I looked up what those laws referred to are, and... this is very very serious and Theranos is unlikely to survive it.
The first two laws they are cited as having broken are about quality control standards. The next two laws they are cited as having broken are about qualifications that must be held by the laboratory director and technical supervisor. The last law they are cited as having broken is about qualifications that must be held by technicians. They have ten days to come into compliance, but in order to address these violations they will have to either hire new staff for key leadership and other positions, or pull their product from the market. They will do the latter.
This same company was previously forced to pull their "nanotainer" testing system from the market because when regulators sent them control samples, they fraudulently tested them on different equipment and with different procedures than they used with patient samples. I will be surprised if no criminal charges are brought against Theranos CEO Elizabeth Holmes.
They aren't laws, and they have ten days to submit a plan, not to execute the plan. Are you sure you know enough about this sector to weigh in on whether survival is likely?
Limiting personal liability is the purpose for incorporation... She can't have criminal charges brought against her unless she commits an SEC violation and uses corporate resources for personal or unrelated purposes in conflict with the best interests of investors, which is what they are claiming shkreli did, for example.
If you're a digital health entrepreneur and treating what's happening with Theranos as a wakeup call to do rigorous science, you could do worse than to work with the UCSF Center for Digital Health innovation:
I'm a machine learning engineer working with UCSF cardiology. I certainly don't know all the answers, but I'm happy to try to answer questions or direct people to the right place.
I think it's quite dangerous when there's a company that says "we have breakthrough science, but we definitely can't tell you what it is", which was Theranos's M.O. for a long time.
Working in medicine is hard, working with biology is hard, not just because of regulatory hurdles, but because fundamentally the problems in those fields are much more commonly questions of basic science than engineering.
Good science leads to good companies, and if you can't do good science you're probably going to fail in this space. Good to see solid research institutions creating spaces to nurture good science at startups.
From a funding standpoint the first question that comes to mind is, "How did this happen?"
Theranos to date has raised $88.4M. The Series C was raised in 2010 following a 4-year hiatus.
In the ten years since the founding of Theranos, they were unable to hire anyone who would help them figure all this shit out?
It seems insane to me that a well respected venture firm like DFJ, who invested in their Series A,B and C, would not have done their due diligence and understood where Theranos would become vulnerable. Everyone knew that government regulators would be involved since day one.
I am bullish on Elizabeth. She is obviously extremely intelligent and charismatic but I'm bearish on her investors. Step one of funding should have been building a blood test that actually works and step two is getting that $88M test approved.
Without knowing the whole story it's hard to form an opinion about the situation but I am super interested in the psychology of how all "this" happened.
> It seems insane to me that a well respected venture firm like DFJ, who invested in their Series A,B and C, would not have done their due diligence
She's childhood best friends with Tim Draper's daughter.[0]
It really is that simple. If you saw a state construction contract going to a firm controlled by a friend of the Chinese Premiere's daughter you wouldn't be confused at all right? So why should anyone be confused now?
> Clinkle had a polished demo that came before things like Apple Pay, said one former employee, who declined to be named. But most importantly that person added, Duplan “was charismatic when he wanted to be” and could “raise money in absurd abundance.”
You really want to change the world? Forget being a programmer, learn to be be charismatic.
It seems to be endemic to these biotech darlings: 23 & Me pulled the same thing and faced the same consequence. They thought as a tech prima donna that they did not have to adhere to the FDAs medical device regulations (or even publish efficacy data). They got smacked in the mouth - serves them right.
I disagree with your opinion on the CEO. Intelligent? clearly, but also weird to the point that it's uncomfortable to watch her speak, and she's clearly very bad at handling the press.
I can't say Theranos's comments about the matter even begin to assuage the concerns this brings. Trying to pass off the immediate jeopardy fault in hematology (i.e. blood testing) as "not apply[ing] to the whole lab" is absurd. It's like a restaurant saying that the board of health complaint that shut them down focused too much on the rat feces in the kitchen, and not enough on the well watered house plants in the dining room. It's so tone deaf.
> It's like a restaurant saying that the board of health complaint that shut them down focused too much on the rat feces in the kitchen, and not enough on the well watered house plants in the dining room
To be fair, that has been Theranos' response to ALL criticism for the past 7 months. "Everyone is begging us for our secret recipes, but that is company secrets/proprietary science!"
