Elizabeth Holmes
Elizabeth Holmes, founder and CEO of Theranos, speaks at the Wall Street Journal Digital Live (WSJDLive) conference at the Montage hotel in Laguna Beach, California, October 21, 2015. Reuters/Mike Blake

The US Centers for Medicare and Medicaid Services (CMS) has revoked the licence of Elizabeth Holmes’ Theranos Inc. for two years. The ban will take effect after 60 days.

According to the Wall Street Journal, the agency, which oversees labs in the US, has banned Holmes from the blood-letting industry for at least two years. It has also specified sanctions for the company, including a monetary fine of US$10,000 (AU$13,200) a day from July 12 until all deficiencies of the company has been corrected.

The sanctions, which were laid out in a letter to the company on Friday, are:

  • Revocation of the laboratory’s Clinical Laboratory Improvement Amendments (CLIA) certificate). This includes the owners and operators of the lab to be prohibited from owning, operating or director a lab for two years.
  • Limitation of the company’s CLIA certificate for the specialty of hematology
  • Civil money penalty
  • Directed portion of a plan of correction
  • Suspension of the lab’s approval to receive Medicare and Medicaid payments for services performed for the specialty of hematology
  • Cancellation of the lab’s approval to receive Medicare and Medicaid payments for all lab services

Holmes, the founder, will remain the chief executive of the company. In a statement sent to Forbes via email, Theranos said Holmes will continue to lead the company. The CMS review also pertains to Theranos’ Newark laboratory, not its technologies.

“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,” Holmes said in a statement.

“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.”

As the sanctions do not take effect until 60 days, Theranos plans to keep its Arizona labs running until then or until an appeal is filed.

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