Top 10 Theranos Scandal Facts
It had promised a healthcare revolution, but as of early 2016, it finds itself embroiled in a major scandal. Join http://www.WatchMojo.com as we count down news stories that might be on your radar. In this installment, we're counting down 10 crucial facts you should know about the Theranos scandal.
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Top 10 Theranos Scandal Facts
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It had promised a healthcare revolution, but as of early 2016, it finds itself embroiled in a major scandal. Welcome to WatchMojo News, the weekly series where we break down news stories that might be on your radar. In this installment, we’re counting down 10 crucial facts you should know about the Theranos scandal.
#10: What Is Theranos? The Company
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Founded in 2003, Theranos – a play on the words ‘therapy’ and ‘diagnosis’ – is a health-technology and medical laboratory company. As a growing startup based in California, it promised an innovative service to streamline blood testing, making it faster, cheaper and easier. However, the company is also famously secretive, and exact details about Theranos’ methods have proven difficult to ascertain. Its blood-testing device, known as Edison, uses a fingerstick to draw tiny amounts of blood, from which unprecedented amounts of data can allegedly be found. But Theranos’ credibility was called into question in the mid-2010s.
#9: Who Is Elizabeth Holmes? The Founder
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As CEO and founder, Elizabeth Holmes is the face of Theranos, and the world’s youngest self-made female billionaire. A former student at Stanford University, where she studied chemical engineering, Holmes dropped out of her undergraduate program when she was 19 to pursue her ‘pioneering’ venture. Despite the fact that Edison has never been subjected to peer-reviewed study, she worked to secure over $700 million from investors, for a company once valued at $9 billion. In April 2016, Forbes valued Holmes’ own net worth at around $3.6 billion, though that figure had been as high as $4.7 billion before it dipped as a result of recent controversies.
#8: How Does Theranos Differentiate Itself from Other Companies? The Technology
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There are three strands to consider when discussing Theranos’ claims of innovation. First, and fundamentally, it aims for faster tests, using less blood. Whereas vials of blood are traditionally required from major veins, the Theranosmethod only needs ‘micro-liters’ taken from a fingertip. Second, Theranos aims to start democratizing the health care system by giving consumers direct access to blood tests. This would be done by enabling people to request lab tests without a doctor’s prescription. Finally, Theranos so-called groundbreaking technology has consistently drawn attention; however, it’s notoriously reluctant to explicitly reveal its methods.
#7: Which Companies Are Considered Theranos’ Competition? The Competition
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The Washington Post describes Theranos as ‘boldly plowing into a world where two large laboratory testing companies, Quest Diagnostics and Laboratory Corp. of America, have billions of dollars of precious turf to protect.’ Quest was founded in 1967 and LabCorp in 1978, and both are among the largest clinical laboratories in the world. But Theranos has sought to rethink traditional blood testing, and it isn’t alone. Abbott Laboratories have developed the i-STAT device, which requires a physician to draw only small amounts of blood, and Alere has a similar method that received FDA clearance in 2006 – something that Theranos has struggled to get. While neither is an exact replica of whatTheranos offers, both require smaller amounts of blood to work.
#6: Who Is Backing Theranos? The Rise
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Theranos has received widespread attention, partly thanks to its high profile backers. However, because the company lacks board members that have a medical background, the company has also prompted concern from the public. Instead, most of the members have significant military and government experience. This has led to boardroom shuffling, with former Secretaries of State Henry Kissinger and George P. Shultz being moved from the board of directors to a "board of counselors" in 2015. In April 2016, the company announced the addition of multiple “nationally respected laboratory and medical experts” to its Scientific and Medical Advisory Board. But its board of directors still consisted of former Secretary of Defense, William Perry, US senators Sam Nunn and Bill Frist, as well as former senior military figures, such as the retired US Marine Corps General, James Mattis, and former Chief of Naval Operations, Gary Roughead. Furthermore, in February of that same year,Theranos was backed by American lawyer David Boies, who was made the firm’s attorney, and was given a spot on the board of directors.
#5: When Did Doubts About the Company’s Abilities Surface? The Wall Street Journal
After the company enjoyed dramatic early success by securing massive funding, Theranos’ reputation came under significant scrutiny in October 2015, when it was subject to a front-page investigation by the Wall Street Journal. Following the report, which included a series of allegations, increased pressure was put onto Theranos to reveal more details about its product, which it was still reluctant to do. Within a month, Theranos had lost further credibility, and business deals began to unravel. In one of the most prominent cases, the grocery chain, Safeway, sought to sever ties, despite having spent $350 million building Theranos clinics in its stores.
#4: What Is the Scandal Surrounding Theranos? The Situation
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First, it was alleged that the vast majority of Theranos blood tests were actually carried out using traditional machines bought from companies such as Siemens AG, rather than its own Edison device. In many cases, blood was taken from a patient using the fingerstick, but was then diluted into a larger sample and analyzed using conventional technology. Furthermore, president Sunny Balwani was also accused of ordering Theranos’ employees to “perform proficiency tests using third-party machinery at a time when the lab was performing those same tests using its proprietary system.” The most serious allegations, for the general public at least, suggest that Theranos blood test results are often inaccurate, and that the questionable data produced could have harmful repercussions for the patient. Among further inadequacies found at Theranoswas the employment of unlicensed or under qualified workers, and improper use of equipment. Theranos came under fire again in mid-April 2016, after the Wall Street Journal reported that federal prosecutors had launched an investigation into whether the company misled investors about the way it does business and what it uses to do it.
#3: How Would the Sanctions Affect Theranos and Holmes? The Ban
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A letter sent by the Centers for Medicare and Medicaid Services, dated March 18th, 2016, found that Theranos had not sufficiently corrected its problems. The letter, which was again revealed by the Wall Street Journal, included CMS proposals to ban Elizabeth Holmes and Theranos president Sunny Balwani from the blood-testing business for two years. Theranos remains hopeful that CMS won’t impose the sanctions, saying ‘It’s all hypothetical at this point.’ However, should a ban be implemented, the economic damage could be massive, and the company’s reputation unsalvageable.
#2: Did the Media and Start-up Culture Contribute to This Problem? The Sensationalism
In the world of start-up technologies, it is quite common to ‘bend the truth’ and claim what you have is ‘revolutionary’ when perhaps it is not. There’s so much competition, and so many people looking for the next new thing. However, while sensationalism may be excusable with regards to consumer tech or social media apps, for example, it is very risky to deviate from the truth in healthcare. If a medical start-up doesn’t do exactly as it claims, then people’s lives may be put in danger – which is why recent revelations have caused so much damage for Theranos. If it had introduced the Edison more modestly, maybe the scandal would be less widespread, but there’d also be less general excitement for the product. As it happens, there was massive initial interest, resulting in a very public fall from grace.
#1: Will Theranos Live Up to Its Hype? The Future
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It’s difficult to see Theranos emerging out of this scandal unscathed. Healthcare technologies need to be trustworthy from both the investor’s and patient’s point of view, but this situation has thrown Theranos’ integrity into doubt. As pressure mounts on the company, and medical authorities scrutinize further, its backers could begin to withdraw. That said, if Theranos can prove that its technology is safe, reliable and pioneering, then it would enjoy a huge, high profile victory. But as of April 2016, it’s a balancing act between revolution and reliability, andTheranos appears to be failing.
