Reports: Theranos' Walgreens partnership may dissolve without corrective action

PALO ALTO, Calif. – Theranos has less than a month to prove to its retail partner Walgreens Boots Alliance that deficiencies identified by federal regulators at a laboratory in California are addressed with a plan in place to resolve the issue, otherwise Walgreens will terminate its partnership with Theranos altogether, The Wall Street Journal reported Wednesday evening. 

 

In January, Walgreens issued a release announcing that laboratory services at its Palo Alto, Calif. store were suspended and that Theranos "must immediately cease sending any clinical laboratory tests provided through Theranos Wellness Centers at Walgreens to the Theranos lab in Newark, Calif., for analysis" in light of a letter from the Centers for Medicare and Medicaid Services that identified several deficiencies at the lab. 

 

In a late January statement, Theranos resolved to "take corrective action and will submit a full plan of correction to CMS within days."

 

"CMS’ findings included standard and condition-level deficiencies, and one finding at the 'immediate jeopardy' level, based on a condition-level deficiency in one specific area – hematology," Theranos acknowledged. "To be clear, that finding does not apply to the whole lab, and none of these findings relate to our Arizona lab, where we currently process over 90% of our tests."

 

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, Calif. lab identified by CMS until all issues raised by CMS have been fully resolved, Walgreens asserted.

 

Losing Walgreens as a retail partner and subsequent access to patients could be devastating to Theranos, William Quirk, Piper Jaffray analyst, told The Journal. “Should the Theranos-Walgreens partnership dissolve, that would effectively mean they’d cease to be a competitor to other labs,” he said.