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The Theranos controversy, explained - Vox

http://www.vox.com/2015/10/20/9576501/theranos-elizabeth-holmes

The Theranos controversy, explained

Over the past two years, a highly secretive Silicon Valley biotech startup
called Theranos <https://www.theranos.com/> has been trying to disrupt the
multibillion-dollar US blood testing industry.

When you go to a clinic and get your blood drawn, the doctor or nurse
typically sends it off to a lab for testing, say, to do routine cholesterol
to vitamin D checks or look for signs of disease. This ritual — which
almost all Americans endure at some point in their lives — usually requires
a painful needle jab, multiple vials of blood, and days or weeks of waiting
on results.

Theranos wanted to change all that. Two years ago, the company started
offering blood tests that it claimed required only a finger prick — and
could deliver results of up to 30 tests in hours using its own lab testing
instrument (called "Edison machines"). In numerous interviews, Elizabeth
Holmes <http://www.tedmed.com/speakers/show?id=308981>, the 31-year-old
founder of the company, argued that this technology would be revolutionary,
slashing costs in the $75 billion-a-year blood testing industry. Investors
and media loved it, and last year the company was valued at $9 billion.

But recently, Theranos has started attracting doubters and critics. Over
the past several months
<http://www.degruyter.com/view/j/cclm.2015.53.issue-7/cclm-2015-0356/cclm-2015-0356.xml?format=INT>,
both health researchers
<http://jama.jamanetwork.com/article.aspx?articleID=2110977&utm_campaign=order_confirmation&utm_medium=email&utm_source=Silverchair_Information_Systems>
and some journalists
<http://www.forbes.com/sites/matthewherper/2015/07/15/giving-theranos-a-few-tests/>
have started wondering whether Holmes's claims actually held up, whether
they would really be as revolutionary as Holmes promised.

Then in October, the Wall Street Journal published an eye-catching
<http://www.wsj.com/articles/theranos-has-struggled-with-blood-tests-1444881901#pq=Jd8MoW>
investigation
<http://www.wsj.com/articles/theranos-has-struggled-with-blood-tests-1444881901#pq=Jd8MoW>
into Theranos, finding that the company's revolutionary claims were
overblown. Theranos has allegedly been collecting blood samples the
traditional way and then diluting them so they could be run on machines
made by other companies — not their much-hyped Edison technology.

What's more, the Journal's investigation, as well as a follow-up story
<http://www.forbes.com/sites/matthewherper/2015/07/15/giving-theranos-a-few-tests/>,
suggested there were major concerns about the accuracy of Theranos's test
results. It's a messy story, full of wild claims and regulatory clashes.
Here's a primer on what we know so far.
Theranos claimed to offer faster, cheaper, painless blood tests

Every startup promises to solve a problem, and Theranos was focused on
fixing our blood testing system.

Currently, when you go to the doctor for a blood test, you have to endure a
long needle, and the nurse or phlebotomist often has to draw several vials
of blood in order to run multiple tests. It can be painful — and costly.

Theranos, by contrast, claimed that it had the technology to take blood
from a simple painless prick and run multiple tests on that tiny,
raindrop-size sample. The sample would be sent to a lab in a "nanotainer"
and tested on Theranos’s proprietary technology, known as "Edison
machines." Theranos also promised to deliver results in a few hours, to
eliminate anxiety-inducing waits. Holmes said the tests would cost about half
o
<http://www.smithsonianmag.com/innovation/how-to-run-30-health-tests-on-a-single-drop-of-blood-180949983/?no-ist>f
<http://www.smithsonianmag.com/innovation/how-to-run-30-health-tests-on-a-single-drop-of-blood-180949983/?no-ist>
current Medicare and Medicaid
<http://www.smithsonianmag.com/innovation/how-to-run-30-health-tests-on-a-single-drop-of-blood-180949983/?no-ist>
reimbursement rates for tests.

It seemed promising. In 2013, Theranos opened 42 "wellness centers" in
Walgreens pharmacies in Arizona, two in California, and one in
Pennsylvania. Holmes had also started lobbying state governments to allow
patients to order Theranos tests without having to go through the
cumbersome annoyance of getting a doctor's note — a step that, in theory,
would further cut down on time and cost to patients.

