Walgreens Tells Theranos to Fix Problems or Lose Pact

By Ron Shinkman, Editor, Laboratory Industry Report

Walgreens has told Theranos to get its act together, or get out.

The Chicago-based pharmacy retail giant has given the startup lab Theranos 30 days to get problems in laboratory operations in California eliminated, the Wall Street Journal has reported. The warning was issued in late January, according to the newspaper.

The Centers for Medicare & Medicaid Services (CMS) said late last month that a deficiency in hematology testing at Theranos’ Palo Alto facility constituted immediate jeopardy for patients. That could lead to Theranos losing its CLIA certification and ability to participate in the Medicare and Medicaid program if they are not corrected. CMS gave Theranos a Feb. 12 deadline for submitting a plan of correction.

Theranos had entered into a deal with Walgreens to open retail testing centers at its thousands of stores nationwide. So far, just 41 have been opened, 40 of which are in Arizona. Citing the issue with CMS, Walgreens suspended operations at the one Theranos testing center in California.

Supermarket chain Safeway, another big retailer, put off a deal for Theranos to conduct retail testing in its stores in Arizona, allowing Sonora Quest to enter into its own agreement.

According to the Wall Street Journal article, a loss of the Walgreens pact would essentially eliminate any competitive edge Theranos has against other laboratories. The company has claimed to be able to conduct hundreds of lab tests with just a few drops of blood, but has encountered a variety of regulatory and operational issues, many of which are focused on the efficacy of its testing platform.