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Walgreens Files $140 Million Breach of Contract Suit Against Theranos

Elizabeth DiNardo, Esq. | Associate Counsel

On Tuesday, November 8, 2016, while the nation flocked to the polls, pharmaceutical super store, Walgreens, filed a $140 million breach of contract suit in Delaware federal court against healthcare technology company, Theranos Inc. Because the case was filed under seal, few details are known about the suit at this time; however, many people familiar with the controversy have pointed out that the $140 million in damages that Walgreens is seeking is equal to the initial sum it invested in Theranos.

The relationship between the now-feuding companies had an auspicious beginning in September 2013 when the parties signed a contract, implementing Theranos blood- drawing sites in 40 Walgreens locations in Phoenix, Arizona and one location in northern California. The plan, it seems, was to eventually put Theranos Centers into Walgreens stores across the country. 

In June 2016, around the same time that things began to unravel for the health-tech company, Walgreens terminated its relationship with Theranos. In July 2016, Theranos received sanctions from the Centers for Medicare and Medicaid Services. These sanctions included a renunciation of the company’s CLIA Certificate, which in effect equates to a prohibition for Theranos’ founder, Elizabeth Holmes, from owning and operating a lab for two years.

 Despite the sealing of the file, it is believed that Walgreens will argue that Theranos continuously misled Walgreens as to the quality and abilities of Theranos’ blood analysis machines, thus putting Walgreens’ customers at risk. 

In October 2016, Theranos announced it would be temporarily closing all blood testing facilities in order to concentrate on perfecting its technology. The same month, the company announced its intention to fight for an appeal of the government sanctions and bans against Holmes.

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