For the record, I'm pretty sure Theranos is up to something very shady. Spend a couple hours watching just interviews with Holmes and reading the glassdoor reviews by current and former employees and you'll quickly start to piece together some pretty sketchy stuff.
Their glassdoor profile is full of some of the most obviously fake reviews I've ever seen, I wouldn't at all be surprised if about half of them were written by Holmes herself instead of running the company.
I've since spent some time looking into the company and asking some people I know in the industry about the company and the opinion seems to run from "scam" to "gross ineptitude".
Something smells really bad about Theranos and it's probably going to ruin a lot of people's careers while a select few are going to walk away with a nice percentage of the VC money in the end. The story on this will probably get caught up in post-Theranos litigation for many many years and I'll probably be retired long before the whole story is known.
The real problem is trying to ascertain motive. Money seems too easy for Holmes to have been working at it for so long. But it could be that simple.
I can't imagine what Liz's end game might be. What did she expect to happen in this situation? The healthcare industry is very tightly regulated. If you want to (temporarily?) mislead investors or customers, it's one of the worst options out there.
And after a decade in stealth mode, why did she make things public in 2013, before the technology was working? If she's as much of an attention-seeker as some say, how did she survive for the first decade without anyone caring?
Holmes should havs finished college and got a Med Tech degree rather than becoming fluent in Mandarin. A bench level Med Tech would have done a better job.
But slaps forehead the Mandarin is for the money.... Duh
This is a little sensationalist - it's a list of deficiencies in their labs, not in their tests. More akin to an OSHA violation letter than a cease and desist letter.
This is definitely not a good thing for Theranos, but it isn't them being called out for bogus biotech. (Not that that would surprise me immensely if it happened.)
It's only "sensationalist" if you cherry-pick the most bureaucratic-sounding requirement, and ignore the first one in the list, which is a lot more fundamental to what a diagnostic lab does -- they're violating some unspecified part(s) of the quality system requirements for labs:
This also is a section, it's worth nothing, that consists mainly of references to lots of other, more specific, requirements. There's really no way of knowing what the violations are, other than to take the letter at its word that the violations are serious.
This isn't taxi medallions -- mess this basic stuff up, and you're putting people's lives directly at risk.
No, it's worse -- this is basic blocking and tackling stuff that is table stakes for entering the medical testing space. This is not stuff that you "disrupt." As the letter says, these deficiencies could be putting customers' lives at risk.
I wonder how far Liz Holmes is going to take this thing. I wonder when it hits the breaking point where even she accepts the cold hard truth that this company that was famously valued at $9b is pure vaporware, built on little more than smoke and mirrors. Does the company need to file bankruptcy? Do investors need to sue to recover what money is left? Do insiders need to be criminally charged? I wonder...
Serious question: Even if Theranos goes down in flames, won't she walk away from this with a fortune? Maybe not quite the fortune she thought, but still many millions?
they will pivot. If i remember correctly from the magazine articles her original idea 10+ years ago was cell-phone attached to some diagnostic gadget. May be time to revisit, now with all the money and manpower.
Having a Unicorn go bust is akin to having a house get foreclosed on in your neighborhood in 2008. It doesn't reflect kindly on the value of the other homes in the neighborhood.
That is one of the reasons why venture capitalists not even affiliated to Theranos had suspiciously optimistic responses to the initial allegations last year:
The Theranos saga is incidentally one of the reasons I wrote the "You Can't Criticize Startups" rant on Monday. (to be fair, ignoring federal regulations is a different scope than mere criticism.)
It is worse for the non-software startups like biotech. With a software startup it normally does not take long for the investors to get an idea if the tech is real or not, but with biotech this can take many years.
Biotech investment is based on trust that the scientists are telling the truth. A bad actor in this area can really poison the environment for all other biotech startups - if you can’t trust the scientists then you have nothing.
Perhaps. A VC portfolio full of unicorpses does look kinda like a bad neighborhood. Limited partners might get scared off.
Or maybe a good VC firm that also has some huge hits would just explain that they're just swinging for the fences, so sometimes they'll have a spectacular miss or two.
Honestly, I can't wait for a few unicorns to fizzle. But only because maybe then the whole "unicorn" meme will finally fade away.
The corollary of "it's better to ask forgiveness than permission" is "sometimes, you will ask forgiveness and be told 'hell no, what were you thinking?'"
Unbelievable. I really dislike this company for trying to pull a fast one with people's health.
