
The letter the Feds sent to Theranos [pdf] - coloneltcb
https://cdn2.vox-cdn.com/uploads/chorus_asset/file/5969923/Theranos_Inc_Cover_Letter_01-25-2016.0.pdf
======
jimrandomh
I looked up what those laws referred to are, and... this is very very serious
and Theranos is unlikely to survive it.

The first two laws they are cited as having broken are about quality control
standards. The next two laws they are cited as having broken are about
qualifications that must be held by the laboratory director and technical
supervisor. The last law they are cited as having broken is about
qualifications that must be held by technicians. They have ten days to come
into compliance, but in order to address these violations they will have to
either hire new staff for key leadership and other positions, or pull their
product from the market. They will do the latter.

This same company was previously forced to pull their "nanotainer" testing
system from the market because when regulators sent them control samples, they
fraudulently tested them on different equipment and with different procedures
than they used with patient samples. I will be surprised if no criminal
charges are brought against Theranos CEO Elizabeth Holmes.

~~~
aczerepinski
They aren't laws, and they have ten days to submit a plan, not to execute the
plan. Are you sure you know enough about this sector to weigh in on whether
survival is likely?

~~~
jimrandomh
Not laws? Those are section numbers from the US Code of Federal Regulations.
Are you trying to point at the distinction between civil and criminal law?

~~~
michaelhoffman
The CFR is made up of _regulations_. Usually when people refer to "laws" in a
U.S. context they are referring to statutes.

~~~
tannhauser23
No no no, regulations have the force of law, and if you violate them you can
be fined, jailed, banned from the industry, etc. This is serious.

~~~
aczerepinski
I'm really not sure about that. There are so many conditions spanning when
documents need to be signed, how to clean a nursing bag, when to hold
meetings, what credentials personnel need to hold, how close to the
floor/ceiling supplies can be stored.

What are some examples of COP violations leading to jail time?

~~~
hguant
Law - what is put together by Congress and signed by the President. This can
involve tasking Federal agencies to do a specific task, referred to as a
mandate.

Regulation - How the Agency turns its mandate, which is often broadly stated
and sometimes nebulous, into concrete actions and policies. An example - I
worked at the DOJ as an intern. There was a law passed to provide benefits to
the families of public safety officers who died in the line of duty. What
those benefits are? Who qualifies as a public safety officer? If a fire
fighter gets in a car crash on his was home from a shift, does that qualify?
The answers to these questions are determined by lawyers and experts in equal
measure - the experts to determine what should be done to solve the problem,
the lawyers to make sure the agency actually has the power to enact the
policies the experts recommend. To put it in OOP terms, regulations are
instances of law.

The stuff you mentioned - who is allowed to sign form 22a, minimum size of
cleaning closets - is still law. The agencies also have the power to determine
penalties for breaking regulations, not all of which involve going to jail.
This power is again derived from what powers Congress assigns them when it
writes the law.

~~~
aczerepinski
These are rules for being a Medicare participating provider and the
consequence of violating them is that you can't bill Medicare. I want to see
one example of an individual doing time or even paying a fine for failing a
CMS condition.

There are providers who don't bill Medicare, don't undergo CMS surveys, and
don't follow the COPs. You guys are going overboard in calling it "the law."

~~~
jforman
A lab at Cleveland Clinic was placed in Immediate Jeopardy status a few months
ago. They voluntarily stopped some services temporarily and were fined
$600,000.

[http://www.beckershospitalreview.com/quality/cms-fines-
cleve...](http://www.beckershospitalreview.com/quality/cms-fines-cleveland-
clinic-hospital-for-lab-deficiencies.html)

Whether or not regulations are technically "laws" is beside the point, and
arguing about it so much is pedantic. The feds show up with a gun and have
full authority to fine you or even padlock your lab (which has happened plenty
of times). Theranos is in plenty of legal (or regulatory, who cares) hot water
right now, whatever you call it.

~~~
aczerepinski
Thanks for posting (and to seanccox who posted a similar link). I'm wrong, and
it appears the lab business is different from other health care businesses
where most surveys contain deficiencies and everybody just keeps working.

------
brandonb
If you're a digital health entrepreneur and treating what's happening with
Theranos as a wakeup call to do rigorous science, you could do worse than to
work with the UCSF Center for Digital Health innovation:

[http://centerfordigitalhealthinnovation.org/](http://centerfordigitalhealthinnovation.org/)

I'm a machine learning engineer working with UCSF cardiology. I certainly
don't know all the answers, but I'm happy to try to answer questions or direct
people to the right place.

