The rise and recent fall of Theranos, a multibillion-dollar biotechnology start-up in Silicon Valley, and its founder, Elizabeth Holmes, is becoming the classic Wall Street scandal of the decade. When Holmes founded Theranos in 2003, the young, intelligent, and charismatic visionary was already being touted as the next Steve Jobs or Mark Zuckerberg of the medical industry. She was called a game changer for the laboratory industry, and became one of the first self-made female billionaires. She was featured in business and technology magazine from Forbes to Wired magazines and appeared in Ted Talks and on other prominent speaking panels that have also included former president Bill Clinton.
Her Edison lab technology promised a new era, when a single finger prick producing one drop of blood could yield a multitude of diagnostic tests—from hematology to general chemistry to immunoassays even to molecular diagnostics—all on one platform. She promised faster, more convenient, and cheaper results for patients and a dream that one day her technology could be utilized in the comforts of your home and wirelessly communicated to your physician. It was a dream not too far from the FitBits and Apple Watches that have become immensely popular by allowing consumers to take control of their health and continuously monitor their exercise, sleep habits, and heart rates.
Big-name investors and partners
Theranos garnered several high-profile investors, including Henry Kissinger and Rupert Murdoch, obtained several patents, and partnered with Walgreens, Safeway, and the Cleveland Clinic to provide its proprietary technology. Holmes’ hype and prestigious associations allowed her company to grow to an estimated $9 billion in value. Its low prices and the convenience of a local Walgreens store brought in a plethora of customers. The growing popularity caused many skeptics in the diagnostic industry to question their doubts and consider that she might have a viable product.
It all suddenly came crashing down when The Wall Street Journal’s John Carreyrou, in a series of articles and a newly released book, unraveled the devious practices and corporate greed that duped not only investors but also physicians and patients. Faulty Theranos-based lab results even led physicians to misdiagnose patients. Carreyrou’s claims forced the federal government to take notice and brought the Centers for Medicare and Medicaid services (CMS) knocking on Theranos’ door. The regulators found extensive lapses and violations at the accredited reference laboratory, utilizing both traditional and its own proprietary-based lab testing. The violations were so egregious that Theranos had to void two years’ worth of lab results to atone for its wrongdoings. And Elizabeth Holmes is now facing federal criminal fraud charges.
A lesson for labs
So what went wrong, and is there a lesson for all laboratories wanting to usher in new technologies?
In the world of improving lab diagnostics, obtaining more accurate and precise results while decreasing turnaround times are the top priorities. However, as a start-up business, Theranos’ priorities became more focused on appealing to the investors and consumers by promising to reduce the emotional and physical trauma associated with a needlestick. Corporate greed took over, and the money coming in became more important than fully developing a clinically proven and peer-reviewed product.
Theranos failed to take into account that accuracy and precision are of utmost importance when clinical decisions are being made based on these results. The company looked to make the leap ahead before proper validations could be performed to collect comparative data on its new technology. It was later discovered that its performance details were greatly exaggerated, with high error rates compared to conventional methods or even point-of-care tests, leading to several cases of misdiagnosis.
Proof of quality
As biotechnology is upgrading itself at a feverish pace to become faster, easier-to-use, and more automated, the lesson to take from Theranos’ demise is that statistical hard facts are required as proof of quality versus the idea that newer is always better. To provide the highest level of healthcare, improvements in technology are necessary and inevitable. However, expense and time must be expended to properly validate new instrumentation and methodologies.
The College of American Pathologists acknowledges this need to establish a validation standard in the industry and has created a set of minimum standards for validating new tests. New methodologies should include comparative studies with coefficients of variation and statistical bias calculations between current proven methods and new ones. Upper and lower detection limits, new reference intervals, and analytical interferences must be established and verified.
Precision must be proven
Accuracy with clinical diagnoses must be subjected to a diverse group of normal and abnormal samples from a variety of demographics. Precision must be proven by means of several repeat testing protocols, and proficiency studies among peer groups should be performed to gather real-world performance data. Lastly and most importantly, there needs to be transparency and acknowledgement if a validation fails to meet expectations or when new insights on performance optimization require revalidation.
Innovation in laboratory technology plays a key role in advancing the medical field from symptom-based to evidence-based diagnoses, and it will lead the way to a more personalized healthcare. The large stake Big Pharma will have in laboratory diagnostics will change the landscape, and due diligence must be undertaken to ensure that corporate hype does not supersede patient care and clinical evidence. A degree of skepticism must be maintained to uphold the high standard of precision and quality care that physicians and patients demand and expect from the laboratory.
Carreyrou, J. (2018). Bad Blood: Secrets and Lies in a Silicon Valley Startup. New York: Alfred A. Knopf.
Roper, C. (2014, February 18). This Woman Invented a Way to Run 30 Lab Tests on Only One Drop of Blood. Retrieved from https://www.wired.com/2014/02/elizabeth-holmes-theranos/
Herper, M. (2016, October 11). Bad Blood: The Decline and Fall of Elizabeth Holmes and Theranos. Retrieved from https://www.forbes.com/sites/matthewherper/2016/10/08/bad-blood-the-decline-and-fall-of-elizabeth-holmes-and-theranos/#528c60d5c335