
Walgreen Terminates Partnership with Theranos - dhawalhs
http://www.wsj.com/article_email/walgreen-terminates-partnership-with-blood-testing-firm-theranos-1465777062-lMyQjAxMTE2MDE5MzExMjM4Wj
======
bane
_Walgreens managers also grew increasingly frustrated in recent weeks with
Theranos as they sought information about the extent of test reports it had
corrected or voided._

This seems to be a common thread in the stories I've read about Theranos, an
almost pathological inability to provide basic information upon request. I can
only guess that Holmes' notion of open and transparent communication is
defined very differently from what most people would consider it to mean.

A big warning sign to me is also the bizarre collection of company reviews on
Glassdoor [1]. It's really fascinating to me that anybody would even consider
turfing their own company's reviews with this kind of ham fisted, single voice
corporate speak nonsense. I wonder who inside the company is responsible for
writing all of these? Holmes herself? Regardless, it's a really fascinating
look into how Holmes has prioritized things.

1 - [https://www.glassdoor.com/Reviews/Theranos-
Reviews-E248889.h...](https://www.glassdoor.com/Reviews/Theranos-
Reviews-E248889.htm?sort.sortType=RD&sort.ascending=false&filter.employmentStatus=REGULAR&filter.employmentStatus=PART_TIME&filter.employmentStatus=UNKNOWN)

~~~
dominotw
This is hilarious

[https://www.glassdoor.com/Reviews/Employee-Review-
Theranos-R...](https://www.glassdoor.com/Reviews/Employee-Review-Theranos-
RVW6516521.htm)

    
    
      Advice to Management
     You are doing a good job. Stay in better touch with the 
     employees. I think most people do feel appreciated but 
     there are also some that are disgruntled and unhappy for
     other reasons. I see these people spreading negative energy.
     You should seek them and try and fix the problem.
    

Is it common practice among upstart companies to pad their reviews on
glassdoor. I've been using those as references for my job search, I know
better now.

~~~
ryguytilidie
Well that plus I've had two separate situations where I left a negative review
and was threatened until I took it down. Not sure you're going to see many
unbiased views there...

~~~
dhimes
How were you threatened?

~~~
ryguytilidie
One threatened to tell my current boss that I had been a bad, disruptive
employee, even though he admitted that he knew that this was untrue. So he
basically threatened to try and get me fired from my job because I reviewed my
experience working at his company.

Other one threatened to sue me because I had signed a non-disparagement
agreement after a layoff.

~~~
dhimes
Wow, that is incredible shittyness.

------
aresant
"In recent weeks, Walgreens also was named as a co-defendant in one of three
civil lawsuits filed by consumers against Theranos. The suits, which seek
class-action status, allege that Theranos misled the public about the nature
and accuracy of its blood-testing technology."

Walgreens had an official partnership, including an investment of $50m, into
Theranos.

If there is actual consumer damage shown its Walgreens that's going to find
themselves writing checks to tort classes and attorneys.

In the entire WSJ expose it sounded like Walgreens management was as snowed-
over as the rest of us with regard to Theranos' "technology" but it's crazy
that they didn't do more relatively simple due diligence given their exposure

~~~
jalonso510
Who's writing the checks really depends on what's in the contract between
Walgreens and Theranos. I haven't seen it, but it wouldn't be out of the
ordinary for Theranos to have agreed to indemnify Walgreens against claims
over the accuracy of the tests. If so, Theranos would be on the hook even if
Walgreens is getting sued as well, and the real question is how big the claims
are and whether they will be enough to to bankrupt Theranos.

~~~
mathattack
In this case I believe that the contract was very tilted towards Theranos. The
execs in charge were forced out previously. [0] I don't know any specifics on
indemnification though, but if Theranos goes under, they can't indemnify much.

[0] [http://www.nytimes.com/2016/04/22/business/a-once-avid-
ally-...](http://www.nytimes.com/2016/04/22/business/a-once-avid-ally-
walgreens-is-struggling-to-shake-off-theranos.html)

~~~
pdabbadabba
> if Theranos goes under, they can't indemnify much.