~~~
entee
I think it's quite dangerous when there's a company that says "we have
breakthrough science, but we definitely can't tell you what it is", which was
Theranos's M.O. for a long time.

Working in medicine is hard, working with biology is hard, not just because of
regulatory hurdles, but because fundamentally the problems in those fields are
much more commonly questions of basic science than engineering.

Good science leads to good companies, and if you can't do good science you're
probably going to fail in this space. Good to see solid research institutions
creating spaces to nurture good science at startups.

~~~
nedwin
They claim that it's because they can't patent their inventions and are
instead relying on trade secrets. Revealing their trade secrets wouldn't make
them trade secrets anymore.

~~~
entee
A lot of the things they've claimed to be developing (microfluidic devices,
signal amplification strategies, novel assays, etc.) are totally patentable.
Maybe they don't want to reveal their secrets to inhibit competition, but in
medicine you have to prove the thing works before you actually use the thing.

I don't much care if they want to hide some aspects of how their process
works, but under no circumstances should anyone in this space operate without
conclusively, publicly and openly proving that the technology works. The
standard for that is scientific publication, and the ability of disinterested
parties to test the equipment and verify it does what it claims to do.

Plenty of medical/biotech/diagnostics companies have cleared that bar while
maintaining trade secrets. Theranos should be submitted to the same standards,
and as far as I can tell, whenever they have been tested, they have failed.

------
bluker
From a funding standpoint the first question that comes to mind is, "How did
this happen?"

Theranos to date has raised $88.4M. The Series C was raised in 2010 following
a 4-year hiatus.

In the ten years since the founding of Theranos, they were unable to hire
anyone who would help them figure all this shit out?

It seems insane to me that a well respected venture firm like DFJ, who
invested in their Series A,B and C, would not have done their due diligence
and understood where Theranos would become vulnerable. Everyone knew that
government regulators would be involved since day one.

I am bullish on Elizabeth. She is obviously extremely intelligent and
charismatic but I'm bearish on her investors. Step one of funding should have
been building a blood test that actually works and step two is getting that
$88M test approved.

Without knowing the _whole_ story it's hard to form an opinion about the
situation but I am super interested in the psychology of how all "this"
happened.

Thoughts?

~~~
codinghorror
[http://www.forbes.com/sites/ryanmac/2016/01/22/clinkle-up-
in...](http://www.forbes.com/sites/ryanmac/2016/01/22/clinkle-up-in-smoke-as-
investors-want-their-money-back/)

> Clinkle had a polished demo that came before things like Apple Pay, said one
> former employee, who declined to be named. But most importantly that person
> added, Duplan “was charismatic when he wanted to be” and could “raise money
> in absurd abundance.”

You really want to change the world? Forget being a programmer, learn to be be
charismatic.

~~~
nostrademons
I wouldn't say that either Theranos or Clinkle have changed the world.

I would say that Apple, Google, EBay, Uber, Android, and Twitter have, but
Steve Wozniak, Larry Page, Pierre Omidyar, Garrett Camp, Andy Rubin, and Evan
Williams are far from charismatic.

This is more an example of "You can fool some of the people all the time or
all of the people some of the time, but you can't fool all the people all the
time." Charisma can help fool a critical mass of people early on, but once you
try to expand to a product all the people use all the time, you'll fall flat
on your face. Build something useful and then you don't have to fool anyone.

~~~
mbesto
I don't think you picked up on Jeff's snark. I read it as "the key to
successfully getting funding is to be charismatic" and "successfully getting
funding" is currently synonymous with the sentiment that you would be
"changing the world".

------
jonathankoren
Definitions of "conditional-level deficiency" and "immediate jeopardy" can be
found at [http://www.hospitalinspections.org/qa-with-
cms/#10](http://www.hospitalinspections.org/qa-with-cms/#10)

I can't say Theranos's comments about the matter even begin to assuage the
concerns this brings. Trying to pass off the immediate jeopardy fault in
hematology (i.e. blood testing) as "not apply[ing] to the whole lab" is
absurd. It's like a restaurant saying that the board of health complaint that
shut them down focused too much on the rat feces in the kitchen, and not
enough on the well watered house plants in the dining room. It's so tone deaf.

~~~
randycupertino
> It's like a restaurant saying that the board of health complaint that shut
> them down focused too much on the rat feces in the kitchen, and not enough
> on the well watered house plants in the dining room

To be fair, that has been Theranos' response to ALL criticism for the past 7
months. "Everyone is begging us for our secret recipes, but that is company
secrets/proprietary science!"

