Lab Professionals Knew of Challenges at Theranos

THE DARK REPORT was first to report news of issues with Theranos' diagnostic technology

CEO SUMMARY: For most of the past year, pathologists and medical laboratory professionals in the San Francisco and Phoenix markets were aware that Theranos was not delivering to patients and consumers the specific lab testing services it regularly touted in news stories and at conferences. Another sign was that, as of July 2014, it was known that Blue Cross Blue Shield of Arizona was including Theranos as a network lab provider, but not for lab tests using a capillary specimen collected by finger stick.

THERE ARE FEW SECRETS in the clinical laboratory testing industry. For that reason, much information unavailable to Wall Street analysts and venture capitalists about how Theranos was performing in the clinical marketplace has been known to a surprisingly large number of pathologists, lab executives, and medical lab professionals.

This is true both in the San Francisco Bay Area and the Phoenix metro area. In each region, Theranos has operated Theranos Wellness Centers in Walgreens pharmacies. At the same time, it is hiring phlebotomists and medical technologists who have spent decades working in labs in these communities and continue to have friends in these labs.

Add to this the regular flow of secret shoppers sent by labs into the Theranos Wellness Centers in Walgreens. These individuals often undergo parallel lab testing. That is, they have blood drawn at Theranos and at their clinical lab during the same window of time. Thus, when the lab test results from Theranos are received, they can be compared to the results produced by that secret shopper’s clinical laboratory.

Another reason why this source of market research into Theranos is significant is that the clinical pathologists, clinical chemists and medical technologists at these other labs understand the different causes of failures to produce an accurate lab test result. They know how specific types of failures in specimen collection, specimen transport, specimen preparation and specimen analysis might cause the lab test results to be inaccurate.

Assessing the Evidence

Thus, it was no mystery to lab professionals, particularly in Phoenix, that Theranos was struggling with its proprietary lab test technology. The results of parallel lab testing on the labs’ secret shoppers were evidence of that. Further, labs were being told by client physicians who had referred patients to Theranos that they were seeing instances where the lab test results produced by Theranos raised questions, given the patient’s history and/or repeat of the same lab tests by a CLIA-certified medical lab in the community.

Essentially, Theranos was, and is, being “tested” and watched daily by a highly-efficient intelligence network. Labs in the same community have a regular source of information that, in important ways, cannot be matched by journalists and financial analysts who may also be researching Theranos.

It was this intelligence network of labs and physicians that was tapped by THE DARK REPORT earlier this year. In April, we were first to report that patients visiting the Theranos Wellness Centers in Walgreens in Phoenix were not getting finger stick draws. Instead, nearly all patients were being drawn by venipuncture, using conventional Vacutainer blood collection tubes. THE DARK REPORT submitted a list of questions about these issues to Theranos in advance of publishing this story, but Theranos did not respond. (See TDR, April 20, 2015 and Dark Daily, May 4, 2015.)

Health Insurer’s Decision

Another confirmation of this situation was made public this summer. On July 8, Angela Gonzales, Senior Reporter at the Phoenix Business Journal, wrote a story titled, “Will insurers cover the new FDA- approved Theranos blood test?” This was a follow-up to the announcement by Theranos of FDA clearance for its Herpes Simplex 1 test.

In her story, Gonzales wrote, “Blue Cross and Blue Shield of Arizona Inc. already includes Theranos in its network, but does not cover the single-drop blood test because there isn’t enough research to support it, said Andrea Parsons, spokeswoman for BCBS. ‘We review our medical guidelines on a regular basis to accommodate new evidence and practices,’ she said. ‘There are a number of considerations we take into account, in addition to the FDA’s approval, such as clinical effectiveness and impact on health outcomes.’ ”

THE DARK REPORT has asked BCBS of Arizona to make a medical director available to discuss the insurer’s decision not to cover any clinical laboratory tests Theranos performs using a finger stick and capillary blood specimen, but the health insurer has not responded to these requests.

The fact that the BCBS of Arizona spokeswoman specifically indicated that the insurer would not reimburse Theranos for any of its lab tests that are capillary blood specimens collected by finger stick needs to be given credibility. It is reasonable to assume that medical expertise at the health insurer had concerns with the data that Theranos provided about these proprietary lab tests.

The point here is that Theranos is being evaluated in a myriad of ways and by a variety of individuals and healthcare organizations. This is happening every day that Theranos serves a patient or a consumer and interacts with physicians and other providers.

Thus, the series of stories about Theranos published by The Wall Street Journal this month could turn out to be a defining moment for the lab testing company. If Theranos was to pursue greater transparency about the progress it is making to generate accurate, reliable, and reproducible clinical lab test results with its proprietary diagnostic technology, and if it was to engage in a more open exchange with pathologists and clinical chemists at other labs, at lab scientific meetings, and in peer-reviewed journals, then it might find it much easier to gain acceptance across the clinical lab testing industry.

Benefits of Transparency

Certainly it is true that Quest Diagnostics Incorporated and Laboratory Corporation of America are considered competitors by most lab organizations. At the same, their pathologists and lab professionals are accepted and continue to have productive scientific collaborations with their peers at competing labs. The same could be true for Theranos. If this happened, then the winners would be patients who would benefit much sooner from all the advantages Theranos says it can deliver.


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