Insurance!

~~~
mathattack
Do you think they're fully insured? (I have no idea)

------
FreedomToCreate
It still baffles me that Walgreens got into this partnership in the first
place. A complete failure of due diligence.

~~~
ChuckMcM
Well yes and no. Remember that they have a really well connected board of
directors and a lot of people put their reputation out there based on
information they believed to be true. The managers at Walgreens don't know how
to design, validate, and certify laboratory tests and procedures so they are
kind of at the mercy of the folks who tell them they do. And while it would
have been within their rights to send an outside pathologist on site to audit
the entire workflow, to come up with that idea you have to at least _suspect_
that they might be trying to pull a fast one on you.

I speak from experience when I say that it is easy to be fooled into believing
people when those people actually believe they are telling the truth.

Bottom line is this is all on Theranos, and not Walgreens.

~~~
ploxiln
Then Walgreens should _fail_ and come to be replaced by a pharmacy chain which
one way or another depends on input from a competent pharmacist (whether they
are equivalent of "CTO", or board of pharmacist advisors, or whatever works).

But according to a very relevant ArsTechnica article[0], they thought to do
due diligence, failed to do so, and then in a fit of unicorn mania did the
deals anyway:

Theranos failed to hand over an Edison to researchers hired by Walgreens to
kick the tires and ensure it worked correctly, despite initially agreeing to
do so. The young company, initially valued at $9 billion, didn’t even allow
Walgreens executives to enter its lab or walk around the company’s
headquarters without a chaperone, the WSJ reports.

Theranos did provide an Edison prototype and sample testing kits to a
Walgreens executive. But the machine only spit out test results such as “low”
and “high” so that Walgreens couldn’t compare the results to standard blood
testing equipment. Nevertheless, Walgreens moved forward with a deal, partly
out of anxiety that Theranos might partner with a competitor.

[0]: [http://arstechnica.com/science/2016/05/walgreens-failed-
to-v...](http://arstechnica.com/science/2016/05/walgreens-failed-to-vet-
theranos-tests-that-patients-are-now-suing-over/)

~~~
jonathankoren
Having a chaperone for guests just makes sense. At the very least, you can
keep them from accidentally breaking something. If you're not escorting
guests, you're doing it wrong.

~~~
daveguy
Agreed. I have never seen any commercial scientific lab (bio or otherwise)
that let anyone just roam free. It would be a serious liability to let people
roam without a chaperone. That has as much to do with
biohazard/radiation/toxic/laser signs plastered around as it does company
secrets. That said, the chaperone in this case should be very accommodating to
the visitor in terms of seeing systems and operations of interest.

------
tim333
I look forward to the movie version of this fiasco with Jennifer Lawrence
playing Holmes [http://www.independent.co.uk/arts-
entertainment/films/news/j...](http://www.independent.co.uk/arts-
entertainment/films/news/jennifer-lawrence-to-play-controversial-silicon-
valley-ceo-elizabeth-holmes-a7077886.html)

------
smaili
Anyone happen to know why this took so long to become official?

EDIT: Looks like it's mentioned a few paragraphs into the article:

 _Walgreens leaders decided to end the partnership after regulators disclosed
problems at Theranos in late January, but held off on finalizing the
separation because the company feared Theranos might sue, said people familiar
with the matter._

~~~
metalliqaz
They must have realized that Theranos is going to sue no matter what happens.

~~~
joshdickson
Not quite - Walgreens believes that the CMS punishment, which is expected in
the next two weeks, will be sufficiently harsh enough that it will win a case
against Theranos. If they lost the case, they could have potentially been on
the hook for hundreds of millions or even billions of dollars in damages (i.e.
so much money that even with the incredibly bad press of not severing the deal
sooner, it still made more sense to keep the deal until things got to where
they are now).

[https://twitter.com/joshdickson40/status/742154076851408898](https://twitter.com/joshdickson40/status/742154076851408898)

------
kqr2
Official statement from Theranos:

[https://theranos.com/news/posts/statement-from-
theranos-7](https://theranos.com/news/posts/statement-from-theranos-7)

    
    
      Quality and safety are our top priorities and we are 
      working closely with government officials to ensure that 
      we not only comply with all federal regulations but 
      exceed them. We are disappointed that Walgreens has 
      chosen to terminate our relationship and remain fully 
      committed to our mission to provide patients access to 
      affordable health information and look forward to 
      continuing to serve customers in Arizona and California 
      through our independent retail locations.

------
lordnacho
Are the tests just completely worthless? I thought the FDA or such would
mandate a battery of studies to determine whether the tests were accurate
before letting someone sell them.

The fact that a major chain was selling them also seemed to indicate to me
that there was something real in Theranos. Probably a lot of people think the
same way, and are disappointed.