I really hope some lawyers file a suit against Elizabeth Holmes or something bad happens to create a strong disincentive from someone ever trying to do something like ever again.
The chinese milk crisis is an extreme example of what could be done. The executives were executed or imprisoned, which again could be extreme, but I doubt anyone in china would ever try it again.
http://news.bbc.co.uk/2/hi/asia-pacific/8375638.stm
CMS surveys, deficiencies, and plans of correction are to some extent business as usual for large health care providers. The article doesn't mention what they got hit with so it could be a big deal, or just an isolated incident that a surveyor happened to observe.
Correcting the problem tends to be easy, but measuring and reporting back your progress creates administrative expense. An example is paying for someone to train your employees on something related to the deficiency and then doing a random audit of their records at regular intervals for a few months afterwards.
Technically you can get shut down, but it isn't common.
Without the actual statement of definicinies, there's not much to this letter other than that they have ten days to be in compliance with... something?
You can look up the regulations listed in the letter although you won't know exactly what their deficiencies are.
What is interesting to me is that this is CMS, not the FDA. CMS runs Medicare and Medicaid and is basically saying that if they don't improve their compliance, CMS will stop paying for their lab tests.
As a medical laboratory professional I can shed some light:
The Immediate Hazard Hematology citation comes from an expired reagent being used on a Hematology analyzer (clearly a standard Siemens analyzer, not the mysterious new technology they won't disclose). This is easily fixable, but reveals a great deal about what is ACTUALLY going on in that lab
The Laboratory Director and Technical Consultant citations are standard when you have an Immediate Hazard citation. But they also reveal how poorly organized this lab is and how whomever is responsible for the laboratory leadership at a directorship level knows NOTHING about CMS laboratory regulations, or tried to pull a fast one on CMS/CLIA by hiring a patently unqualified Dermatologist to be a part-time director of a CLIA high-complexity lab. This is a MASSIVE glaring error in leadership and quality assurance at the very highest level. The executive leadership of this company appears to know nothing about the business they seek to upend. I am sure the Cleveland Clinic is wondering WTH they got themselves involved with. Also very telling that Holmes was at Cleveland Clinic the day after this letter was released.
They are clearly operating as a bog-standard lab doing conventional testing to be able to report patient results and be a traditional CLIA-certified lab (except may be one test they have - the HSV) This significant fact seems to have escaped everyone. They can't report any tests performed by their top-secret technology because it ain't FDA approved.
For a conventional refererence lab like Quest or Labcore, their inspection faults would be embarrasing but fixable. For Theranos, it's likely fixable but the PR fiasco may be ultimately fatal.
Someone shoukd really have studied the industry they seek to upturn and worked with real professionals rather than pusing global dominance and glossy PR. The cart is miles ahead of the horse at Theranos
Hmm... I have a very good friend who is looking for a better job doing quality, regulatory, or compliance work at a biotech/medical device company. From what I understand, this seems kinda like the stuff a company in this area deals with regularly; It's just that most companies just don't publicize it. Anyway forwarded this to him.
edit: I should clarify, I mean general regulatory issues, I'm not commenting on the specifics, but every company faces audits and inspections.
Do you remember when the WSJ first started really dismantling the Theranos house of cards last fall, how a bunch of prominent VCs and publications like TechCrunch, with a lot to lose if the startup bubble pops, immediately circled the wagons? There was a lot of "this is a media hit piece", "we need time to evaluate the technology", "Liz Holmes is a visionary", etc. I wonder if we'll be getting retractions and apologies from those people.
To start with, I am a clinical lab medical director and clinical pathologist. I've commented on Theranos a few times before on HN. That said, I think three things have been missed in all of this
1) There are a lot of bad labs out there like Theranos, and Theranos' story is thus only unique because of how pumped up it got. Clinical labs are "old economy" businesses, and the idea that someone could sprinkle "new economy" fairy dust and turn it into an Uber or Netflix success story is more about the echo chamber that is Silicon Valley, the general lack of scientific interest or rigor in clinical diagnostics in the tech industry, a somewhat Aspergey yet charismatic CEO, black turtlenecks, and friendship with important ex-government officials and VC folks than anything special about what was going on in their laboratory. Plenty of labs have been caught and shut down for what Theranos has done, and while I didn't think that it was actually occurring there, I am not terribly surprised.
