Despite high-hopes and much fanfare, the collaboration failed to transform healthcare and lower healthcare costs for everyday Americans as many anticipated it would
Another anticipated “disruptor” to today’s healthcare market is closing its doors. Three years ago, in 2018, Amazon (NASDAQ:AMZN), Berkshire Hathaway (NYSE:BRK.A), and JPMorgan Chase (NYSE:JPM) announced a joint venture to enter into the healthcare market and use their combined market leverage to secure lower-cost healthcare for their 1.2 million employees. At that time, healthcare business experts suggested Haven Healthcare (Haven), as the non-profit joint venture was named, might become a transformative healthcare model other companies could follow.
But that was not to be. In January, the companies announced Haven would close its doors in February. Why did it fail to accomplish its goals? And how will its demise affect the healthcare benefits provided to the thousands of people employed at these companies? The answers to these questions should be of interest to pathologists and medical laboratory managers who want to position their clinical labs as high-quality, added-value contributors to patient care.
One Expert’s Opinion on Demise of Haven Healthcare
In an article he penned for Harvard Business Review, titled, “Why Haven Healthcare Failed,” John S. Toussaint MD, an internist, former healthcare CEO, and founder and Executive Chairman of Catalysis, a non-profit healthcare educational institute, outlined three major reasons for Haven’s closing:
Insufficient Market Power: According to Toussaint, the three companies simply did not have the market power to dominate a large enough share of any local market. In addition, with a combined 1.2 million employees, the companies did not have enough employees to incentivize providers into lowering prices.
Perverse Incentives: In the current healthcare environment, US insurers and providers make huge profits from treating disease. This means there is little incentive to keep people out of hospitals or accept the risks associated with fixed-price capitation.
Poor Timing: The COVID-19 pandemic forced providers to focus on and manage the crisis, which, in turn, caused them to postpone or even cancel elective and non-emergency medical procedures, resulting in financial hits and the unwillingness to take on the uncertainty associated with new, possibly dubious arrangements.
Why Is It Hard to Disrupt Healthcare?
Jeff Becker, Principal Analyst, Healthcare, CB Insights, told Quartz, “Haven is yet another cautionary tale to outsiders [who] hope to disrupt the industry that their ambition is likely unrealistic and that solving key industry problems proves to be far more difficult than most anticipate.”
Other experts point to a vague plan, an overly ambitious strategy, difficulty retaining top talent, a lack of visible progress, and the divergence of interests between the three companies as potential reasons for Haven’s demise, Quartz reported.
“Haven’s decision to cease operations proves just how hard it is to disrupt the healthcare system in America,” Robert Andrews, JD (above), a former US Congressman for the state of New Jersey, and CEO of Health Transformation Alliance, told Forbes. “Even three of the largest and most influential employers in the country found the challenge a very steep one. We share with Haven’s founders the conviction that employer sponsorship is key.” (Photo copyright: United States House of Representatives.)
Did Haven Healthcare Demonstrate Any Innovation?
It is unclear what the collaboration accomplished or what exactly led to its demise, but it does seem that some positive developments were created through the venture.
According to Forbes, Haven Healthcare stated on its now-defunct website, “In the past three years, Haven explored a wide range of healthcare solutions, as well as piloted new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable. Moving forward, Amazon, Berkshire Hathaway, and JPMorgan Chase and Co. will leverage these insights and continue to collaborate informally to design programs tailored to address the specific needs of their own employee populations.”
At least one of the three partners may have anticipated Haven’s closure and taken proactive steps. In January of 2020, Dark Daily reported that Amazon Care launched a pilot program which offers virtual primary care to its Seattle employees, and features both telehealth and in-home care services, including clinical laboratory testing.
At that time, we noted the similarities with Haven Healthcare.
And in “Amazon Building Labs to Do COVID-19 Testing,” Dark Daily’s sister publication The Dark Report covered how, as a result of the COVID-19 pandemic, Amazon built and now operates multiple clinical laboratories for testing its employees.
Amazon has a history of entering an industry and successfully disrupting it. Its willingness to build lab testing facilities to do its own COVID-19 testing may be the first step in a multi-year strategy to enter the clinical laboratory industry and disrupt it by offering better quality lab testing services at a cheaper price.
