Theranos: Marketing Trumps Science

When I first heard of Theranos and its diagnostic testing breakthrough there were no immediate alarm bells or red flags that caused me to look closely. I was impressed. It appeared to be a elegant incremental improvement to diagnostic testing. I assumed, wrongly, that because of high plausibility it was unlikely to be hogwash. For the most part, current diagnostic blood testing is antiquated and long overdue for improvement; it was likely that someone could easily improve the current equipment. In the end it all turned out to be a lie. It’s a good lesson that one should always be skeptical of groundbreaking changes.

Although some of my posts inspire commentator accusations of corporate boot-licking, I like to think of myself as a fair judge of corporate medical malfeasance. Corporate fear-mongering is rampant and many people would like you to believe that corporate malfeasance is a foregone conclusion. I disagree; corporations are actually a gray area and are often blamed because they offer a faceless entity to demonize. Corporations can be money-grubbing evil entities, but it is a logical fallacy to assume all corporations are always completely amoral engines of destruction. Many cranks use corporate wrongdoing to justify a whole laundry list of medical shams. “Big Pharma is bad, therefore my magic treatment X works” is an oft used illogical argument. Corporations do need to be watched and regulated. No one can deny that there is big money in medical treatment and big money inspires greed. What people fail to recognize is that more often than not there is a tremendous amount of scrutiny and regulation in the medical field. There is a cost to getting caught and that is a reasonable disincentive. Still, I am neither denying that corporations do shady things, nor that they need to be watched. In this case specifically, Theranos is an example of a company that is guilty of gaming the system for profit and generating harm. This was done by the most common route: marketing.

There is no shortage of marketing in both mainstream and alternative medicine. And for the most part, all medical marketing disregards or manipulates scientific evidence. Marketing fabricates, falsifies, or exaggerates. Diligent healthcare providers have to wade through a morass of marketing claims surrounding medical treatments. Marketing executives often bet that no one will look too closely at the data. Marketing, by nature, plays to our cognitive weakness and numerous foibles.

Fortunately, in proven medicine false claims generally are held accountable eventually. Since there are almost no requirements to prove effectiveness and safety in complementary and alternative treatments, marketing runs wild and unimpeded. There are many cases of miracle cures and wonder devices that fail to live up to expectations, and there are examples where users were seriously harmed, even killed. What is so interesting about the Theranos fiasco is the subtle manipulation of science so similar to many alternative medicine scams. So let’s point our skeptical eye at Theranos and its chief, Elizabeth Holmes, and take a good look at how and why this happens.

Cosplay of Thanos, the Super Villain Character from Marvel Comics, amusingly similar name to Theranos Inc. Via Wikimedia

Theranos is a startup company headed by Ms. Holmes, who is known as the world’s youngest self-made billionaire. She has made her money primarily through her company, which she started on her own in 2003. The company’s name is a portmanteau of “therapy” and “diagnosis” and it sought to upend the lucrative business of medical blood testing.

Blood analysis is integral to medical care, and very, very expensive. Blood testing typically involves a long needle and several blood-filled vials. Diagnostic testing is time- and resource-intensive; it often involves very expensive equipment and extensive quality-control standards. Standards are high, people’s lives are at stake. Though the current system is as accurate as possible, it is riddled with redundancy and bureaucratic oversight. Most diagnostic testing requires a sizable amount of blood to test—usually 2 to 5 mL of blood per tube—which doesn’t sound like much, yet hospitalized patients often require daily laboratory work. Intensive care patients, even neonatal babies, often require multiple tests and tubes. And in some rare circumstances, that 2 to 5 mL can result in clinically significant blood loss. More commonly, blood testing is just painful and anxiety producing.

Hospitalized patients are just one part of diagnostic blood testing. The more lucrative sector is outpatient screening and diagnostic blood testing. That is a billion-dollar industry, and the two dominant lab companies, Quest and Laboratory Corporation of America, generate a combined $75 billion dollars per year in revenue.