2) The magic of their Edison box, even if it had turned out to work, was not nearly as impressive if you know anything about how clinical labs operate today. The claims that they have made (can do tests on MICROLITERS and have imprecision LESS THAN 5-10%!) are actually standard these days for many assays. As a lab director, I was always disturbed by the lay press puff pieces that said things about Theranos that were totally uninteresting and unimpressive to anyone knowledgeable...what clearly happened was that no one at Forbes, etc.. actually asked anyone who works in a clinical lab to comment. The commentary always focused more on the phenomenon of Theranos, rather than the substance...probably because the substance was super boring.
3) What has consistently been missed, and is still missed today, is that even if Theranos' technology worked and their labs weren't being run with a criminal disregard for standard laboratory practice, is that Theranos' business objectives would STILL be a horrible idea. Their push to democratize health information, to do more testing early to prevent disease rather than detect late, to test for lots of things in healthy people to increase "wellness", etc... is all total bullshit. With few exceptions, lab tests are for sick people, and testing healthy people with lots of tests simply consumes money and generates false positive results that are expensive to work up. Also, there are NO TESTS for all of the conditions (cancers, etc...) that they claim to be helping you detect early. Getting your sodium and potassium levels weekly won't help you avoid kidney disease, cancer, or diabetes, but it will make your pocketbook shrink and it will give you some falsely abnormal values 1 in 20 times you do it. This has been the true play of Theranos, which is to do a massive amount of testing on well people, marketed directly to healthly people without the advice of doctors, with the intent of arming a bunch of worried well people with an avalanche of insignificant noisy information to present to their physicians. This helps no one other than Theranos.
I have often seen a lot of objections to (3) from people on HN, especially tech-sorts who think that they are better able to handle data than the average person. However, this is fundamentally flawed. For those who are interested in Bayesian analyses, consider the utility of any test when the pre-test probability is low - the answer is that positive results are almost always false positives, or at least difficult to interpret. The answer is not getting more tests, even if it's cheap. Lab tests these days ARE cheap...it's the clinical followup that is expensive.
I will be very interested to see how this all plays out now. The big players, Labcorp and Quest, have both tried the direct-to-consumer/in-drugstore model for testing, and amusingly actually shut their offerings down years ago because of lack of interest. The truth of the matter is that making health information more available to people sounds great, but really, the only people who end up collecting that information are affluent, worried-well people who should be discouraged from testing in the first place. The people who need more routine testing are poor, socially-underserved and neglected people with chronic illnesses, but I do not think that Theranos is planning on opening test facilities in Flint, Michigan to give Hemoglobin A1c monitoring tests for free to the elderly impoverished people there. To the contrary, they've tried to open in areas where they can get customers who they can trap into believing that they need lab tests like they need step counts from a fitbit. Hopefully, this bump in the road will caution others trying to do the same thing, but I really doubt it.
This interview snippet (only 4 minutes long) with the CEO Elizabeth Holmes is a revealing look into the mind of a possibly crazy person (crazy with power).
[+] [-] jimrandomh|10 years ago|reply
The first two laws they are cited as having broken are about quality control standards. The next two laws they are cited as having broken are about qualifications that must be held by the laboratory director and technical supervisor. The last law they are cited as having broken is about qualifications that must be held by technicians. They have ten days to come into compliance, but in order to address these violations they will have to either hire new staff for key leadership and other positions, or pull their product from the market. They will do the latter.
This same company was previously forced to pull their "nanotainer" testing system from the market because when regulators sent them control samples, they fraudulently tested them on different equipment and with different procedures than they used with patient samples. I will be surprised if no criminal charges are brought against Theranos CEO Elizabeth Holmes.
[+] [-] aczerepinski|10 years ago|reply
[+] [-] dnautics|10 years ago|reply
[+] [-] brandonb|10 years ago|reply
http://centerfordigitalhealthinnovation.org/
I'm a machine learning engineer working with UCSF cardiology. I certainly don't know all the answers, but I'm happy to try to answer questions or direct people to the right place.
[+] [-] entee|10 years ago|reply
Working in medicine is hard, working with biology is hard, not just because of regulatory hurdles, but because fundamentally the problems in those fields are much more commonly questions of basic science than engineering.
Good science leads to good companies, and if you can't do good science you're probably going to fail in this space. Good to see solid research institutions creating spaces to nurture good science at startups.
[+] [-] todayiamme|10 years ago|reply
[+] [-] bluker|10 years ago|reply
Theranos to date has raised $88.4M. The Series C was raised in 2010 following a 4-year hiatus.
