Walgreens has called it quits on Theranos, the maker of blood-testing devices which has come under fire
"In light of the voiding of a number of test results, and as the Centers for Medicare and Medicaid Services has rejected Theranos's plan of correction and considers sanctions, we have carefully considered our relationship with Theranos and believe it is in our customers' best interests to terminate our partnership," says Brad Fluegel, a Walgreens senior vice president, in a statement.
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With the loss of its biggest retail partner, the company that promised to "democratize" blood-testing and was heralded as an agent of change in medicine takes another big step towards irrelevance.
The Palo Alto, Calif.-based company has been on a downward spiral ever since an investigative article published in October by The Wall Street Journal cast doubts on the accuracy of its blood tests. The skepticism voiced in The Journal article was later substantiated by the Food and Drug Administration, which announced weeks later that it had also detected major problems with at least one of the company's blood-testing devices.
Most recently, a report in March by the Centers for Medicare and Medicaid Services issued a scathing condemnation of the company's tests and lab practices, threatening sanctions against the company unless it responded with a plan to reform its practices.
The Journal also reported that Theranos is the subject of a federal criminal investigation focused on whether it misled investors about its equipment and operations. When you tack on Forbes magazine's decision to cut founder Elizabeth Holmes' net worth from $4.5 billion to zero at the beginning of June, it's clear Theranos hasn't had much good news as of late.
The Deerfield, Ill.-based Walgreens has been seriously contemplating ending its relationship with Theranos since the beginning of the year, but officials of the pharmacy giant feared a lawsuit from the Silicon Valley startup for breach of contract. Walgreens has invested at least $50 billion in Theranos, an enormous sum of money that it does not anticipate recovering. Theranos, which reached an estimated value of $9 billion last year, is now considered virtually worthless.
And yet, Theranos goes on, with company officials projecting confidence that it will forge new alliances with retailers to make up for the 40 Walgreens stores in Arizona and California that it lost.
"Quality and safety are our top priorities, and we are working closely with government officials to ensure that we not only comply with all federal regulations but exceed them," Theranos representative Brooke Buchanan, told The Journal. "We are disappointed that Walgreens has chosen to terminate our relationship and remain fully committed to our mission to provide patients access to affordable health information and look forward to continuing to serve customers in Arizona and California through our retail locations."
The silver lining to Theranos' apparent downfall, some argue, is that cheap, easy-to-use blood tests might not be such a great medical development. False-positives are already such a big problem in medicine that medical authorities have begun to conclude that certain tests, including prostate screenings, may harm certain segments of the population than they help.
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