View from Washington: Theranos 4 – First do no harm
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The Theranos scandal could challenge Silicon Valley's attempts to change priorities in healthcare, even though many in the sector see it as the right path.
After a Covid-19-forced hiatus, the fraud trial of Theranos founder Elizabeth Holmes began hearing from witnesses in earnest on Tuesday (14 September). Among them was Erika Cheung, a former lab associate, who was one of the main whistleblowers about the unacceptable unreliability and scope of the company’s Edison blood-testing system. Her testimony and comments elsewhere speak beyond the case to another of its broadly important aspects: trust in new healthcare technology.
In a 2020 TEDxBerkeley talk, Cheung described why she joined the company in 2013 and quit just seven months later as a result of three ‘red flags’: an ongoing series of inaccurate Edison results across a number of controlled samples; the reporting of results from other approved testing hardware as results from Edison to regulators at the Food and Drug Administration; and COO Ramesh ‘Sunny’ Balwani’s refusal to act on her concerns when she raised them.
“So what does this signal to you? It signals to you that even within your own organisation, you don't trust the result that your technology is producing,” she continued.
Cheung would subsequently alert the US laboratory regulator, the Centres for Medicare and Medicare Services (CMS). A resulting inspection closed Theranos’ clinical labs and banned the company from operating one for two years. However, by this time, many inaccurate test results had been sent out. Some of their recipients will also be witnesses.
The US is already in the throes of another major medical scandal, the long-running liability and compensation battle over the opioid crisis. This is currently dominated by a controversial settlement between the government and those behind the most aggressively promoted of those painkillers, Oxycontin: the pharmaceutical company Purdue Pharma and its divesting owners, the Sackler family. To get some idea of how deeply the crisis has cut, there were more than 70,000 deaths in 2019 in the US attributable to opioid overdoses, according to the National Institutes of Health; millions are thought to remain addicted.
Although research is ongoing, a further potential indication of the depth of that cut is an apparent correlation between the US states where opioid addiction has been most widespread and those where Covid-19 vaccine scepticism is greatest. There may be a domino effect here as well as a political one.
But rather than drugs, the Theranos scandal may raise general concern in another field within healthcare, though in a similar way. That comes down to what Silicon Valley sees as its big ‘in’ to the sector, alongside biopharmaceuticals.
Cheung described at TED what attracted her to the company. “Essentially, what the company was doing was creating a medical device where you would be able to run your entire blood panel on a fingerstick of blood. So, you wouldn't have to get a big needle stuck in your arm in order to get your blood tests done,” she said. “So this was interesting, not only because it was less painful, but also it could potentially open the door to predictive diagnostics.”
Where Big Pharma treats illness and disease, Big Tech now sees an opportunity in either preventing them or, very much where Theranos aimed to stand, catching them early. It is a shift in emphasis that healthcare providers see as increasingly necessary given escalating costs and ageing populations.
Theranos’ technology stood very much at the disruptive end of this range, though it was chasing a fast-moving space – the blood-testing market alone is expected to reach a value of $140bn (£101bn) by 2028 at an annual growth rate of 8.3 per cent, according to Grand View Research.
A wide range of preventative products and services is already on offer with more to come, most based on established, recognised technologies which they aggregate in new ways rather than seek to disrupt wholly.
The smartwatch has turned out to be less of a communications device and more one for wellbeing, less Dick Tracy and more Dick Fosbury, you might say. Meanwhile, Forward, a US start-up founded by a former Googler, has spent the last five years building out a subscription service that provides practice and online access to MDs (medical doctors) alongside advanced and continuous diagnostics including body scans, DNA and blood tests, and other traditional metrics. It aims to make this combination more actionable through the addition of AI-based analysis.
There is no question of fraud surrounding any of those examples, but what might Theranos nevertheless mean for confidence in this shift in approach?
Public trust must come first, and with Holmes’ trial receiving worldwide coverage, questions are going to be raised. Her defence has succeeded in limiting the testimony of those who received incorrect tests to the tests themselves rather than their psychological impact. But the instances are likely to be shocking. You don’t need much empathy to appreciate what the impact might have been for someone who received, say, an incorrect HIV test.
Another point, though, is that most Americans are confident about healthcare as it stands. According to the Pew Research Centre, 74 per cent have a “mostly positive” view of MDs and 68 per cent feel the same way about medical researchers. However, when it comes to the quality of the research, only 43 per cent believe it is good all or most of the time. There is some conservatism out there, so changing how things are done will involve a fair amount of persuasion. Theranos hardly helps.
Then, there is the issue of investment. In targeting potential backers, Holmes seems to have pitched chiefly at the great-and-the-good (e.g., former Secretaries of State George Shultz and Henry Kissinger, and media mogul Rupert Murdoch) and venture capital firms associated more with digital hardware and software. These were sources for which, even if not entirely new territory, healthcare lay outside their core competences. So they may not have been aware that many phlebotomists never believed a pinprick sample would be sufficient in volume for the range of tests Edison was supposed to perform. Right now, VC money is flowing overall but still mostly towards drugs.
It is six years since Erika Cheung first alerted the CMS and the Wall Street Journal’s John Carreyrou began reporting on Theranos’ problems, but it remains too early to diagnose fully what impact the scandal will have on more conservative and, in some cases, fragile attitudes to how the healthcare industry is evolving. However, something persistent feels entirely possible.
Meanwhile Cheung has moved on to found and act as executive director of a not-for-profit consultancy, training, and educational organisation. It is called Ethics in Entrepreneurship.
This article is the fourth in a series looking at the wider issues raised by the Theranos scandal, with more coverage to follow as the trial of Elizabeth Holmes progresses. You can read the earlier articles at these links:
Theranos – Silicon Valley on Trial
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