------
bane
Discussion about a month ago
[https://news.ycombinator.com/item?id=10765562](https://news.ycombinator.com/item?id=10765562)

For the record, I'm pretty sure Theranos is up to something very shady. Spend
a couple hours watching just interviews with Holmes and reading the glassdoor
reviews by current and former employees and you'll quickly start to piece
together some pretty sketchy stuff.

Their glassdoor profile is full of some of the most obviously fake reviews
I've ever seen, I wouldn't at all be surprised if about half of them were
written by Holmes herself instead of running the company.

[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)

Here's what I wrote on this about a month ago.
[https://news.ycombinator.com/item?id=10765996](https://news.ycombinator.com/item?id=10765996)

I've since spent some time looking into the company and asking some people I
know in the industry about the company and the opinion seems to run from
"scam" to "gross ineptitude".

Holmes' answers to simple questions are about as mealy mouthed as I've ever
heard outside of Congress. e.g. [https://www.youtube.com/watch?v=MBs-
oj7U-bo](https://www.youtube.com/watch?v=MBs-oj7U-bo)

Something smells really bad about Theranos and it's probably going to ruin a
lot of people's careers while a select few are going to walk away with a nice
percentage of the VC money in the end. The story on this will probably get
caught up in post-Theranos litigation for many many years and I'll probably be
retired long before the whole story is known.

The real problem is trying to ascertain motive. Money seems too easy for
Holmes to have been working at it for so long. But it could be that simple.

~~~
w1ntermute
I can't imagine what Liz's end game might be. What did she expect to happen in
this situation? The healthcare industry is very tightly regulated. If you want
to (temporarily?) mislead investors or customers, it's one of the worst
options out there.

And after a decade in stealth mode, why did she make things public in 2013,
before the technology was working? If she's as much of an attention-seeker as
some say, how did she survive for the first decade without anyone caring?

~~~
bane
> What did she expect to happen in this situation?

In my more charitable moments thinking about what they're up to the best I can
come up with is "AirBnB/Uber". Just ignore the law and hope it goes away long
enough to make money.

But both of those companies actually offer a working and viable
service/product while Theranos doesn't seem to be even at that MVP point yet
so that doesn't really even make sense either. At this point they're just
taking VC money and lighting it on fire.

------
pboutros
This is a little sensationalist - it's a list of deficiencies in their labs,
not in their tests. More akin to an OSHA violation letter than a cease and
desist letter.

Here is an example of the regs that they are violating. It's things like lack
of lab personnel certification.
[https://www.gpo.gov/fdsys/pkg/CFR-2011-title42-vol5/pdf/CFR-...](https://www.gpo.gov/fdsys/pkg/CFR-2011-title42-vol5/pdf/CFR-2011-title42-vol5-sec493-1441.pdf)

This is definitely not a good thing for Theranos, but it isn't them being
called out for bogus biotech. (Not that that would surprise me immensely if it
happened.)

~~~
timr
It's only "sensationalist" if you cherry-pick the most bureaucratic-sounding
requirement, and ignore the first one in the list, which is a lot more
fundamental to what a diagnostic lab does -- they're violating some
unspecified part(s) of the quality system requirements for labs:

[https://www.gpo.gov/fdsys/pkg/CFR-2011-title42-vol5/pdf/CFR-...](https://www.gpo.gov/fdsys/pkg/CFR-2011-title42-vol5/pdf/CFR-2011-title42-vol5-sec493-1215.pdf)

These are horribly oppressive, bureaucratic, unnecessary requirements like
"maintain basic scientific controls":

[https://www.law.cornell.edu/cfr/text/42/493.1256](https://www.law.cornell.edu/cfr/text/42/493.1256)

This also is a section, it's worth nothing, that consists mainly of references
to lots of other, more specific, requirements. There's really no way of
knowing what the violations are, other than to take the letter at its word
that the violations are serious.

This isn't taxi medallions -- mess this basic stuff up, and you're putting
people's lives directly at risk.

~~~
pboutros
I only randomly picked a CFR to look up. This is totally a big deal! It just
isn't the definitive 'none of these tests work' that many people have been
expecting.

~~~
akiselev
When it comes to biotech companies working in clinical diagnostics, lacking
the proper credentials is way WORSE than 'none of these tests work.' Most
diagnostics companies self regulate by hiring an FDA certified lab managers
and technicians who share responsibility for making sure that the marketed
product, in this case blood tests, is properly carried out and that it is
comparable to the gold standard (usually much more expensive tests with known
performance and false negative/positive rates). The FDA set it up this way
because otherwise regulating all of the labs and their output like
pharmaceuticals would be insanely more expensive and wildly impractical.

A company like Theranos selling blood tests without properly certified staff
is the equivalent of Genentech or Pfizer marketing and selling snake oil
disguised as cancer medication. It's the equivalent of selling something
without having ever tested it to begin with.