~~~
seehafer
No, the regulatory system is actually doing its job. The regulatory system is
predicated on the government not being all knowing and all seeing and private
actors in the industry having a bit of sense and doing their own due
diligence. To structure it otherwise would basically make it impossible for
any health tech startup to get off the ground -- the time required, and the
capital requirements would be insane.

To summarize regulatory action:

Theranos sent in a marketing application to FDA for one of the use of Edison
with one test, FDA said OK, this looks good based on the data you sent us (FDA
can only see what you send them). FDA then placed Theranos on an audit list
(common practice for any new company), stopped by after a few months, and
found out that Theranos' own internal procedures for making sure that the data
they generate about their product's performance is honest were, shall we say,
poor. They also found Theranos marketing other components that they had not
sought clearance to market from FDA. So FDA issued a 483 (deficiency notice)
and the fallout from that we have yet to see. (I personally think there will
be another shoe to drop here.)

Now, on the lab side, which is regulated by the Center for Medicare and
Medicaid Systems, not FDA, the process is different. Basically CMS allows you
to get a preliminary certificate after a cursory inspection and gives you 2
years within which to build a real testing process and get your shit together
before they do the real audit. Theranos's Bay Area lab got the preliminary
certificate and massively failed the real audit, and then massively failed to
fix anything, which is what's landing Holmes in potentially very hot water
(being banned from the diagnostic industry for two years in the US). The
reason this is structured this way is that 1) to have enough data for a
meaningful audit takes time and 2) the government expects anyone contracting
with a brand new lab for the first two years to understand that it's a brand
new lab and act accordingly (i.e. be skeptical, do your own audit, don't take
NewCo's evidence at face value).

Most people in the industry understand this. Hell, most people at _Walgreens_
understood this and were properly skeptical [1]. But the top execs at the time
overrode the valid concerns of their QC people in order to chase the unicorn.

[1] [http://www.wsj.com/articles/craving-growth-walgreens-
dismiss...](http://www.wsj.com/articles/craving-growth-walgreens-dismissed-
its-doubts-about-theranos-1464207285)

------
dennyis
Man I've gotta say that despite all the bad news this really bums me out. I
love being able to run down to Walgreens, order my own blood tests, and get
the results without a doctor or a big hassle.

~~~
wmt
Do you care if the results are garbage or not? Because that's why they're
booting them out, all Edison results from 2014 and 2015 were voided.
[http://www.wsj.com/articles/theranos-voids-two-years-of-
edis...](http://www.wsj.com/articles/theranos-voids-two-years-of-edison-blood-
test-results-1463616976)

------
mathattack
It's about time. I'd be very surprised if Walgreens doesn't have a legal
liability as a result of taking so long to cancel the partnership.

------
minimaxir
The previous news story was that Walgreens discontinued sending blood to
Theranos in light of the allegations.

If the partnership is terminated, then Walgreens must know something is very
off.

------
korginator
Walgreens done messed up their due diligence big time. They have no one to
blame but themselves. Greed drove them to this.

------
seesomesense
Consumer class action litigation against Walgreens has started and will go on
for decades.

------
grizzles
It's shocking to find out that a science education is actually pretty useful
for leading a science company. DFJ and the other investors should be getting
way more of the blame for not doing proper due diligence on Theranos. It's
kind of amazing in a way that the company is still a going concern. There is
going to be no salvaging this company, because it has nothing of value. What a
shmozzle.

