Fall of Theranos Still Haunts the Digital Health Space

The failure of Theranos is probably something the digital health space wishes it could shake from its consciousness. Lauded as a revolutionary company that aimed to provide amazingly cheap blood testing with just a few drops of blood, Theranos has fallen from its pedestal.

I participated in the hype about the company. I wrote about Theranos years ago and was a proponent of the benefits it offered for the pharmacy industry. After all, the ability for a patient to get lab work, no order sets, all at the pharmacy, was a fantastic proposition for the profession. We have a massive lack of objective data relevant to the end utilization of medications. Hypothyroidism? What does the lab work show? Anemia? Lab work. Diabetes? Lab work, which we just do not have. So, this was a fantastic ability to work with patients and expand our medication therapy management services, I thought. It also opened up a better means for patient safety, such as evaluation of renal function. Walgreens, I am sure, thought that, too. It was one of Theranos' biggest backers and was aiming to create space in its pharmacies for the equipment. Even Safeway was getting on board, but that was in the early stages, until the bomb dropped from The Wall Street Journal.¹

The problem was that the science behind Theranos did not add up, and some smart journalists and researchers put it together. The Wall Street Journal in October 2015 published an article indicating that the Edison blood-testing machines that Theranos had created did not work.¹ It is a fascinating read, and if you want further background information, minus a paywall, I recommend the article by Vanity Fair.² The drama with Theranos had it all: backroom meetings, a fall from heights, and suicide, that those who are fans of schadenfreude will love. But, at the end of the day, the worst was that it just was not true.

Theranos has been trying to recover since 2016. Walgreens filed a lawsuit against Theranos for not living up to the technology and shuttered all the in-store lab locations that were going to be opened. Investors left, and the media was none too kind. The Securities and Exchange Commission charged Theranos Founder and Chief Executive Elizabeth Holmes with fraud.³The allegation includes raising more than $700 million from investors with false statements regarding its technology. The story behind Holmes is rather interesting, and I would not be surprised if a movie gets made about the Theranos story in the next few years.

So, what does this all come down to? Well, the hype is real. Many investors who threw money at Theranos went in without any scientific background of data to support their investments. Several companies that did balk at investing did their homework and saw that the technology was questionable, and even when pitched for the Department of Defense it led to an alert with the FDA to review the Edison devices for accuracy.

I honestly think that the Theranos story killed a lot of hype in the digital health space. Companies and investors became more cautious. But I think it is a good thing. For years, we have seen technology pitched to change health care and people's lives. We still do. Just now we ask for the evidence, and I do not think that is a bad thing. My lasting concern regarding the damage from this tale is that pharmacy companies while exhibiting some trepidation may take a more substantial step back. For some time, companies such as Walgreens were on the forefront, bringing different developments and pilot programs using technology to the company and patient care, but it seems to have died down as of late, and I wonder if this is the price to be paid.

References

1. Carreyrou J. Hot startup Theranos has struggled with its blood-test technology. The Wall Street Journal. wsj.com/articles/theranos-has-struggled-with-blood-tests-1444881901. Published October 16, 2015. Accessed April 12, 2018.

2. Bilton N. Exclusive: how Elizabeth Holmes's house of cards came tumbling down. Vanity Fair. vanityfair.com/news/2016/09/elizabeth-holmes-theranos-exclusive. Published October 2016. Accessed April 12, 2018.

3. Theranos, CEO Holmes, and former president Balwani charged with massive fraud [news release]. Washington, DC: US Securities and Exchange Commission; March 14, 2018. sec.gov/news/press-release/2018-41. Accessed April 12, 2018.