~~~
quotefoundslash
This happened: [http://www.reuters.com/article/us-roche-europe-
idUSBRE85K1NH...](http://www.reuters.com/article/us-roche-europe-
idUSBRE85K1NH20120621)

------
bedhead
I wonder how far Liz Holmes is going to take this thing. I wonder when it hits
the breaking point where even she accepts the cold hard truth that this
company that was famously valued at $9b is pure vaporware, built on little
more than smoke and mirrors. Does the company need to file bankruptcy? Do
investors need to sue to recover what money is left? Do insiders need to be
criminally charged? I wonder...

~~~
flormmm
Serious question: Even if Theranos goes down in flames, won't she walk away
from this with a fortune? Maybe not quite the fortune she thought, but still
many millions?

~~~
tyre
Quite likely. In later rounds, founders are often strongly encouraged to take
money off the table by selling equity.

This isn't shady, it's so the founding team stops worrying about money and
focuses full-time on the company. Ramen-profitable is good in the short term,
but time becomes increasingly valuable as a company grows.

~~~
bsder
> This isn't shady, it's so the founding team stops worrying about money and
> focuses full-time on the company.

Uh, no. It's so that the founders won't sell the company at a mere 4-5x rather
than then 20-100x that the VC's want.

If it was genuinely about the company, they'd let _all_ the initial people
take some stock off the table. Instead they only allow the people who could
sell the company to take stock off the table.

Big difference.

------
dev1n
Having a Unicorn go bust is akin to having a house get foreclosed on in your
neighborhood in 2008. It doesn't reflect kindly on the value of the other
homes in the neighborhood.

~~~
minimaxir
That is one of the reasons why venture capitalists not even affiliated to
Theranos had suspiciously optimistic responses to the initial allegations last
year:

[https://twitter.com/joshelman/status/655033793414238208](https://twitter.com/joshelman/status/655033793414238208)

[https://twitter.com/williamalden/status/658705178523258880](https://twitter.com/williamalden/status/658705178523258880)

[http://techcrunch.com/2015/11/21/in-defense-of-
theranos/](http://techcrunch.com/2015/11/21/in-defense-of-theranos/) (Thanks
to Analemma_ above for reminding me of this)

The Theranos saga is incidentally one of the reasons I wrote the "You Can't
Criticize Startups" rant on Monday. (to be fair, _ignoring federal
regulations_ is a different scope than mere criticism.)

~~~
dev1n
I saw your post on the front page the other day but didn't have time to read
it. I'll check it out. I'm a fan of your other posts. Keep up the solid
writing!

------
bgribble
The corollary of "it's better to ask forgiveness than permission" is
"sometimes, you will ask forgiveness and be told 'hell no, what were you
thinking?'"

------
MollyR
Unbelievable. I really dislike this company for trying to pull a fast one with
people's health. I really hope some lawyers file a suit against Elizabeth
Holmes or something bad happens to create a strong disincentive from someone
ever trying to do something like ever again.

The chinese milk crisis is an extreme example of what could be done. The
executives were executed or imprisoned, which again could be extreme, but I
doubt anyone in china would ever try it again.
[http://news.bbc.co.uk/2/hi/asia-
pacific/8375638.stm](http://news.bbc.co.uk/2/hi/asia-pacific/8375638.stm)

~~~
jonsterling
Totally agree. We need to bring Industry to heel.

------
aczerepinski
CMS surveys, deficiencies, and plans of correction are to some extent business
as usual for large health care providers. The article doesn't mention what
they got hit with so it could be a big deal, or just an isolated incident that
a surveyor happened to observe.

Correcting the problem tends to be easy, but measuring and reporting back your
progress creates administrative expense. An example is paying for someone to
train your employees on something related to the deficiency and then doing a
random audit of their records at regular intervals for a few months
afterwards.

Technically you can get shut down, but it isn't common.

~~~
Naritai
If your comment were to be somehow combined with jimrandomh's, they would
instantly combine, leaving nothing in their place.

~~~
aczerepinski
Agreed, but I've been through multiple CMS surveys, some with deficiencies,
some without. Some POCs were scary, some laughable. Personnel issues can be
trivial (somebody's cpr certification expired yesterday) or serious (you hired
somebody who claims to be a doctor but isn't). It's really hard to weigh in as
an outsider.