Thus, it is likely these medical laboratories will continue to deliver clinical testing even after the pandemic has officially ended and will compete with local independent clinical laboratories.
Painless technology could one day replace some phlebotomy blood draws as the go-to specimen-collection method for clinical laboratory testing and health monitoring
Clinical laboratories have long sought a non-invasive way to do useful medical laboratory testing without the need for either a venipuncture or a needle stick. Now engineers at the McKelvey School of Engineering at Washington University in St. Louis in Missouri have developed a disposable microneedle patch that one day could be a painless alternative to some blood draws for diagnostics tests and health monitoring.
The technology uses an easy-to-administer low-cost patch that can be applied to the skin like an adhesive bandage. The patch is virtually painless because the microneedles are too small to reach nerve receptors. Another unique aspect to this innovative approach to collecting a specimen for diagnostic testing is that the Washington University in St. Louis (WashU) research team designed the microneedle patch to include plasmonic-fluor. These are ultrabright gold nanolabels that light up target protein biomarkers and can make the biomarkers up to 1,400 times brighter at low concentrations, compared to traditional fluorescent labels.
The patch, states a WashU news release, “… can be applied to the skin, capture a biomarker of interest and, thanks to its unprecedented sensitivity, allow clinicians to detect its presence.”
The technology is low cost, easy for clinicians or patients themselves to use, and could eliminate the need for a trip to patient service center where a phlebotomist would draw blood for clinical laboratory testing, the news release states.
“We have created a platform technology that anyone can use. And they can use it to find their own biomarker of interest,” study leader Srikanth Singamaneni, PhD (above), Lilyan and E. Lisle Hughes Professor in the Department of Mechanical Engineering and Materials Sciences at Washington University in St. Louis, said in the WashU news release. Singamaneni and his colleagues are developing a new specimen collection method that might someday be widely used by clinical laboratories. (Photo copyright: Washington University in St. Louis.)
“We used the microneedle patch in mice for minimally invasive evaluation of the efficiency of a cocaine vaccine, for longitudinal monitoring of the levels of inflammatory biomarkers, and for efficient sampling of the calvarial periosteum [a skull membrane]—a challenging site for biomarker detection—and the quantification of its levels of the matricellular protein periostin, which cannot be accurately inferred from blood or other systemic biofluids,” the researchers wrote. “Microneedle patches for the minimally invasive collection and analysis of biomarkers in interstitial fluid might facilitate point-of-care diagnostics and longitudinal monitoring.”
Mark Prausnitz, PhD, Regents’ Professor, J. Erskine Love Jr. Chair in Chemical and Biomolecular Engineering, and Director of the Center for Drug Design, Development, and Delivery at Georgia Tech, told WIRED, “Blood is a tiny fraction of the fluid in our body. Other fluids should have something useful—it’s just hard to get those fluids.”
“Previously, concentrations of a biomarker had to be on the order of a few micrograms per milliliter of fluid,” said Zheyu (Ryan) Wang, a PhD candidate in Srikanth Singamaneni’s lab at McKelvey School of Engineering and a lead author of the paper, in the WashU news release. By using plasmonic-fluor, researchers were able to detect biomarkers on the order of picograms per milliliter—one millionth of the concentration.
“That’s orders of magnitude more sensitive,” Wang said.
Unlike blood, dermal interstitial fluid often does not contain high enough concentrations of biomarkers to be easily detectable. To overcome this hurdle, the Washington University in St. Louis research team developed a microneedle patch with plasmonic-fluor—ultrabright gold nanolabels (above)—which lit up target protein biomarkers, making them roughly 1,400 times brighter at low concentrations than when using traditional fluorescent labels commonly used in many medical laboratory tests. (Photo copyright: Washington University in St. Louis.)
Can Microneedles Be Used as a Diagnostic Tool?
As reported in WIRED, the polystyrene patch developed by Srikanth Singamaneni’s lab at McKelvey School of Engineering removes interstitial fluid from the skin and turns the needles into “biomarker traps” by coating them with antibodies known to bind to specific proteins, such as Interleukin 6 (IL-6). Once the microneedles are mixed with plasmonic-fluor, the patch will glow if the IL-6 biomarkers are present.
