The company gained the backing of some of the foremost venture capitalists in Silicon Valley, and its board included several well-connected politicians, including three former cabinet secretaries, two former senators and several retired senior military officers.8
Ms. Holmes’ plan was to disrupt the world of laboratory medicine by collecting a few drops of blood from a patient via a simple finger prick and processing it using proprietary technology, which would reduce lab costs by as much as a 90%, resulting in huge savings for patients and insurers. Using direct-to-patient marketing and building hundreds of kiosks inside Walgreen’s pharmacies nationwide, Theranos was going to disrupt clinical laboratory medicine, a notable driver of medical costs. A brilliant plan!
But there were a few nettlesome issues that Theranos’ investors and Board of Directors somehow overlooked.9 The first was that the company never divulged the scientific basis of its proprietary method, code named Edison, believing that by exposing their technology to open scrutiny they might lose their technological advantage to competitors. The second was that federal lab inspectors were growing concerned about this mysterious methodology. They cited Theranos for several safety infractions as early as 2013, and by fall 2015, inspectors described the situation at their central lab in Newark, Calif., as “likely to cause, at any time, serious injury or harm, or death, to individuals served by the laboratory or to the health and safety of the general public.”9 (Note: Federal health regulators have since proposed banning Theranos Inc. founder Elizabeth Holmes from the blood-testing business for at least two years.) It may also not have helped that a dermatologist lacking board certification in pathology or laboratory science was the director listed on the Newark facility’s license. Being secretive and sloppy is rarely a formula for success. Secretaries of state and senators ought to know that simple fact.
A Lesson in Behavior Modification
The numbers are astounding. With less than 5% of the world’s population, the U.S consumes nearly 80% of the global supply of opioids.10 The No. 1 most prescribed drug for several years running is hydrocodone—not statins, not beta-blockers or diuretics. There are several theories for why our nation has a drug addiction issue, including the now-debunked belief that held sway in the 1990s claiming that patients suffering from chronic pain carried extremely low risks for developing opioid addiction (see “Fallout from False Assumptions in Medicine,” The Rheumatologist, December 2014). Recently, the U.S. Drug Enforcement Agency (DEA) moved hydrocodone-containing products from schedule III of the Controlled Substances Act to the more-restrictive schedule II, meaning patients could no longer obtain refills on prescriptions that now had to be submitted in person to the pharmacy each month.