------
whbk
Wow, not mincing words. I think we've found our first dead unicorn of 2016.

~~~
bahador
How many employees do they have? I would imagine that the impact of a dead
unicorn would be directly proportional to the number of employees it had.

~~~
knd775
A quick google search suggests around 500.

~~~
whbk
142 on LinkedIn - guessing whatever number you found is inflated by people
working in clinics that do Theranos tests or something along those lines?

~~~
jsprogrammer
Maybe LinkedIn doesn't capture every worker? You think they have greater than
30% penetration into the market?

~~~
whbk
I've actually had the (dis)pleasure of doing a fair bit of work in this area
and have found LinkedIn to be pretty directionally accurate - for tech
companies, I'd ballpark it at closer to 80-90% in most cases. They may very
well be one of the outliers - I typically saw that in businesses structured in
a way that made it readily understandable (ie 75 core employees, but hundreds
of hourly warehouse employees without LinkedIn accounts). Not sure if Theranos
has such a structure - perhaps the medical/research side is much less likely
to have LinkedIn accounts than the tech side.

------
danielvf
Without the actual statement of definicinies, there's not much to this letter
other than that they have ten days to be in compliance with... something?

Does anyone know what they are being ask to fix?

~~~
refurb
You can look up the regulations listed in the letter although you won't know
exactly what their deficiencies are.

What is interesting to me is that this is CMS, not the FDA. CMS runs Medicare
and Medicaid and is basically saying that if they don't improve their
compliance, CMS will stop paying for their lab tests.

~~~
jforman
CMS administers the CLIA program. This is about their ability to operate as a
lab, not just about Medicare reimbursement.

See here for a clear breakdown of responsibility among government agencies:
[http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidanc...](http://www.fda.gov/MedicalDevices/DeviceRegulationandGuidance/IVDRegulatoryAssistance/ucm124105.htm)

------
LevyJenningsSD2
As a medical laboratory professional I can shed some light: The Immediate
Hazard Hematology citation comes from an expired reagent being used on a
Hematology analyzer (clearly a standard Siemens analyzer, not the mysterious
new technology they won't disclose). This is easily fixable, but reveals a
great deal about what is ACTUALLY going on in that lab

The Laboratory Director and Technical Consultant citations are standard when
you have an Immediate Hazard citation. But they also reveal how poorly
organized this lab is and how whomever is responsible for the laboratory
leadership at a directorship level knows NOTHING about CMS laboratory
regulations, or tried to pull a fast one on CMS/CLIA by hiring a patently
unqualified Dermatologist to be a part-time director of a CLIA high-complexity
lab. This is a MASSIVE glaring error in leadership and quality assurance at
the very highest level. The executive leadership of this company appears to
know nothing about the business they seek to upend. I am sure the Cleveland
Clinic is wondering WTH they got themselves involved with. Also very telling
that Holmes was at Cleveland Clinic the day after this letter was released.

They are clearly operating as a bog-standard lab doing conventional testing to
be able to report patient results and be a traditional CLIA-certified lab
(except may be one test they have - the HSV) This significant fact seems to
have escaped everyone. They can't report any tests performed by their top-
secret technology because it ain't FDA approved.

For a conventional refererence lab like Quest or Labcore, their inspection
faults would be embarrasing but fixable. For Theranos, it's likely fixable but
the PR fiasco may be ultimately fatal.

Someone shoukd really have studied the industry they seek to upturn and worked
with real professionals rather than pusing global dominance and glossy PR. The
cart is miles ahead of the horse at Theranos

------
lsiebert
Hmm... I have a very good friend who is looking for a better job doing
quality, regulatory, or compliance work at a biotech/medical device company.
From what I understand, this seems kinda like the stuff a company in this area
deals with regularly; It's just that most companies just don't publicize it.
Anyway forwarded this to him.

edit: I should clarify, I mean general regulatory issues, I'm not commenting
on the specifics, but every company faces audits and inspections.

------
emeraldd
Is anyone else seeing a bunch of missing letters in the linked pdf? I know
it's a side issue but it really makes the letter hard to read.

------
Analemma_
Do you remember when the WSJ first started really dismantling the Theranos
house of cards last fall, how a bunch of prominent VCs and publications like
TechCrunch, with a lot to lose if the startup bubble pops, immediately circled
the wagons? There was a lot of "this is a media hit piece", "we need time to
evaluate the technology", "Liz Holmes is a visionary", etc. I wonder if we'll
be getting retractions and apologies from those people.