The development of such a highly sensitive biomarker-detection method means skin becomes a potential pathway for using microneedles to diagnose conditions, such as myocardial infarction or to measure COVID-19 antibodies in vaccinated persons.
“Now we can actually use this tool to understand what’s going on with interstitial fluid, and how we’re going to be able to use it to answer healthcare-related or medical problems,” Maral Mousavi, PhD, Assistant Professor of Biomedical Engineering, Viterbi School of Engineering at the University of Southern California, told WIRED. “I think it has the potential to be that kind of a game changer.”
Because the WashU study is a proof-of-concept in mice, it may be many years before this technology finds its way to clinical application. Many skin biomarkers will need to be verified for direct links to disease before microneedle patches will be of practical use to clinicians for diagnostics. However, microneedle patch technology has already proven viable for the collection of blood.
In 2017, Massachusetts-based Seventh Sense Biosystems (7SBio) received 510(k) clearance for a new microneedle blood collection device. Called TAP, the device is placed on the upper arm and blood collection starts with a press of a button. The process takes two to three minutes.
Initially, the FDA clearance permitted only healthcare workers to use the device “to collect capillary blood for hemoglobin A1c (HbA1c) testing, which is routinely used to monitor blood sugar levels in diabetic or pre-diabetic patients,” a Flagship Pioneering news release noted.
Then, in 2019, the FDA extended its authorization “to include blood collection by laypersons. Regulators are also allowing the device to be used ‘at-home’ for wellness testing,” a 7SBio news release stated. This opened the door for a microneedle device to be used for home care blood collection.
“No one likes getting blood drawn, but blood is the single-most important source of medical information in healthcare today, with about 90% of all diagnostic information coming from blood and its components,” Howard Weisman, former CEO of 7SBio and current CEO of PaxMedica, a clinical-stage biopharmaceutical company, said in the Flagship Pioneering news release. “TAP has the potential to transform blood collection from an inconvenient, stressful, and painful experience to one people can do themselves anywhere, making health monitoring much easier for both healthcare professionals and patients.”
As microneedle technology continues to evolve, clinical laboratories should expect patches to be used in a growing number of drug delivery systems and diagnostic tests. But further research will be needed to determine whether interstitial fluid can provide an alternate pathway for diagnosing disease.
Royal College of Pathologists of Australia says the pandemic is ‘suppressed’ to ‘intermittent’ outbreaks, thanks to the dedication of thousands of pathologists, medical scientists, and laboratory professionals
COVID-19 efforts in Australia have achieved a milestone. Pathology laboratories there have performed more than 12 million SARS-CoV-2 tests since the pandemic began. That is an impressive feat and is equal to about half the country’s population of 25.4 million people.
“It is an incredible feat,” they continued. “Australia’s current position of having effectively suppressed the virus to intermittent outbreaks owes much to the year-long dedication and ingenuity of 35,000 pathologists, medical scientists, lab technicians, couriers, phlebotomists, and ancillary personnel.”
Australia Pathology Society Recognizes Accomplishments
Furthermore, Graves and Bott wrote, pathology in Australia deserves recognition for these pandemic-related accomplishments, among others, as well:
Australia launched drive-through COVID-19 testing clinics even before the pandemic was declared by the World Health Organization (WHO).
An RCPA quality assurance program for lab COVID-19 testing was the first of its kind to start worldwide, and it became a model for other countries.
Australia’s pathology labs were fast to develop in-house test kits once they had the genome sequence for the SARS-CoV-2 coronavirus.
Quick Responses to COVID-19 in the Land Down Under
The Doherty Institute (a joint venture of the University of Melbourne and the Royal Melbourne Hospital) offers research, teaching, public health and reference lab services, diagnostics, and clinical care for infectious diseases and immunity.
After receiving the patient sample on Jan. 24, 2020, institute scientists were the first outside China to grow the coronavirus in cell culture, noted a University of Melbourne news release.
“We’ve planned for an incident like this for many, many years, and that’s really why we were able to get an answer so quickly,” Dr. Mike Catton (above), Co-Deputy Director, Doherty Institute and Director of the Victorian Infectious Diseases Reference Laboratory (VIDRL), said in the news release. (Photo copyright: ABC News.)
Doherty Institute researchers also were first to report on immune response to COVID-19, according to a second news release.