By 2015, Holmes had persuaded Arizona
<http://www.usatoday.com/story/tech/2015/07/02/new-arizona-law-and-fda-approval-gives-theranos-something-to-celebrate/29634373/>'s
legislature to
<http://www.usatoday.com/story/tech/2015/07/02/new-arizona-law-and-fda-approval-gives-theranos-something-to-celebrate/29634373/>
pass a law
<http://www.usatoday.com/story/tech/2015/07/02/new-arizona-law-and-fda-approval-gives-theranos-something-to-celebrate/29634373/>allowing
patients to skip right to her labs and order up whatever menu of testing
they wanted, without doctors' approval.

So not only was Holmes trying to upend the way blood testing is done, she
was also trying to change how people interact with the health care system.
Considering that every person gets blood tests at some point, the change
she promised was a big deal.
Many of Theranos's claims were never validated, raising suspicions

More recently, however, critics had begun asking for proof that Theranos's
technology actually works, and that its results are accurate. After all,
the evidence on this wasn't public: The Food and Drug Administration
(FDA) doesn't
regulate tests
<http://www.nytimes.com/2015/10/17/business/theranos-a-blood-test-start-up-faces-fda-scrutiny.html?_r=0>
like Theranos's that are developed and performed in a single laboratory.
And Holmes had never published her claims in peer-reviewed journals.

Holmes and Theranos's PR team deflected these critics by citing intellectual
property
<http://www.businessinsider.com/science-of-elizabeth-holmes-theranos-2015-4>
concerns and suggesting that any complaints were being planted by rival
testing companies, such as Quest and Laboratory Corporation. Here's how Ken
Auletta of the New Yorker described Holmes's stonewalling:

What exactly happens in the machines is treated as a state secret, and
Holmes’s description of the process was comically vague: "A chemistry is
performed so that a chemical reaction occurs and generates a signal from
the chemical interaction with the sample, which is translated into a
result, which is then reviewed by certified laboratory personnel." [Holmes]
added that, thanks to "miniaturization and automation, we are able to
handle these tiny samples."

Then in October 2015 came the massive Wall Street Journal investigation
<http://www.wsj.com/articles/theranos-has-struggled-with-blood-tests-1444881901#pq=Jd8MoW>
on Theranos. For about half a year, reporter John Carreyrou had tried to
answer some of the questions critics have been asking: What actually goes
on behind the scenes at Theranos? Did the company's tests really work?

Carreyrou eventually discovered and reported that it appears Theranos
rarely even used its much-hyped Edison technology in its tests. Instead,
the startup allegedly relies mostly on older technology by companies like
Siemens for the bulk of its testing. (This was in contrast to the company's
claims that it used older machines only for "certain esoteric and less
commonly ordered tests.")

What's more, there are real concerns that the company's signature Edison
machines — the ones that have garnered all the hype — aren't nearly as
accurate as claimed. On this point, Carreyrou cited former employees,
internal emails, and doctors. One Theranos employee even complained to
regulators that Theranos had been gaming the system, "failing to report
test results that raised questions about the precision of the Edison
system."

Since the Journal's story, other critics have come forward
<http://qz.com/527579/i-asked-theranos-why-my-blood-test-results-were-wildly-off-from-my-traditional-labs-but-no-one-ever-replied/>
and claimed that their blood test results from Theranos didn't quite match
those from standard labs. In a follow-up
<http://www.wsj.com/articles/hot-startup-theranos-dials-back-lab-tests-at-fdas-behest-1444961864>,
the Wall Street Journal confirmed that the FDA had pressured Theranos to
stop using its Edison technology on almost all of its blood tests save for
one (a test for Type 1 herpes simplex) because of concerns about the
machine's accuracy. Last week, Holmes admitted
<http://www.bloomberg.com/news/articles/2015-10-16/theranos-limits-new-blood-technology-to-one-in-200-tests>
that Theranos had stopped taking pinprick blood samples for all but one of
its tests.