~~~
argonaut
What I saw was a lot of tech people and VCs cautioning against a rush to
judgment. Which is totally reasonable. I for one will leave this up to the
regulators to figure out. The people who invested in the company will lose
(some/most/all) of their money. No need for us to get whipped up into outrage.

~~~
timr
I'm not outraged by Theranos, but I do feel that stuff like this makes it all
the harder for _legitimate_ science to get investment, by "raising the bar" on
the number of stupid, oversimplified, breathless claims you need to make to
get noticed.

Real science is too messy to be able to compete with a press release from a
sufficiently motivated huckster -- and investors love a huckster in lab coat.

~~~
andygates
Doesn't real science ... publish real papers? Or at least file patents. It's
the secret sauce that's so suspcious. To a skeptical outsider, it whiffs of
e-Cat.

~~~
timr
Yeah, but investors don't often _read_ papers...let alone have the expertise
to know if they're any good. It's pretty common for investors to commit money
based on good spin and social proof. Theranos has excelled at both.

------
enziobodoni1
To start with, I am a clinical lab medical director and clinical pathologist.
I've commented on Theranos a few times before on HN. That said, I think three
things have been missed in all of this

1) There are a lot of bad labs out there like Theranos, and Theranos' story is
thus only unique because of how pumped up it got. Clinical labs are "old
economy" businesses, and the idea that someone could sprinkle "new economy"
fairy dust and turn it into an Uber or Netflix success story is more about the
echo chamber that is Silicon Valley, the general lack of scientific interest
or rigor in clinical diagnostics in the tech industry, a somewhat Aspergey yet
charismatic CEO, black turtlenecks, and friendship with important ex-
government officials and VC folks than anything special about what was going
on in their laboratory. Plenty of labs have been caught and shut down for what
Theranos has done, and while I didn't think that it was actually occurring
there, I am not terribly surprised.

2) The magic of their Edison box, even if it had turned out to work, was not
nearly as impressive if you know anything about how clinical labs operate
today. The claims that they have made (can do tests on MICROLITERS and have
imprecision LESS THAN 5-10%!) are actually standard these days for many
assays. As a lab director, I was always disturbed by the lay press puff pieces
that said things about Theranos that were totally uninteresting and
unimpressive to anyone knowledgeable...what clearly happened was that no one
at Forbes, etc.. actually asked anyone who works in a clinical lab to comment.
The commentary always focused more on the phenomenon of Theranos, rather than
the substance...probably because the substance was super boring.

3) What has consistently been missed, and is still missed today, is that even
if Theranos' technology worked and their labs weren't being run with a
criminal disregard for standard laboratory practice, is that Theranos'
business objectives would STILL be a horrible idea. Their push to democratize
health information, to do more testing early to prevent disease rather than
detect late, to test for lots of things in healthy people to increase
"wellness", etc... is all total bullshit. With few exceptions, lab tests are
for sick people, and testing healthy people with lots of tests simply consumes
money and generates false positive results that are expensive to work up.
Also, there are NO TESTS for all of the conditions (cancers, etc...) that they
claim to be helping you detect early. Getting your sodium and potassium levels
weekly won't help you avoid kidney disease, cancer, or diabetes, but it will
make your pocketbook shrink and it will give you some falsely abnormal values
1 in 20 times you do it. This has been the true play of Theranos, which is to
do a massive amount of testing on well people, marketed directly to healthly
people without the advice of doctors, with the intent of arming a bunch of
worried well people with an avalanche of insignificant noisy information to
present to their physicians. This helps no one other than Theranos.

I have often seen a lot of objections to (3) from people on HN, especially
tech-sorts who think that they are better able to handle data than the average
person. However, this is fundamentally flawed. For those who are interested in
Bayesian analyses, consider the utility of any test when the pre-test
probability is low - the answer is that positive results are almost always
false positives, or at least difficult to interpret. The answer is not getting
more tests, even if it's cheap. Lab tests these days ARE cheap...it's the
clinical followup that is expensive.

I will be very interested to see how this all plays out now. The big players,
Labcorp and Quest, have both tried the direct-to-consumer/in-drugstore model
for testing, and amusingly actually shut their offerings down years ago
because of lack of interest. The truth of the matter is that making health
information more available to people sounds great, but really, the only people
who end up collecting that information are affluent, worried-well people who
should be discouraged from testing in the first place. The people who need
more routine testing are poor, socially-underserved and neglected people with
chronic illnesses, but I do not think that Theranos is planning on opening
test facilities in Flint, Michigan to give Hemoglobin A1c monitoring tests for
free to the elderly impoverished people there. To the contrary, they've tried
to open in areas where they can get customers who they can trap into believing
that they need lab tests like they need step counts from a fitbit. Hopefully,
this bump in the road will caution others trying to do the same thing, but I
really doubt it.

------
akhilcacharya
I do hope Aaron Sorkin writes a movie about this.