“When COVID-19 emerged, we already had ethics and protocols in place so we could rapidly start looking at the virus and immune system in great deal,” Dr. Irani Thevarajan, Infectious Disease Physician, Doherty Institute, Royal Melbourne Hospital, said in the second news release.
“Our study provides novel contributions to the understanding and kinetics of immune responses during a non-severe case of COVID-19. This patient did not experience complications of respiratory failure or acute respiratory distress syndrome, did not require supplemental oxygenation, and was discharged within a week of hospitalization, consistent with non-severe but symptomatic disease,” Thevarajan and co-authors wrote in Nature Medicine.
Drive-Through COVID-19 Testing Sites in Australia
Also impressive was Australia’s launch of drive-through COVID-19 testing on March 9, 2020, before the pandemic was declared by WHO on March 11.
The COVID-19 testing site in Adelaide, South Australia, was “believed to be a first for the country’s public health system,” ABC News reported.
Public Recognition for Medical Laboratories has Global Reach
The COVID-19 response and scientific contributions by pathology laboratory scientists and researchers in Australia are noteworthy. It is also significant that Australia’s pathology professional society sought recognition for medical laboratory workers by detailing their accomplishments during the pandemic and sharing them in media with national and global reach.
The palm-sized device could one day be engineered to track down explosives and gas leaks or could even be used by medical laboratories to detect disease
Here’s a technology breakthrough with many implications for diagnostics and clinical laboratory testing. Researchers at the at the University of Washington (UW) are pushing the envelope on what can be achieved by combining technology with biology. They developed “Smellicopter,” a flying drone that uses a living moth antenna to hunt for odors.
According to their published study, the UW scientists believe an odor-guided drone could “reduce human hazard and drastically improve performance on tasks such as locating disaster survivors, hazardous gas leaks, incipient fires or explosives.”
“Nature really blows our human-made odor sensors out of the water,” lead author Melanie Anderson, a UW doctoral student in mechanical engineering, told UW News. “By using an actual moth antenna with Smellicopter, we’re able to get the best of both worlds: the sensitivity of a biological organism on a robotic platform where we can control its motion.”
The researchers believe their Smellicopter is the first odor-sensing flying biohybrid robot system to incorporate a live moth antenna that capitalizes on the insect’s excellent odor-detecting and odor-locating abilities.
In their paper, titled, “A Bio-Hybrid Odor-Guided Autonomous Palm-Sized Air Vehicle,” published in the IOPscience journal Bioinspiration and Biomimetics, the researchers wrote, “Biohybrid systems integrate living materials with synthetic devices, exploiting their respective advantages to solve challenging engineering problems. … Our robot is the first flying biohybrid system to successfully perform odor localization in a confined space, and it is able to do so while detecting and avoiding obstacles in its flight path. We show that insect antennae respond more quickly than metal oxide gas sensors, enabling odor localization at an improved speed over previous flying robots. By using the insect antennae, we anticipate a feasible path toward improved chemical specificity and sensitivity by leveraging recent advances in gene editing.”
How Does it Work?
In nature, a moth uses its antennae to sense chemicals in its environment and navigate toward sources of food or a potential mate.
“Cells in a moth antenna amplify chemical signals,” said study co-author Thomas Daniel, PhD, UW Professor of Biology, in UW News. “The moths do it really efficiently—one scent molecule can trigger lots of cellular responses, and that’s the trick. This process is super-efficient, specific, and fast.”
To keep the moth antennae “alive,” scientists place Manduca sexta hawk moths (above) in a refrigerator to anesthetize them before removing their antennae. Once separated from the live moth, the antenna stays “biologically and chemically active” for up to four hours. Refrigerating the antennas further extends that time span, researchers explained in the UW News article. (Photo copyright: University of Washington.)
Because the moth antenna is hollow, researchers are able to add wires into the ends of the antenna. By connecting the antenna to an electrical circuit, they can measure the average signal from all of the cells in the antenna. When compared to a metal oxide gas sensor, the antenna-powered sensor responded more quickly to a floral scent. It also took less time to recover between tracking puffs of scent.
Anderson compared the antenna-drone circuitry to a human heart monitor.
“A lot like a heart monitor, which measures the electrical voltage that is produced by the heart when it beats, we measure the electrical signal produced by the antenna when it smells odor,” Anderson told WIRED. “And very similarly, the antenna will produce these spike-shaped pulses in response to patches of odor.”
