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The timeline/impact is a bit murkier. Carreyou had two big revelations. One was that Theranos was not running blood tests on their proprietary machines, which
by cepth 8y ago
The timeline/impact is a bit murkier.
Carreyou had two big revelations. One was that Theranos was not running blood tests on their proprietary machines, which were supposed to do finger prick draws. The other was that Theranos had submitted fraudulent validation data to the Center for Medicare and Medicaid Services (CMS) and state regulatory bodies.
They did a couple brazenly unethical and illegal things.
1) CMS subcontracts lab inspections to state regulatory bodies. When California lab inspectors visited Theranos, they physically blocked off the door leading to a floor that had the Siemens equipment, presumably to hide the fact that they were not conducting tests on their own proprietary machines. So, the inspectors never actually inspected the relevant labs.
2) Theranos violated "proficiency testing" guidelines. Proficiency testing is the practice of running tests on a sample with a known concentration/result, and comparing results. The spirit, if not the letter, of the guidelines is that you run the tests on the same equipment as would be commercially used. Thus, Theranos sent in fraudulent tests by testing using Siemens machines. This proficiency testing duping was what caused Tyler Schultz to send in an anonymous tip to the New York laboratory regulatory body, and led to his final decision to leave the company.
3) Theranos tried to claim with the FDA that its tests were "laboratory developed tests", i.e. they were unique tests that could not be compared to existing market tests. Carreyrou has a scoop in the book that Theranos benefited greatly from a bureaucratic power grab between the FDA and CMS. Both agencies claim some sort of regulatory oversight for the blood testing market.
At least initially, there were many in the FDA who were suspicious, and wanted to send inspectors. But, Theranos's seeming passing of CMS inspections allayed fears in the short term. It was after Carreyrou's first two articles (IIRC), that the FDA sent a surprise inspection.
EDIT: I also think that in the book Carreyrou mentions that a number of doctors in the Phoenix area, where Theranos was doing a test pilot of their finger prick tests, had filed complaints with the state or federal regulatory bodies. So, there were definitely people at CMS or FDA who were beginning to pay attention.
- seehafer 8y agoFDA may also have been tipped off by people within Walgreens’ safety division that vetoed the Theranos and were shocked when the CEO went ahead and signed the deal anyway.
- tptacek 8y agoRight, but doesn't the whole Tyler Schultz timeline feed right into Carreyrou's first article? Schultz was one of Carreyrou's star sources; the back quarter of the book basically documents Theranos' retaliation against Schultz.
- cepth 8y agoI think we may be talking past each other here. I just wanted to say in the previous comment that Theranos was already on the radar of the FDA and other regulators prior to the publication of that first article. Early complaints of Phoenix-area doctors about bizarre Theranos test results had already reached regulators by the time Carreyrou went to press. If what you meant was simply that the FDA launched enforcement action after the publication of the article, then my apologies. No argument from me there.
- tptacek 8y agoI doubt we disagree strongly. Also, all I know about this story I know from Carreyrou's book; you might know a lot more than me. Unsurprisingly given my source, I have the impression that Theranos might have survived the FDA stuff, had the WSJ debacle not occurred.
- xevb3k 8y agoI think that’s possible. But if it wasn’t consumer testing, then I don’t think it would have been news, and the fallout wouldn’t have been as big. So, we possibly agree. The fact that they started doing consumer testing with a device that didn’t work made this news. However, similar kinds of lies/misinformation gets told to investors in biotech startups all the time. That they actually did consumer testing is what made this news.
- usrusr 8y agoHow does the start of consumer testing mesh with the investment timeline? Unless testing only started after the last investment was committed, the two are the opposite of unrelated.
- microtherion 8y ago> When California lab inspectors visited Theranos, they physically blocked off the door leading to a floor that had the Siemens equipment, presumably to hide the fact that they were not conducting tests on their own proprietary machines. No, it was the other way around: the inspectors only got to see the STANDARD equipment, not the proprietary machines.