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Out for Blood: Will Theranos Revolutionize Medical Testing?

Move over, LabCorp and Quest Diagnostics, there’s a new biotech powerhouse hogging the headlines: Theranos, a biotech startup currently valued at over 9 billion dollars, aims to revolutionize blood diagnostics. How? By offering a cost and time effective alternative to traditional lab testing. The company is just emerging from its infancy, but its team’s ambition is far from waning. With Elizabeth Holmes, the world’s youngest female billionaire, at the helm, plus backing from the likes of Carlos Slim and Henry Kissinger, the enterprise has both scientists and investors talking.

While at Stanford, Holmes developed novel microfluidic techniques and used them to launch her new business. Such technology enables Theranos to run over 30 lab tests in a matter of hours using only drops of the patient’s blood. Through their growing collaboration with Walgreens’ Wellness Centers, Theranos can bring its product directly to the consumer.  The steps are simple: pick up a lab order from a physician, bring it to the local Walgreens, provide a blood sample via finger stick draw, and receive results later that day. Hoping to make this process even more effortless, Theranos is attempting to eliminate the first step altogether. The company’s recent lobbying efforts in Arizona are telling about what they hope to soon make the national norm.

House Bill 2645, entitled “Laboratory Testing Without Physician Order,” was given the green light by Arizona Governor Doug Ducey, who signed the bill in mid-April of this year. Governor Ducey staged the signing ceremony at a Theranos location in Scottsdale, Arizona, with Elizabeth Holmes present. The bill went into effect in July and has allowed Theranos to continue expanding its services in Arizona. At the ceremony, Holmes remarked that Theranos “believe[s] Arizona’s law can and should serve as a model for the nation for direct access testing.” National legislation with similar provisions would provide Theranos with enough leverage to overtake LabCorp and Quest Diagnostics and emerge as the dominant lab testing company in the field.

But the chance of federal legislation passing in the near future remains slim due to the obstacles Theranos is bound to hit. Legislation will likely face major opposition from the lab companies who currently provide the majority of lab tests done in America. Dr. Kavita Patel, the Managing Director of Clinical Transformation at the Brookings Institution’s Center for Health Policy and a current practicing physician at Johns Hopkins Medicine, told The Politic,  “We’ll see in Arizona how much is initiated by a patient and what the downstream effects are.” According to Patel, those effects concern “how much of what a patient initiates might result in false-positive and false-negative” results in comparison to traditional lab testing through a physician. False-positive and false-negative outcomes are the result of mistakes in lab testing that can erroneously report the presence or absence of a disease.

Patel described a scenario in which every person in the United States submitted themselves to a test for Lyme disease, which has a false positive rate of 2-3%, through Theranos’ self testing. The combination of that percentage and the large patient pool will result in a significant number of results declaring a false-positive. This scenario raises some questions. Who would handle the hundreds of thousands of people with incorrect results? Who would be liable for the error? Patel noted that when a patient initiates a test that results in either a false-positive or a false-negative, the share of culpability held by the provider and physician still remains unclear. Since Arizona’s new law enables patients to bypass seeing a physician entirely, the physician could claim to have played no part in the diagnosis altogether.

Although Patel expressed her reservations regarding House Bill 2645’s potential implications for any federal legislation, she lauded the company for its price transparency.  All Theranos test prices are conveniently listed on its website, with no individual test price exceeding 50% of Medicare reimbursement costs. That alone could save the current healthcare industry billions of dollars, providing uninsured patients with a cheaper alternative to expensive lab testing via the doctor’s office. Dr. Mark McClellan, a senior fellow and director of the Health Care Innovation and Value Initiative at the Brookings Institution, implied that there is a growing trend in healthcare to modify pricing so that “a patient can best meet their medical needs at the lowest price.”  McClellan went on to add that given Theranos’ “more efficient technology,” the company could potentially “drive down those payments” made by and to Medicare, insurance providers and labs to ensure a lower overall cost for the patient. Yet the issue is more nuanced than that, for even if such patients could afford testing, they would still need to consider the possibility of taking further action if the results for a particular disease were positive. Suppose they do make an appointment at a doctor’s office and then hand the physician their Theranos test results; the doctor is likely to have them submit to testing again in order to verify the diagnosis. As a result, patients would end up spending even more money than if they had simply chosen the standard lab testing. One method in which Theranos could combat this issue is to build up its scientific credentials through more transparency about its technology. In the business sector, the company is  formidable, and Fortune notes that it has “three former cabinet secretaries, two former senators, and retired military brass” on its board. However, there appears to be a stark contrast between Theranos’ copious business sponsors and its scientific backing.