In the ten years since the founding of Theranos, they were unable to hire anyone who would help them figure all this shit out?
It seems insane to me that a well respected venture firm like DFJ, who invested in their Series A,B and C, would not have done their due diligence and understood where Theranos would become vulnerable. Everyone knew that government regulators would be involved since day one.
I am bullish on Elizabeth. She is obviously extremely intelligent and charismatic but I'm bearish on her investors. Step one of funding should have been building a blood test that actually works and step two is getting that $88M test approved.
Without knowing the whole story it's hard to form an opinion about the situation but I am super interested in the psychology of how all "this" happened.
Thoughts?
[+] [-] CPLX|10 years ago|reply
She's childhood best friends with Tim Draper's daughter.[0]
It really is that simple. If you saw a state construction contract going to a firm controlled by a friend of the Chinese Premiere's daughter you wouldn't be confused at all right? So why should anyone be confused now?
[0] http://www.mercurynews.com/michelle-quinn/ci_26147649/quinn-...
[+] [-] codinghorror|10 years ago|reply
> Clinkle had a polished demo that came before things like Apple Pay, said one former employee, who declined to be named. But most importantly that person added, Duplan “was charismatic when he wanted to be” and could “raise money in absurd abundance.”
You really want to change the world? Forget being a programmer, learn to be be charismatic.
[+] [-] dbcooper|10 years ago|reply
http://fortune.com/2015/10/28/theranos-is-seeking-to-raise-2...
IIRC, the $88.4M figure comes from their publicly disclosed funding as at end 2010.
[+] [-] dfsegoat|10 years ago|reply
[+] [-] such_a_casual|10 years ago|reply
[+] [-] jonathankoren|10 years ago|reply
I can't say Theranos's comments about the matter even begin to assuage the concerns this brings. Trying to pass off the immediate jeopardy fault in hematology (i.e. blood testing) as "not apply[ing] to the whole lab" is absurd. It's like a restaurant saying that the board of health complaint that shut them down focused too much on the rat feces in the kitchen, and not enough on the well watered house plants in the dining room. It's so tone deaf.
[+] [-] randycupertino|10 years ago|reply
To be fair, that has been Theranos' response to ALL criticism for the past 7 months. "Everyone is begging us for our secret recipes, but that is company secrets/proprietary science!"
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] bane|10 years ago|reply
For the record, I'm pretty sure Theranos is up to something very shady. Spend a couple hours watching just interviews with Holmes and reading the glassdoor reviews by current and former employees and you'll quickly start to piece together some pretty sketchy stuff.
Their glassdoor profile is full of some of the most obviously fake reviews I've ever seen, I wouldn't at all be surprised if about half of them were written by Holmes herself instead of running the company.
https://www.glassdoor.com/Reviews/Theranos-Reviews-E248889.h...
Here's what I wrote on this about a month ago. https://news.ycombinator.com/item?id=10765996
I've since spent some time looking into the company and asking some people I know in the industry about the company and the opinion seems to run from "scam" to "gross ineptitude".
Holmes' answers to simple questions are about as mealy mouthed as I've ever heard outside of Congress. e.g. https://www.youtube.com/watch?v=MBs-oj7U-bo
Something smells really bad about Theranos and it's probably going to ruin a lot of people's careers while a select few are going to walk away with a nice percentage of the VC money in the end. The story on this will probably get caught up in post-Theranos litigation for many many years and I'll probably be retired long before the whole story is known.
The real problem is trying to ascertain motive. Money seems too easy for Holmes to have been working at it for so long. But it could be that simple.
[+] [-] w1ntermute|10 years ago|reply
And after a decade in stealth mode, why did she make things public in 2013, before the technology was working? If she's as much of an attention-seeker as some say, how did she survive for the first decade without anyone caring?
[+] [-] sixQuarks|10 years ago|reply
[+] [-] LevyJenningsSD2|10 years ago|reply
But slaps forehead the Mandarin is for the money.... Duh
[+] [-] unknown|10 years ago|reply
[deleted]
[+] [-] pboutros|10 years ago|reply
Here is an example of the regs that they are violating. It's things like lack of lab personnel certification. https://www.gpo.gov/fdsys/pkg/CFR-2011-title42-vol5/pdf/CFR-...
