Theranos’ founder takes responsibility for shortcomings in blood-testing technology

Elizabeth Holmes, the founder and chief executive of Theranos, will take responsibility for a series of “extremely serious” deficiencies in the blood-testing startup’s labs that have resulted in major sanctions imposed by state and…

Theranos’ founder takes responsibility for shortcomings in blood-testing technology

Elizabeth Holmes, the founder and chief executive of Theranos, will take responsibility for a series of “extremely serious” deficiencies in the blood-testing startup’s labs that have resulted in major sanctions imposed by state and federal regulators, two attorneys general charged in a statement issued on Thursday.

The statement was issued jointly by US Attorney General Jeff Sessions and West Virginia Attorney General Patrick Morrisey, who both took issue with how Theranos and its leadership responded to the problems identified by the National Association of Boards of Pharmacy.

It also pointed to violations of HIPAA and the Occupational Safety and Health Act by employees at Theranos’ Newark, Calif., facility — errors that could have put members of the public at risk.

In each instance, they said, the company and its officials placed Theranos’ survival ahead of what was right for its employees.

“It is a hallmark of business success that companies innovate, create jobs, and reinvest in communities,” Mr. Sessions said in a statement, “rather than skirting the law in an effort to slash corners or foment lax standards.”

The attorney generals alleged that, following a review of Theranos’ Newark lab in 2016, the National Association of Boards of Pharmacy sent the company a report that found the lab’s machines “were unable to reliably produce positive results with all substances tested, including without exception over 50 percent of the liver tests.”

“Rather than address the issues identified,” the statement said, “Theranos opted to shift focus to a ‘New Jersey turnaround’ to mask widespread failures at their facilities and its laboratories.”

Losses at Theranos have totaled more than $1 billion since Holmes went public in 2014 with plans to create “the first national blood-testing company.”

The company has been the subject of a long-running Wall Street Journal investigation and has been operating under various types of enforcement action since 2015. The stock has been suspended from trading and has been delisted from the New York Stock Exchange since October 2016.

Theranos’ attorney, Michael R. Kelly, did not immediately respond to requests for comment on Thursday.

The allegations detailed in the statement from Mr. Sessions and Mr. Morrisey are broad enough to go after the offices of the FDA and the Department of Health and Human Services as well as Theranos itself.

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