~~~
tlb
On the other hand, out of the top 5 pharma companies, only 3/5 CEOs have
science degrees: (Edit: was 1, wasn't counting medical degrees before)

    
    
      #1: Novartis: Economics, MBA
      #2: Pfizer: BS chemical engineering, chartered accountancy
      #3: Roche: economics, law
      #4: Sanofi: MD
      #5: Merck: veterinary medicine, PhD
    

So a person who didn't know any better might not assume a science degree was
necessary.

~~~
cwilkes
What does running a company have to do with science? I'm being serious here.
It's not like the Ceo of a company is going to personally check on lab
results.

~~~
lordnacho
The CEO needs to have an idea of what conditions are for workers. If I change
the work-at-home policy, will we still be able to get work done, while
attracting the right people? If someone comes up with a suggestion like "let's
make such-and-such a molecule, it will cure the common cold", the boss needs
to know what questions to ask. It's about have a prior that's better informed
than a non-science person would have.

Lately there's been a trend towards thinking that management is somehow
separate from doing things. It's a somewhat anglo-saxon thing, you'll find it
less in the Germanic world.

------
perseusprime11
What took them so long?

------
meeper16
The hallmark of a good product is whether or not the founder, founding team,
board and few key shareholders are using the product. I'd like to hear more
about this.

~~~
yongjik
Depends on the product. (E.g., funeral service?)

------
beilabs
Has there been any confirmed cases where someone has died as a result of a
faulty Theranos test during this period? Surely that would be the final nail
in the coffin of such a mismanaged enterprise...

~~~
pyrophane
No. If that were to happen then I imagine that the discussion would shift to
which Theranos executives will be going to prison.

------
_audakel
1 - Theranos should have been more transparent, but what startup doesn't
stretch the truth or even leave out data on occasion? It is a fine line
between lying and hustling. Startups can often talk about something that
doesn't exist yet like it does because they can move fast enough to build it.

2 - I worked at a medical startup in Palo Alto and I can attest that it is
incredibly hard complying with all the FDA rules. Many are regulations that do
little to protect consumers and exist from an outdated bureaucratic system.
Others are lobbied into existence by big players like JNJ to protect
themselves from startups like Theranos.

3 - Theranos was trying to do something that few people do - truly inovate in
the medical world. As a country we have come to a point where little inovation
is possilbe bc so many rules prevent the change necessary. We are not willing
to accept any risk, and so we are stuck without progress.

4 - Before we all hop on the hate Theranos band wagon, lets remember that they
did what all startups do - move fast and break things.

~~~
dingo_bat
There is a fundamental difference between snapchat and medical tests. You
cannot approach one as you approach the other. I have worked for a medical
software company and the atmosphere is completely different from the usual
move-fast-break-things culture at other places. You digitally sign for every
line of code you write or review, every test you write, every test you say is
working. If a single bug is found in your code, after deployment, it is traced
back to the tester, dev and manager and it is counted against their
performance.

TL;DR people die when you move fast and break things in medicine, and your
company gets sued for millions of dollars.

~~~
_audakel
Beign at either extreme, moving too fast or moving too slow, is problematic. A
related field to medical is the Space + Rocket industry. Heavily regulated and
if you make a mistake people die.

For much of the lifetime of the industry, NASA was the best there was. They
embraced a "zero bug" mentality ([http://www.jamesshore.com/Agile-
Book/no_bugs.html](http://www.jamesshore.com/Agile-Book/no_bugs.html)). It
resulted in very slow and costly development and we accepted that as the way
things where, ie very expensive and little progress.

SpaceX came in with a move fast and break things mentality. They did not
approach this in the way that had always been done (move slow and make no
mistakes). They have greatly reduced cost and increased capability to a level
that arguably would never have been reached by NASA, all without loss of life.

We don't need to test or develop medical in a haphazard way, but do have to
accept that the way things work currently will not result many advancements
(at least not rapid advancements). FDA regulations are fine until you realize
that you have a currently incurable medial condition, and wonder if medical
innovation was easier if you would have a cure.

Is the regulation to ease fear of a potential death/injury worth the many real
deaths of people who we do not have treatments for?

~~~
CaptainZapp

      They have greatly reduced cost and increased capability to a level that arguably would never have been reached by NASA, all without loss of life.
    

Well, they haven't attempted manned space flight yet, have they?