This is definitely not a good thing for Theranos, but it isn't them being called out for bogus biotech. (Not that that would surprise me immensely if it happened.)
[+] [-] timr|10 years ago|reply
https://www.gpo.gov/fdsys/pkg/CFR-2011-title42-vol5/pdf/CFR-...
These are horribly oppressive, bureaucratic, unnecessary requirements like "maintain basic scientific controls":
https://www.law.cornell.edu/cfr/text/42/493.1256
This also is a section, it's worth nothing, that consists mainly of references to lots of other, more specific, requirements. There's really no way of knowing what the violations are, other than to take the letter at its word that the violations are serious.
This isn't taxi medallions -- mess this basic stuff up, and you're putting people's lives directly at risk.
[+] [-] URSpider94|10 years ago|reply
[+] [-] Aleman360|10 years ago|reply
[+] [-] bedhead|10 years ago|reply
[+] [-] flormmm|10 years ago|reply
[+] [-] Uhhrrr|10 years ago|reply
Of course, yes, there could also be all sorts of crazy sketchy voodoo. Ya never know.
[+] [-] trhway|10 years ago|reply
[+] [-] dev1n|10 years ago|reply
[+] [-] minimaxir|10 years ago|reply
https://twitter.com/joshelman/status/655033793414238208
https://twitter.com/williamalden/status/658705178523258880
http://techcrunch.com/2015/11/21/in-defense-of-theranos/ (Thanks to Analemma_ above for reminding me of this)
The Theranos saga is incidentally one of the reasons I wrote the "You Can't Criticize Startups" rant on Monday. (to be fair, ignoring federal regulations is a different scope than mere criticism.)
[+] [-] danieltillett|10 years ago|reply
Biotech investment is based on trust that the scientists are telling the truth. A bad actor in this area can really poison the environment for all other biotech startups - if you can’t trust the scientists then you have nothing.
[+] [-] skewart|10 years ago|reply
Or maybe a good VC firm that also has some huge hits would just explain that they're just swinging for the fences, so sometimes they'll have a spectacular miss or two.
Honestly, I can't wait for a few unicorns to fizzle. But only because maybe then the whole "unicorn" meme will finally fade away.
[+] [-] bgribble|10 years ago|reply
[+] [-] MollyR|10 years ago|reply
The chinese milk crisis is an extreme example of what could be done. The executives were executed or imprisoned, which again could be extreme, but I doubt anyone in china would ever try it again. http://news.bbc.co.uk/2/hi/asia-pacific/8375638.stm
[+] [-] jonsterling|10 years ago|reply
[+] [-] aczerepinski|10 years ago|reply
Correcting the problem tends to be easy, but measuring and reporting back your progress creates administrative expense. An example is paying for someone to train your employees on something related to the deficiency and then doing a random audit of their records at regular intervals for a few months afterwards.
Technically you can get shut down, but it isn't common.
[+] [-] Naritai|10 years ago|reply
[+] [-] whbk|10 years ago|reply
[+] [-] bahador|10 years ago|reply
[+] [-] danielvf|10 years ago|reply
Does anyone know what they are being ask to fix?
[+] [-] refurb|10 years ago|reply
What is interesting to me is that this is CMS, not the FDA. CMS runs Medicare and Medicaid and is basically saying that if they don't improve their compliance, CMS will stop paying for their lab tests.
[+] [-] minimaxir|10 years ago|reply
[+] [-] LevyJenningsSD2|10 years ago|reply
The Laboratory Director and Technical Consultant citations are standard when you have an Immediate Hazard citation. But they also reveal how poorly organized this lab is and how whomever is responsible for the laboratory leadership at a directorship level knows NOTHING about CMS laboratory regulations, or tried to pull a fast one on CMS/CLIA by hiring a patently unqualified Dermatologist to be a part-time director of a CLIA high-complexity lab. This is a MASSIVE glaring error in leadership and quality assurance at the very highest level. The executive leadership of this company appears to know nothing about the business they seek to upend. I am sure the Cleveland Clinic is wondering WTH they got themselves involved with. Also very telling that Holmes was at Cleveland Clinic the day after this letter was released.
They are clearly operating as a bog-standard lab doing conventional testing to be able to report patient results and be a traditional CLIA-certified lab (except may be one test they have - the HSV) This significant fact seems to have escaped everyone. They can't report any tests performed by their top-secret technology because it ain't FDA approved.