To the company's credit, it has been working with FDA to validate its blood
tests — which, again, it is not required to do — though those results are
still pending. Until it receives FDA blessing, it seems Theranos has been
mostly operating as a mainstream blood testing lab, taking blood through
needles in patients' arms and using traditional technology to analyze the
blood. There's nothing wrong with that, per se, but it's hardly likely to
revolutionize the industry.
So how did Theranos get so much hype with such weak claims?

There's no shortage of Silicon Valley companies that claim to be changing
the world, but Theranos stood out for a couple of reasons: It had an
amazing origin story, it was led by a young woman in a mostly male tech
industry, and it promised to solve a problem that was relevant to most
people.

Holmes, the company's founder, dropped out of Stanford as a sophomore in
2004. She said she'd started the company both to address her phobia of
needles — one that she realized many people shared — and out of the desire
to help people diagnose potential diseases faster and at more accessible
prices.

Over the next decade, Holmes managed not only to get her own Stanford
professor and mentor on board, but also to attract $400 million from
venture capitalists, and assemble a star-studded board that included former
US Secretaries of State Henry Kissinger and George P. Shultz.

Interestingly, the company board included hardly any health care
professionals, as Lydia Ramsey at Slate
<http://www.slate.com/blogs/business_insider/2015/10/16/theranos_blood_testing_technology_scandal_calls_board_of_directors_into.html>
pointed out. All told, Ramsey writes, "[There are] six former government
officials, two former military leaders, two corporation leaders, two
members of Theranos' leadership, and two men who graduated from medical
school." That's pretty unusual for a medical company.

Nonetheless, by 2014, Theranos was valued at $9 billion, with Holmes's
stake in it worth half that, making her one of the youngest self-made
billionaires around.

In this context, it's not surprising that favorable press followed: Holmes
could be found, always in Steve Jobs–esque black, on the cover of Forbes
and Fortune, and was even the subject of an in-depth New Yorker profile
<http://www.newyorker.com/magazine/2014/12/15/blood-simpler>. She was named
"the world's youngest self-made female billionaire" by Forbes
<http://www.forbes.com/profile/elizabeth-holmes/> and "America's coolest
billionaire"
<http://www.inc.com/larry-kim/21-surprising-facts-about-the-world-s-youngest-female-billionaire.html>
by Inc. magazine, and even made Time magazine's list of the "100 most
influential people."
Theranos still hasn't fully answered questions about the effectiveness of
its technology

The Wall Street Journal stories, however, have shed a different light on
Theranos and its corporate culture. The story noted that one former
employee, Dr. Ian Gibbons, had killed himself. But when Carreyrou tried to
speak to Gibbons's widow, "a lawyer representing Theranos sent her a letter
threatening to sue her if she continued to make 'false statements' about
Ms. Holmes and disclose confidential information."

That sort of combative attitude turned out to be the norm. Theranos
repeatedly hit back at Carreyrou as he reported the story, even sending
representatives to the homes of some of his sources, asking them sign
statements saying the newspaper "mischaracterized their comments."

Unsurprisingly, almost as soon as the story went up, Theranos
published a statement
denying <https://www.theranos.com/news/posts/statement-from-theranos> many
of the facts in the piece:

Today’s Wall Street Journal story about Theranos is factually and
scientifically erroneous and grounded in baseless assertions by
inexperienced and disgruntled former employees and industry incumbents.
Theranos presented the facts to this reporter to prove the accuracy and
reliability of its tests and to directly refute these false allegations,
including through over 1,000 pages of statements and documents.

Theranos still hasn't answered important questions about the effectiveness
of its testing, however. Instead, Holmes simply told Bloomberg
<http://www.bloomberg.com/news/articles/2015-10-16/theranos-limits-new-blood-technology-to-one-in-200-tests>
that this is just a transition phase, and that once all of its tests are
validated by the FDA, the blood testing revolution will continue.

Perhaps that's true. But the questions remain about whether Theranos's
technology actually works as promised — questions the company has mostly
avoided answering while it rolled out its tests out across the United
States. Until the Journal story, no one had realized it was hitting
regulatory barriers or struggling to verify the accuracy of its tests.

This whole episode should be a cautionary tale: If a secretive tech company
is claiming to revolutionize an entire industry with technology that still
hasn't been validated, be skeptical.


Eric D. Schwerin
eschwerin@rosemontseneca.com

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