The Theranos Cave apparently has no bottom. Reportedly at the halfway mark, Tuesday’s trial focused on the testimony of former Theranos product manager Daniel Edlin. Recommended by his college friend Christian Holmes in 2011, he soon stepped into frontline work, assembling presentations sent to investors such as Rupert Murdoch, conducting VIP tours with demonstrations of the Edison labs, coordinating with the press, and with Elizabeth Holmes, plumping for Department of Defense and pharmaceutical company business.
According to Mr. Edlin’s testimony, Theranos executives and staff staged demos and blood tests for investors and VIPs. Sometimes the blood tests worked fine, sometimes they didn’t (as in Rupert Murdoch’s case). Investors and reporters often were more interested in seeing Edison and MiniLab machines “work” without seeing any test results. All routine for an early-stage technology company. What was not routine was that other test results others were “corrected” (for Walgreens executives), reference ranges changed, or tests removed on the direction of Dr. Daniel Young, a Theranos VP. The MiniLab never was used for patient blood testing as it had trouble performing general chemistry or ELISA tests adequately.
Rupert Murdoch’s (listed as a witness) investor presentation binder was entered into evidence. According to CNBC, one section of the binder read: “Theranos offers tests with the highest level of accuracy.” Another section said the blood-testing technology “generates significantly higher integrity data than currently possible.” Mr. Edlin testified that Ms. Holmes vetted every investor deck and binder, including the ones shown to DOD. The website, overseen by Ms. Holmes, made statements such as “At Theranos we can perform all lab tests on a sample 1/1000 the size of a typical blood test.” However, even Theranos’ general counsel advised against using these superiority claims:
- “Please remove reference to “all” tests and replace with statements such as “multiple” or “several.” It is highly unlikely that the laboratory can perform every conceivable test, both from a logistical standpoint and because the CLIA certification designates specific specialties of test the lab performs.
- For a similar reason, replace “full range” with “broad range.”
- Replace “highest quality” with “high quality”
- What substantiation do you have for “have results to you and your doctor faster than previously possible?”
- Remove “unrivaled accuracy.”
To be fair, some of this language did change over time. The defense, for instance, had a try at shifting blame to one of Theranos’ marketing agencies.
But overstatements were a way of ‘fake it till you make it’ life at Theranos. The infamous Fortune article (later retracted by the author), the glowing 8 September 2013 Wall Street Journal article by Joseph Rago made at the time of the Walgreens pilot were felt to be overstatements by Theranos insiders, but never corrected. Walgreens and Safeway executives previously testified that they were told that Theranos devices were in use in Army medical evacuation units. But the truth was, according to Mr. Edlin who managed the DOD relationship, that AFRICOM (US Army African Command) deployed the Edison device in Cameroon, Uganda, and South Sudan to run as an experiment to test the viability of the machine. It was never deployed in the Middle East (CENTCOM). The Edison 4.0 was deemed too heavy and put off until lighter-weight units were developed. Nonetheless, Theranos received a 12-month service contract.
The prosecution strategy here is to show that Ms. Holmes was hands-on when it came to marketing and investor communications, approved the overstated claims, and was not “controlled” by Sunny Balwani as the defense maintains. If anything, he deferred to her.
CNN Business, KTVU Fox 2 running commentary, Daily Mail, California News Times Unfortunately, the Mercury News, Bloomberg, and WSJ are paywalled.
TTA’s earlier coverage: Chapter 3, Chapter 2, Chapter 1
To be continued….
[This comment was posted on behalf of Malcolm Fisk, Professor of Ageing and Digital Health at De Montfort University, Leicester UK]
It may be at one edge of telehealth, but Theranos offers some sobering lessons – most prominent among which are, whether you are a purchaser or procurer of products and services, (a) not to be taken in by hype or a seductive sales pitch; and (b) not to be afraid to ask and get cast iron answers to your fundamental questions. But, like it or not, we’re faced with the threat or promise (take your pick) of industrial healthcare (of which Theranos is an example, albeit extreme) where we, as patients, become little more than commodities – our bodies seen as a mass of components, our measures harvested and data-hungry algorithms fed. Full credit to TA for highlighting some of the issues, for featuring the Elizabeth Holmes trial – and also highlighting other areas for concern in a world where greed and rampant commercialism may (as pointed to in the work of Victor Montori) lead us to lose the things we value about personal care.