Making a Drone Hunt Like a Moth
Anderson told WIRED her team programmed the drone to hunt for odors using the same technique moths employ to stay targeted on an odor, called crosswind casting.
“If the wind shifts, or you fly a little bit off-course, then you’ll lose the odor,” Anderson said. “And so, you cast crosswind to try and pick back up that trail. And in that way, the Smellicopter gets closer and closer to the odor source.”
However, the researchers had to figure out how to keep the commercially available $195 Crazyflie drone facing upwind. The fix, co-author and co-advisor Sawyer Fuller, PhD, UW Assistant Professor of Mechanical Engineering told UW News, was to add two plastic fins to create drag and keep the vehicle on course.
“From a robotics perspective, this is genius,” Fuller said. “The classic approach in robotics is to add more sensors, and maybe build a fancy algorithm or use machine learning to estimate wind direction. It turns out, all you need is to add a fin.”
A live moth antenna is attached to wires in an arc sharp on the “Smellicopter” drone (above), developed at the University of Washington in Seattle. The autonomous drone uses the moth antenna to navigate toward smells. By connecting the antenna to a circuit board, the UW researchers were able to study the drone’s response to a puff of floral scent. The Smellicopter tracking skills proved superior to that of a human-made sensor. (Photo copyright: University of Washington.)
Other Applications for Odor Detecting Robots
While any practical clinical application of this breakthrough is years away, the scientific team’s next step is to use gene editing to engineer moths with antennae sensitive to a specific desired chemical, such as those found in explosives.
“I think it is a powerful concept,” roboticist Antonio Loquercio, a PhD candidate in machine learning at the University of Zurich who researches drone navigation, told WIRED. “Nature provides us plenty of examples of living organisms whose life depends on this capacity. This could have as well a strong impact on autonomous machines—not only drones—that could use odors to find, for example, survivors in the aftermath of an earthquake or could identify gas leaks in a man-made environment.”
Could a palm-sized autonomous device one day be used to not only track down explosives and gas leaks but also to detect disease?
As clinical pathologists and medical laboratory scientists know, dogs have demonstrated keen ability to detect disease using their heightened sense of smell.
Therefore, it is not inconceivable that smell-seeking technology might one day be part of clinical laboratory testing for certain diseases.
This latest research is another example of how breakthroughs in unrelated fields of science offer the potential for creation of diagnostic tools that one day may be useful to medical laboratories.
The researchers also found that certain molecules, when added to cancer drugs, can prevent chromosome shattering from occurring in a discovery that may be useful to pathologists and oncologists
Anatomic pathologists who diagnose tissue and closely monitor advances in cancer diagnostics and therapy will be interested in a recent study into how a mutational process known as chromothripsis (chromosome shattering) can promote cancer cell growth in humans and increase resistance to cancer drug therapies.
The study, which was published in the journal Nature, titled, “Chromothripsis Drives the Evolution of Gene Amplification in Cancer,” provides insights into how cancer cells can adapt to different environments and also may suggest potential solutions to drug resistance among cancer patients.
Led by researchers from the University of California San Diego School of Medicine and the UC San Diego branch of the Ludwig Institute for Cancer Research, the discovery could open up a new field in cancer diagnostic testing, where the pathology laboratory analyzes a cancer patient’s tumor cells to determine where chromosomal damage exists. This knowledge could then inform efforts to repair damaged chromosomes or to identify which therapeutic drugs would be most effective in treating the patient, a key element of precision medicine.
“Drug resistance is the most problematic part of cancer therapy. If not for drug resistance, many cancer patients would survive,” said Ofer Shoshani, PhD (above right) postdoctoral fellow at the Cleveland Lab at UC San Diego School of Medicine and the study’s first author, in a news release. He’s shown with Don Cleveland, PhD (above left), head of the Cleveland Laboratory of Cell Biology at the Ludwig Institute for Cancer Research, another author of the study. Cleveland is also Chair of the Department of Cellular and Molecular Medicine, and Distinguished Professor of Cellular and Molecular Medicine, Medicine, and Neurosciences at UC San Diego School of Medicine. (Photo copyright: Ludwig Institute for Cancer Research.)