Theranos promised to radically change the medical laboratory market. Ms. Holmes began making grand promises about a new technique using drops of blood rather than vials, and testing done at a drastically cheaper cost, more efficiently and less painfully—theoretically a win-win for patients and healthcare providers. Theranos claimed that it could test for up to 70 different markers in a single drop of blood, with results delivered to your phone in hours. Every single test costs less than half the Medicare reimbursement rate by the prices listed plainly on its website. Theranos rapidly became an investment powerhouse and Ms. Holmes went on a marketing tour using some very plausible science as well as a “functioning” device to garner a lot of faith and money.

Cropped photo of Elizabeth Holmes Backstage at TechCrunch Disrupt San Francisco 2014. Photo by Max Morse for TechCrunch. Via Wikimedia

If Theranos had delivered, it would have been a triumph for investors and patients worldwide. What actually happened is a typical example of how marketing and a persuasive salesperson easily trump facts. It sounded too good to be true and it was.

The “Edison Device,” as it was called, went on a tour of science and tech showings, eventually convincing the pharmaceutical dispensary/distributor giant Walgreens to back the device. They planned to open clinics nationwide using the device, if it worked as advertised, to take a big chunk of the chain’s outpatient diagnostic business. Investments poured in; Theranos was worth billions on paper. Due to a combination of deceptive marketing, plus clouding specifics with claims of proprietary equipment, the company was able to keep the real usefulness of the Edison Device and their nano collection tubes hidden. Temporarily.

What should have cooled speculation went largely unnoticed and a burning question went unasked: how can one piece of equipment do all these tests? There is no one machine that does all blood tests. Testing vitamin D is vastly different from taking a blood culture, which in turn is completely different from blood counts. It takes a laboratory stocked with all different types of equipment,and different types of blood tubes required for each screening to do these tests. How did Theranos do this?

The more questions that were asked of the testing, the more secretive the company became. Hiding behind patented equipment and proprietary procedures they obfuscated and delayed. Worse, a Food and Drug Administration finding allowed both Walgreens and Safeway to put the device into use. The FDA ruled in July 2015 that the proprietary tubules used by Theranos were good for testing for herpes simplex 1. That’s fine, however the company used the ruling to substantiate use of the device for everything. Here’s the rub: the FDA doesn’t regulate laboratory testing. In the United States, clinical lab testing typically gets approved through another regulatory framework called the Clinical Labs Improvement Amendments, or CLIA. Theranos used the FDA ruling like it was a CLIA ruling, and tried to quiet anyone who complained. Theranos’s miracle technology had avoided the peer review processes that are typical for consumer medicine. Plus the company had pushed and gotten passage of an Arizona law that would allow blood testing without a physician prescription. Theranos was positioning itself perfectly to dodge any consumer protection barriers.

Typically the regulatory bodies jump on this, but there were many forces at play. Theranos looked legitimate, had tons of working capital, reasonable science, and, best of all, it had an FDA seal of approval. Ms. Holmes continued her world media tour—in her best Steve Jobs black turtleneck—showing the device, and talking about her testing revolution. Regulatory bodies and medical critics were mostly drowned out by the positive investor buzz and hyped tech media news cycle.

Fortunately a dedicated science journalist was paying attention. John Carryrou, an investigative reporter at the Wall Street Journalwas very troubled by the secretive nature of Theranos technology and details. He started doggedly digging and he was getting answers. The more answers he got, the more he dug.

Carryrou’s sources told him that Theranos wasn’t using the Edison machine or any proprietary device. They were using traditional blood testing machines they bought from Siemens. Although that would be fine for testing under normal circumstances they didn’t collect enough blood to use those testing machines. So they were diluting it, probably with sterile saline, to be able to complete the tests. Theranos immediately denied the accusation, but people began to take notice of the whole illusion for the first time.

Theranos’s spool of lies began to unwind. They couldn’t produce the data proving the accuracy of their testing. Independent analysis showed their tests had faulty results. The FDA reviewed the data in the herpes testing and withdrew its approval. The money and investments were just as big of an illusion. When it was discovered they were faking the investments, all trust fell away. So did Walgreens and Safeway.