In fact, despite the buzz generated, some members of the scientific community remain unconvinced, citing Theranos’ lack of peer reviews as a reason for their skepticism. The company guards the secrets of its trade closely, which can be a double edged sword. On the one hand, it ensures that the technology remains under wraps, preventing other companies from mimicking its processes. On the other hand, Theranos has yet to subject its findings to the scrutiny of other scientists in the field, which weakens the legitimacy of its results. Dr. Weian Zhao is the principal investigator at a stem cell and biomedical engineering lab at the University of California, Irvine, who conducts similar work utilizing microfluidics as a tool for blood diagnostics. He told The Politic that he understood Theranos’ reluctance to publish information about its technology, especially “from a business perspective,” because the company is “not [technically] required to publish anything.” Despite the little data made publicly available, Zhao did not doubt the technology Theranos purports to possess, as some of his peers may. The number of labs, including his own, incorporating microfluidics into their experiments has skyrocketed in recent years. These labs produce numerous scientific articles that attest to the ability of this newfound technology to accomplish tasks such as those necessary for Theranos. As a result, Zhao understands Theranos’ heavy focus on advertising and business, which he commended as successful in allowing the company to achieve what it has done thus far.

However, he was less optimistic of Theranos’ claims that it plans to reinvent the current definition of diagnosis. He stated that he was “very hesitant to claim that yet” as “they do not necessarily change the paradigm of early detection.” Biomarkers, which can indicate the presence of a disease in the body, “can be extremely low concentration at an early stage,” and since Theranos “only measure[s] those biomarkers in snapshots in a small volume,” “their technology is unable to address that fact” and therefore unable to truly revolutionize early detection. Their main selling point, in Zhao’s opinion, lies in the fact that they present an alternative method to current testing that saves patients both money and time. Here, Zhao praised Theranos for its effective breakthroughs in the biotech industry, which could lead to a more concentrated effort in perfecting the art of microfluidics and other early detection techniques.

Perhaps the issue with early detection lies less with the actual diagnosis itself, but with what comes after it. Jeremy Barofsky, the Brookings Institution’s Okun-Model Fellow, told The Politic the “problem of follow up” after a patient receives his or her results could prove to be “much more difficult” than obtaining a diagnosis. Barofsky went on to detail a specific scenario wherein someone under financial stress or with a low income receives the diagnosis of diabetes after being able to afford the testing through Theranos. Barofsky argued that despite having this knowledge, it would be difficult to guess what exactly the patient would do about it. After all, it’s one thing to spend a certain amount of money on a single lab test; it’s another to have to constantly shell out money over the course of a lifetime to deal with a noncommunicable disease such as diabetes. Here, information and technology could help to ensure that patients are in constant communication with the health system. Whether it is through real time data, providing reminders, or other methods, Barofsky seemed confident that startups could drive more interaction than the standard doctor’s appointment followed by a period of stagnancy for several months.

Although Theranos has gripped the world with its revolutionary blood diagnostics and bold claims, it remains clear that it still has a long way to go before it solidifies itself as a mainstream alternative to traditional lab testing. The company is equal parts hype and potential, pitching its low costs and accessibility to the world in a revolutionary manner. That Theranos’ efforts almost sound too good to be true, though, may just be a testament to its marketing. Theranos has technology, innovation, and some of the world’s smartest minds on its side; now all it needs is the general public, which may be harder to convince than it  assumes. However, at a time when the healthcare industry is looking to modernize the existing system with cutting edge technology, Theranos might just be what everyone is looking for.

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  • Fly On The Wall

    This article started off like a shameless sponsored ad for Theranos – in the worst possible sense – and actually evolved into a decent examination of the company’s current crisis and the testing industry’s current status. My head is whirling.

  • kenrubenstein

    The article seems to assume that Theranos is using it’s innovative technology for running tests. The author might wish to read news reports in which the company has acknowledged that only one such test has been approved and they are currently running all other tests on conventional instruments with conventional technologies. Since they are pricing their panels considerably lower than competition, one is compelled to assume they are subsidizing their services until such time as their new technology becomes usable. Why talk as if the technology has all but arrived?

  • Mona Lisa

    overcome diabetes before being diagnosed with diabetes and complications ? http://goo.gl/2z3vNw

  • Doubleblue

    Did the author read any of the WSJ or NYT articles over the last few weeks?

    Just to recap:
    – The tests run by Theranos are not more cost effective; they cost Theranos more to run them than it costs Quest or LabCorp because their volumes are negligible (they claim to have run 3.5 million tests in the life of the company — fewer LabCorp and Quest run in a single night)
    – There is a difference between “price” and “cost”. Low prices without low costs is not sustainable. Anyone can have low prices if they sell tests at a loss. Costs are what matter.
    – There is no time savings; their turnaround for routine tests is the same as that of LabCorp and Quest since they have to send the samples back to their lab and then run them on the same instruments rather than having one of their instruments on-site.
    – Henry Kissinger has left the Board and never belonged on it in the first place.
    – Did Holmes actually invent any novel microfluidic techniques that are used in the current instrument? The one that investors were told would run hundreds of test but maybe run a dozen or just one, depending on who you believe?
    – She is not a billionaire. Her company, according to a few private investors — not the market — has been valued at $9 billion and she owns half. She will not be a billionaire until and unless she can convert those shares to stocks traded in a public market trading at over $2 billion, or sell the company for a valuation of $2 billion in an M&A transaction.
    – There are allegations that Theranos faked its CAP/CLIA data – that’s a pretty big deal.
    – Their tests are, by some accounts, wildly inacurate – another pretty big deal.

  • Vadim Pashkov

    “While at Stanford, Holmes developed novel microfluidic techniques and used them to launch her new business” – Holmes did not developed anything while in Stanford.