Shattered Chromosomes
Chromosomes that undergo chromothripsis shatter or fragment into several pieces and then are stitched back together by a DNA repair processes. However, not all of the fragments make it back into the repaired chromosome, and this can be a problem.
“During chromothripsis, a chromosome in a cell is shattered into many pieces, hundreds in some cases, followed by reassembly in a shuffled order,” Shoshani told Genetic Engineering and Biotechnology News (GEN News). “Some pieces get lost while others persist as extra-chromosomal DNA (ecDNA). Some of these ecDNA elements promote cancer cell growth and form minute-sized chromosomes called double minutes.”
Studies have shown that up to half of all cancer cells contain cancer-promoting ecDNA chromosome fragments.
Some Cancer Drugs Could be Fueling Drug Resistance
To perform their study, the UC San Diego/Ludwig scientists sequenced entire genomes of cancer cells that had developed drug resistance. Their research revealed that chromothripsis prompts and drives the formation of ecDNA and that the process can also be induced by some chemotherapeutic drugs. The researchers also discovered that the particular type of damage these drugs may cause can provide an opening for ecDNA to reintegrate back into chromosomes.
“We show that when we break a chromosome, these ecDNAs have a tendency to jump into the break and seal them, serving almost like a DNA glue,” Shoshani said in the news release. “Thus, some of the very drugs used to treat cancers might also be driving drug resistance by generating double-stranded DNA breaks.”
Preventing DNA Shattering and Reducing Drug Resistance
The scientists also discovered that ecDNA formation could be halted by pairing certain cancer drugs with molecules that prevent DNA shattering from occurring in the first place, thus reducing drug resistance.
“This means that an approach in which we combine DNA repair inhibitors with drugs such as methotrexate or vemurafenib could potentially prevent the initiation of drug resistance in cancer patients and improve clinical outcomes,” Shoshani said.
“Our identifications of repetitive DNA shattering as a driver of anticancer drug resistance and of DNA repair pathways necessary for reassembling the shattered chromosomal pieces has enabled rational design of combination drug therapies to prevent development of drug resistance in cancer patients, thereby improving their outcome,” Don Cleveland, PhD, Head of the Cleveland Laboratory of Cell Biology at the Ludwig Institute for Cancer Research and one of the authors of the paper, told GEN News.
This research from the University of California San Diego School of Medicine and the UC San Diego branch of the Ludwig Institute for Cancer Research is the latest example of how scientists have gained useful insights into how human genomes operate. More research and clinical studies are needed to solidify the advantages of this study, but the preliminary results are promising and could lead to new cancer diagnostics and therapies.
Government prosecutors allege destruction of LIS database and point to Holmes’ extravagant lifestyle as evidence of fraud motive
There is a new twist in the federal criminal fraud trial of Elizabeth Holmes, co-founder and former CEO of now defunct clinical laboratory testing company Theranos. Once again, the trial has been delayed. In the meantime, however, dueling court filings between prosecutors and defense lawyers have shed additional light on the allegations against Holmes and co-defendant Ramesh Balwani, the company’s chief operating officer. The revelations will be of interest to medical laboratory leaders.
According to The Mercury News, United States District Judge Edward J. Davila cited the ongoing COVID-19 pandemic in his December 18 ruling that postponed the start of Holmes’ trial to July 13, 2021.
In his ruling, Judge Davila wrote, “The court notes sadly, the impact on our lives is grim. California is in the midst of an unprecedented surge in cases and hospitalizations.”
The judge also noted the prospects for widespread public vaccination in the coming months. “All of this supports continuing the trial [of Holmes] to a time when our community is safer,” he added. “The court recognizes that a continuance of the trial will cause great inconvenience to victims who would like their day in court, as well as Defendant, who wishes a speedy opportunity to defend against the charges. All of these rights are important, but paramount to the court is the safety and health of the community.”
On February 9, Law360 reported that Balwani’s trial was delayed even further, with jury selection now set to begin on January 11, 2022.
Wall Street Journal Exposé of Theranos and its Flawed Clinical Lab Testing
In “Elizabeth Holmes: The Breakthrough of Instant Diagnosis,” the Wall Street Journal (WSJ) put Holmes squarely in the public eye. It could be credibly asserted that the paper’s fawning coverage helped boost her credibility when no one knew who she was. Thus, it is ironic that just two years later it was the WSJ that, in a series of articles, exposed the alleged misrepresentation and fraud committed by Holmes, Balwani, and Theranos.