~~~
hashmymustache
They'd make the script a proprietary secret

------
hackaflocka
This interview snippet (only 4 minutes long) with the CEO Elizabeth Holmes is
a revealing look into the mind of a possibly crazy person (crazy with power).

[https://www.youtube.com/watch?v=MBs-
oj7U-bo](https://www.youtube.com/watch?v=MBs-oj7U-bo)

------
wahsd
Please look past your possible distaste for the source, but Zerohedge has an
interesting angle on the situation regarding the composition of the board. At
least take a look at the bottom half of the analysis, but make sure not to
read the comments.

[http://www.zerohedge.com/news/2016-01-27/beating-dead-
unicor...](http://www.zerohedge.com/news/2016-01-27/beating-dead-unicorn-
theranos-lab-poses-immediate-jeopardy-patient-safety-cms-warns)

~~~
such_a_casual
That article makes me think that it's possible that Theranos is more concerned
with their government contract work than this "blood test for the common man"
spiel.

------
wahsd
Wasn't she supposed to be God's own anointed founder CEO?

All kidding aside, wasn't there some other controversy or someone revealed
something about Theranos not too long ago? I guess I was right
[https://news.ycombinator.com/item?id=10984035](https://news.ycombinator.com/item?id=10984035)

~~~
hkmurakami
I'm guessing you're referring to the series of events consisting of (1) the
original WSJ investigative report, (2) the Theranos rebuttal pointing out a
missing piece of information in WSJ's report, and (3) WSJ coming back the very
next day after the Theranos rebuttal with the very information they were
called out on.

It was all very beautiful to observe. ;)

------
hackaflocka
100% agree. Except that USAians believe that they live in a meritocracy.

~~~
learc83
The accepted English demonym is American, and it has been for the last 200
years. Did you think you would be misunderstood if you said American?

The USA is the only country in the world with the word America in the name.
Part of the world does consider North and South America to be one continent,
but most of the English speaking world does not. Therefore in English there is
no ambiguity when referring to someone as an American.

You'll also note that no one has any issue with Australians calling themselves
Australian, despite the fact that Australia is not the only country on the
Australian continent.

~~~
redwood
I agree with just about everything you said except that Australia is really
just home to one country. or am I about to learn something new? Oh I see the
shelf includes other islands

~~~
learc83
Yes, Papua New Guinea is part of the Australian continent. East Timor and
parts of Indonesia are as well depending on who you ask.

------
firasd
Any science or medicine types know if a potential solution to the problem this
company wants to fix can be achieved by a 'hack' of sorts: just make a finger-
prick, but keep it bleeding somehow (using mechanics or other chemical agents)
until you can collect enough of a blood sample?

Seems like an easier approach than inventing breakthroughs in microfluidics.

~~~
randycupertino
The problem is that the finger prick actually hurts a lot more than a
traditional venous draw. There aren't any real benefits to a "finger prick"
other than marketing spin that it's so easy breezy and good for people who
can't stand needles.

imo if Theranos had stayed out of microfluidics and stuck with fundamentals of
testing but done it well- regular draws but used the best trained
phlebotomists who can find the vein on the first stick, do a painless draw and
really improved their model of "easy access" walk in Walgreens testing,
immediate/fast under 24 hour results, pay up front and low cost, they could
have overtaken Quest and Labcorp just by exploiting inefficiencies in that
market. Instead they got too sidetracked focusing on razzle dazzle nanotainer
microfluidic science that doesn't even work.

~~~
joezydeco
_"...There aren't any real benefits to a "finger prick" other than marketing
spin..._"

 _"...regular draws but used the best trained phlebotomists who can find the
vein on the first stick..."_

 _That 's_ the advantage of a finger prick. You don't need to be a trained
phlebotomist to do it. The microfluidics drove the idea that you only needed
"a few drops" to perform the tests (since drawing 100mL out of a finger would
take forever). Put those two together and you had the concept of a test that
any semi-skilled person could perform in a drugstore. That was the hook
Theranos was banking on.

~~~
randycupertino
> You don't need to be a trained phlebotomist to do it.

