Lab startup Theranos is in hot water after a Wall Street Journal article accused the Palo Alto, Calif.-based company of misleading regulators and rarely conducting tests on its proprietary equipment that claims to process lab tests with just a few drops of blood.
The Journal article cites internal e-mails and interviews with former senior employees who alleged that in December 2014, the company used its proprietary Edison device for only 15 of the hundreds of tests on its offering menu. Instead, the company does most of its tests on traditional machines, the Journal said, like those used by lab giants Quest Diagnostics and LabCorp.
Theranos hadn't publicly disclosed that it used traditional equipment for most of its testing, despite advertisements that many of its tests could be conducted with "just a few drops of blood," a feature of Edison.
WSJ sources also said Theranos submitted proficiency-testing samples to the CMS that were conducted on traditional lab equipment instead of Edison. Federal rules require that the samples, which are used to verify that labs are providing accurate results, are supposed to be tested in the same manner in which the lab routinely tests patient specimens, which, in the case of Theranos, was widely thought to be through Edison.
An attorney for Theranos confirmed to the Journal that the company isn't yet using the device for all of its tests and said the transition to testing entirely with Edison is “a journey.” In a statement Thursday morning, Theranos called the WSJ story “factually and scientifically erroneous and grounded in baseless assertions by inexperienced and disgruntled former employees and industry incumbents.”
The company said the sources used in the WSJ article “were never in a position to understand Theranos' technology and know nothing” about how the company's current processes.
“When you create innovative technology, scrutiny is to be expected,” the company said. “We have always welcomed that scrutiny – opening up to regulators like no lab before and voluntarily submitting all our tests for FDA review, the gold standard for quality.”
Theranos has partnered with several big names in healthcare, including insurers Capital Blue Cross and AmeriHealth Caritas as well as the Cleveland Clinic and drugstore operator Walgreens Boots Alliance.
A Capital Blue Cross spokesman said in a statement that the insurer has a "strong strategic partnership with Theranos and we expect that to continue to develop and grow." He added that the insurer has not heard any complaints about test accuracy since Theranos opened its first location in a Capital Blue store in Enola, Pa., in July.
"As an insurance company, it is important for us to partner with companies that have the commitment not only to the highest standards, but also to constant innovation," the spokesman said.
Cleveland Clinic deferred comment to Theranos as did a Walgreens spokesman, who said the company has been reviewing next steps since its initial rollout of the lab services in Phoenix, “and that hasn't changed.” About a dozen doctors and nurses complained to Walgreens about the test results by phone or e-mail between late 2013 and late 2014, a source told the Journal.
An AmeriHealth Caritas spokeswoman similarly said in a statement that the insurer is in the early stages of planning its partnership with Theranos.
“We are committed to ensuring our members have access to quality healthcare and services and our service providers meet regulatory requirements,” said the AmeriHealth Caritas spokeswoman.
Theranos is led by Stanford dropout Elizabeth Holmes, whom Forbes called the "youngest self-made female billionaire in the world." The 31-year-old is ranked No. 5 among U.S. healthcare billionaires and is worth an estimated $4.5 billion.