By 2015, the company had a stock valuation of $9 billion, but it all came crashing down after WSJ investigative journalist John Carreyrou revealed serious problems with the company’s management and technology.
In a public notification from the US Attorney’s Office Northern District of California, the government alleged that Holmes and former Theranos president Balwani promoted the company’s blood-testing technology despite knowing that it was likely to produce unreliable results.
The defendants now face 12 federal felony counts related to wire fraud. They have pleaded not guilty. According to The Mercury News, if found guilty of all charges, “Holmes faces a potential 20-year prison sentence, up to $2.75 million in fines, and possible restitution to investors the government alleges lost more than $700 million.”
Elizabeth Holmes (above), former CEO of now defunct clinical laboratory testing company Theranos, will now stand trial starting in July. Due to risk of infection from the SARS-CoV-2 coronavirus, jurors will be required to wear masks and to socially distance during the trial, CNBC reported. What will be of great interest to clinical laboratories are statements by federal prosecutors that testing data stored on the company’s laboratory information system was destroyed before it could be accessed by investigators, even though it had been subpoenaed months earlier by a federal grand jury. (Photo copyright: Forbes/Yichuan Cao/NurPhoto via Getty Images.)
Missing Clinical Laboratory Data
Though the trial has been delayed, attorneys on both sides have been busy. Last November, after failing to have the charges dismissed, defense attorneys filed a flurry of motions seeking to exclude much of the government’s evidence, The Mercury News reported. This included expert witnesses, testimony about inaccurate test results, and numerous news articles about the company and its tests.
Prosecutors responded to the motions in January, further illuminating their case while providing more fodder for media coverage.
In a January 11 filing [doc-682], the government alleged that a Theranos laboratory information system (LIS) containing patient test results and quality control data was destroyed “on or about August 31, 2018—three months after a federal grand jury issued a subpoena requesting a working copy of this database.” News of the allegation was first reported by The Register, a UK-based IT publication.
Previously, the prosecutors alleged, Theranos, with assistance from an IT contractor, had provided a backup copy of the database to the government but without a password needed for decryption. “All subsequent efforts by the government to access the data on this hard drive have failed,” even with assistance from a computer forensics expert, they wrote.
Then, the original database was permanently destroyed in August when Theranos moved out of its facility in Newark, Calif., the government alleged in its filing. “On or about August 31, 2018—three months after a federal grand jury issued a subpoena requesting a working copy of this database—the LIS was destroyed. The government has never been provided with the complete records contained in the LIS, nor been given the tools, which were available within the database, to search for such critical evidence as all Theranos blood tests with validation errors,” the filing read.
The January 11 filing was in response to a Theranos motion [doc-563] seeking to exclude evidence of “anecdotal test results.”
“The data disappeared. Defendant should be barred from arguing the government’s case is anecdotal when Theranos (and others) destroyed this data,” the prosecutors argued.
Furthermore, prosecutors wrote, “the government’s case is hardly ‘anecdotal.’ The reliability and accuracy problems in Theranos’ clinical lab were well-documented when the Centers for Medicare and Medicaid Services (CMS) investigated the lab, discovered the accuracy and reliability problems, and determined Theranos could not safely administer its tests on patients. Whistleblowers will also testify about Theranos’ accuracy and reliability problems. And patients themselves experienced these problems, receiving incorrect results that affected their treatment and deprived them of the benefit of the purportedly reliable blood tests for which they had paid.”
And Then There’s Her Lifestyle
Prosecutors also claimed in their filing that Holmes’ activities—which included “travel on private jets, stays in luxury hotels, and access to multiple assistants … [who] handled a range of non-business tasks for Defendant, including personal clothes and jewelry shopping, home decorating, food and grocery buying, and other items”—shows that Holmes was “funding an extravagant lifestyle … through company money,” CNBC reported.
And so, the saga of Theranos continues. Will Elizabeth Holmes succeed in her defense? Could a clinical laboratory phoenix bird rise from the ashes of this failed lab test company? Who knows? Probably not. But until there is a resolution, we will keep reporting on the case.
