hemoglobin, white blood cell counts and platelet counts.” Rice researchers said in order to match the accuracy from traditionally drawn blood methods, it required the averaging of six to nine drops of blood, the Times reported.

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