Yes, but Theranos still had phlebotomists doing their finger pricks. Also,
phlebotomists aren't that expensive. Even in the Bay Area I think they only
make around $18 an hour. Cheaper than a nurse, for sure.

~~~
joezydeco
They had phlebotomists because, as we discovered in the fall, they were still
drawing the standard vacutainers for all of the tests except the one that
actually worked on the microfluidic system.

The remainder were run through traditional ELISA and clin-chem machinery from
other companies.

------
transfire
[http://seattleorganicrestaurants.com/vegan-whole-
food/instit...](http://seattleorganicrestaurants.com/vegan-whole-
food/institutional-corruption-of-pharmaceuticals-how-FDA-cannot-be-trusted-
with-public-safety.php)

~~~
hackaflocka
Why is this being downvoted?

~~~
abrak
Because the linked site seems flaky - no references. A google search for the
title of the 'Harvard paper that is about to be published' only returns that
site.

~~~
hackaflocka
OK, makes sense.

------
fossuser
I don't understand the schadenfreude and hostility toward Theranos (and the
founder). From everything I've seen there's very little actual information
publicly available either way about what's going on (aside from some weak pop
tech journalism).

I'd imagine this negative media attention is stressful for them - like it is
for any startup. Should minimally wait for something substantial to see if
there was any actual wrongdoing - there's not much here so far.

~~~
CPLX
A bubble company like this is an event of staggering inefficiency, it sends
huge amounts of very valuable resources (money, but also things like people's
careers, creativity, press attention) into a situation where they are
ultimately squandered.

Asset bubbles can be like wars, they can waste the promise of an entire
generation, never to be recovered. Nobody wants to see a collapse for
collapse's sake, but there is quite a bit of social good in avoiding or
deflating an asset bubble, be it in residential mortgages, late stage
technology companies, or a 20 year old college student who was allowed to lose
tens of millions of dollars of people's pension money just because she
happened to be born in the right neighborhood.

~~~
ageofwant
I certainly don't disagree with your analysis, but surely most of the blame
should be placed on the shoulders of those that controlled the pension money ?

~~~
CPLX
We, rightly, have a concept of "fiduciary duty" deeply embedded in our common
law and in the practice of investing. That applies to all the people entrusted
with the assets in question, from the pension fund manager to the VC firm to
the firm receiving the investment. There's a difference between a bad or risky
bet that doesn't pan out and violations of that duty like misrepresentation
and self-dealing.

The blame should go to those who breached that duty. It seems that at minimum
they engaged in misleading statements about the degree of progress they had
made with their technology. That's certainly unethical and possibly
fraudulent.

------
tyre
At this point, we (HN community) are just treating this like a season of
Jersey Shore.

She's working her ass off to build a company with a mission far more important
than email marketing or advertising or Candy Crush or blockchains.

Were they overly optimistic in their projections? Probably, but try starting a
company and not being optimistic. You'll never get off the ground.

Did they not take reasonable precautions in an industry (biotech/healthcare)
with serious repercussions? Absolutely. There are very real questions about
her empathy and ethics.

That said, let's stop getting giddy every time Theranos (or some other
startup) shows weakness. As founders — those "playing startup" excluded — it
is incredibly hard. Let's have some empathy ourselves for those who have
(likely) fucked up.

~~~
vkou
> She's working her ass off to build a company with a mission far more
> important than email marketing or advertising or Candy Crush or blockchains.

And from all accounts, she's too busy playing PR games, as opposed to treating
this _like_ a mission far more important than email marketing.

Theranos is in the business of medical testing. This is not an industry where
you can half-ass your way through certification... Or where scrutiny like
"Does the product you've been selling even work?" is misplaced.

Theranos could dismiss this entire charade, if they could only provide
evidence that what they claim to have built actually works.

~~~
tyre
Honestly, I don't think they have the data. I'm not saying their product works
or that she did the right thing.

I do, however, question what the after-the-fact self-righteousness does for
anyone.

Should no one be working on this problem? How do we invest in potentially
innovative ideas in more complex fields before they have proven it out?

~~~
CPLX
> Should no one be working on this problem?

You have to understand that's a ludicrous fallacy of the excluded middle
argument you're making.

There is a _long_ way between wanting nobody to work on this problem, and
thinking it's a good idea to give tens of millions of dollars to a bright but
utterly inexperienced college student to work on this problem because she
happened to be school friends with some VC's daughters.

[0] [https://www.brainpickings.org/2014/01/03/baloney-
detection-k...](https://www.brainpickings.org/2014/01/03/baloney-detection-
kit-carl-sagan/)