Since Carryrou’s investigation, Theranos has faced both civil and criminal lawsuits due to the testing errors and falsified reports, but like any good snake oil salesman they have now decided to double down on their sham product. Today, Theranos is ignoring the scandal and showing off its new machine, marketing it as a test for the overhyped Zika virus, now wanting to start the scam all over again.

So what did we learn? Truthfully, what Theranos did is essentially what every alternative and complementary medicine practitioner does: they take a plausible-sounding, science-based idea and market it before the evidence is there. When the evidence says it doesn’t work, ignore it. When questions are asked, hide behind proprietary business privacy. When that doesn’t work, try to impugn the questioner, the industry and/or regulatory body. Never agree that the device or treatment doesn’t work—just try to sell the next product. It works for naturopathy, homeopathy, and the supplement industry, and it works for medical testing as well, apparently.

Investing in medical technology is a tricky thing. Regulators need to get at the facts and the inventor needs her discoveries protected. If you manipulate either you can get a Theranos-level sham, or just capital wasted on investments in these technologies.

Snake oil: potent stuff. Via wikimedia

The truth is that we need more teeth in regulatory bodies and we need to close loopholes to make things safer for the public. People seem to be demanding lower standards and less regulations, not more—allowing alternative medicine, big corporations, and Wall Street to pry open the door wider and wider, and giving them free reign to defraud customers. Sooner or later people are going to be greatly harmed by all this unfounded marketing currently found in medicine.

What matters is the science, not marketing, facts rather than proprietary protection. In medical care, whenever you see a sales pitch rather than the facts you have very, very good reason to be skeptical.

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Disclaimer: This post is my personal opinion, it is not a substitute for medical care. It is for informational purposes only. Information on the Skeptoid blog is not intended nor recommended as a substitute for medical advice, diagnosis, or treatment. Always seek the advice of your own physician or other qualified healthcare professional regarding any medical questions or conditions. This post does not reflect the opinion of my partners, professional affiliates, or academic affiliations. I have no financial conflicts of interest to disclose.

About Stephen Propatier

Stephen Propatier is a board certified acute care nurse practitioner specializing in spine and sports medicine. He is a member of the Society for Science Based Medicine.
This entry was posted in Consumer Ripoffs, Science, Technology and tagged , , , , . Bookmark the permalink.

5 Responses to Theranos: Marketing Trumps Science

  1. Well done!
    To quote Charlie Brown:
    My stomach hurts…

  2. Phil Kyson says:

    There’s a theme that generally runs through these types of scams. If an innovation going the save the public purse lots of money while taking a Big chunk out of Big Pharma profits the idea soon gets squashed like a flea. If it’s too good to be true there’s always someone who’s going pay in one way or another.

    • Although that can be true it is not the issue here. Pharma has nothing to do with diagnositic testing, companies like qwest diagnostics don’t make pharmaceuticals. Additionally it is not innovative to promise something that you know you cant deliver.

      • Stephen Connell says:

        Its fraud incorporating a risk to the public’s health so why is she allowed to keep operating on another venture? The FDA should have been able to see through this type of Flim Flam its what they are supposed to protect the public against not give their imprimatur to a product that potentially puts the public’s health at risk while bringing into question the quality and skills of those who make these decisions at the FDA’
        It might be a great idea to ask John Carryrou to educate decision makers at the FDA on how to apply his skills to sniff out the Baloney when someone else comes peddling a Star Trek invention that will change the world.

  3. Mike says:

    Even with all the government regulation and oversight Theranos (and many other scams) still happen. In fact, they used the blessing of a regulatory body to help sell their product. I don’t think the solution is still more regulation. Investors and companies who did not investigate sufficiently, lost their money. That works. A journalist made money for his publication by exposing these guys. That works. Now, no company is going to offer Theranos tests as that companies will lose customers. That works.

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