For a conventional refererence lab like Quest or Labcore, their inspection faults would be embarrasing but fixable. For Theranos, it's likely fixable but the PR fiasco may be ultimately fatal.
Someone shoukd really have studied the industry they seek to upturn and worked with real professionals rather than pusing global dominance and glossy PR. The cart is miles ahead of the horse at Theranos
[+] [-] lsiebert|10 years ago|reply
edit: I should clarify, I mean general regulatory issues, I'm not commenting on the specifics, but every company faces audits and inspections.
[+] [-] emeraldd|10 years ago|reply
[+] [-] Analemma_|10 years ago|reply
[+] [-] enziobodoni1|10 years ago|reply
1) There are a lot of bad labs out there like Theranos, and Theranos' story is thus only unique because of how pumped up it got. Clinical labs are "old economy" businesses, and the idea that someone could sprinkle "new economy" fairy dust and turn it into an Uber or Netflix success story is more about the echo chamber that is Silicon Valley, the general lack of scientific interest or rigor in clinical diagnostics in the tech industry, a somewhat Aspergey yet charismatic CEO, black turtlenecks, and friendship with important ex-government officials and VC folks than anything special about what was going on in their laboratory. Plenty of labs have been caught and shut down for what Theranos has done, and while I didn't think that it was actually occurring there, I am not terribly surprised.
2) The magic of their Edison box, even if it had turned out to work, was not nearly as impressive if you know anything about how clinical labs operate today. The claims that they have made (can do tests on MICROLITERS and have imprecision LESS THAN 5-10%!) are actually standard these days for many assays. As a lab director, I was always disturbed by the lay press puff pieces that said things about Theranos that were totally uninteresting and unimpressive to anyone knowledgeable...what clearly happened was that no one at Forbes, etc.. actually asked anyone who works in a clinical lab to comment. The commentary always focused more on the phenomenon of Theranos, rather than the substance...probably because the substance was super boring.
3) What has consistently been missed, and is still missed today, is that even if Theranos' technology worked and their labs weren't being run with a criminal disregard for standard laboratory practice, is that Theranos' business objectives would STILL be a horrible idea. Their push to democratize health information, to do more testing early to prevent disease rather than detect late, to test for lots of things in healthy people to increase "wellness", etc... is all total bullshit. With few exceptions, lab tests are for sick people, and testing healthy people with lots of tests simply consumes money and generates false positive results that are expensive to work up. Also, there are NO TESTS for all of the conditions (cancers, etc...) that they claim to be helping you detect early. Getting your sodium and potassium levels weekly won't help you avoid kidney disease, cancer, or diabetes, but it will make your pocketbook shrink and it will give you some falsely abnormal values 1 in 20 times you do it. This has been the true play of Theranos, which is to do a massive amount of testing on well people, marketed directly to healthly people without the advice of doctors, with the intent of arming a bunch of worried well people with an avalanche of insignificant noisy information to present to their physicians. This helps no one other than Theranos.
I have often seen a lot of objections to (3) from people on HN, especially tech-sorts who think that they are better able to handle data than the average person. However, this is fundamentally flawed. For those who are interested in Bayesian analyses, consider the utility of any test when the pre-test probability is low - the answer is that positive results are almost always false positives, or at least difficult to interpret. The answer is not getting more tests, even if it's cheap. Lab tests these days ARE cheap...it's the clinical followup that is expensive.
I will be very interested to see how this all plays out now. The big players, Labcorp and Quest, have both tried the direct-to-consumer/in-drugstore model for testing, and amusingly actually shut their offerings down years ago because of lack of interest. The truth of the matter is that making health information more available to people sounds great, but really, the only people who end up collecting that information are affluent, worried-well people who should be discouraged from testing in the first place. The people who need more routine testing are poor, socially-underserved and neglected people with chronic illnesses, but I do not think that Theranos is planning on opening test facilities in Flint, Michigan to give Hemoglobin A1c monitoring tests for free to the elderly impoverished people there. To the contrary, they've tried to open in areas where they can get customers who they can trap into believing that they need lab tests like they need step counts from a fitbit. Hopefully, this bump in the road will caution others trying to do the same thing, but I really doubt it.
[+] [-] akhilcacharya|10 years ago|reply
[+] [-] hashmymustache|10 years ago|reply
[+] [-] hackaflocka|10 years ago|reply
https://www.youtube.com/watch?v=MBs-oj7U-bo