Truth is, great journalism powered the fall of Elizabeth Holmes
Potentially it could remodel health care globally, rendering pathology cheaper and faster, responses to illness quicker and put patients firmly in charge of their own health diagnoses.
In a user-pays healthcare system like that in the US, the potential was almost unlimited.
It was all blue sky and potential investors came from far and wide, including the US military.
The company, Theranos, founded in 2003 by Elizabeth Holmes, a Stanford University dropout was valued at US$9 billion in 2013. Now, it is corporate rubble.
Holmes, the one-time darling of Silicon Valley, is now standing trial in a US Federal Court in San Jose, California, charged with two counts of conspiracy to commit wire fraud and ten counts of wire fraud.
Holmes’s one time partner both in business and in her personal life, Ramesh “Sunny” Balwani faces the same charges and is due to face trial in 2022.
Theranos’s board featured former Secretary of State in the Reagan administration, George Shultz, Secretary of State in the Nixon administration, Henry Kissinger, Secretary of Defence in the Trump administration, Jim Mattis, and former Wells Fargo Chief Executive Richard Kovacevich.
“Failure is not a crime,” Holmes’s lawyer, Lance Wade, said in his opening address to the jury on September 7.
In one of the more excitable documentaries on the collapse of Theranos, Holmes is likened to Thomas Edison, the American inventor who first developed the metal filament light bulb. Equal parts showman and entrepreneur, Edison was marketing the light bulb before he had grasped the technology to make it work.
The same might be said of Holmes, except the tiny device storing a drop or two of blood known as the Nanotainer fed into a portable testing machine known as the Edison, was made commercially available in California and Arizona through a pharmacy chain known as Walgreen Boots Alliance Inc. Walgreens at one point had 40 Theranos blood testing “wellness” centres inside its stores.
The US retail giant, Safeway had signed an agreement with Theranos blood testing, too, and 969 of its retail outlets were remodelled in preparation for the installation of the Edison.
The technology did not work, and the Edison was rarely deployed. The blood samples marketed as 1/1000th to that of the size taken by the normal venipuncture method were producing erroneous results — false positives, false negatives.
Ultimately, Theranos complied with the state of Arizona and offered people who had used the company for blood pathology full refunds in a US$4.65 million settlement. How many patients who had received false negatives for serious illness is not known.
The US Food and Drug Administration was all but sidelined thanks to a dangerous loophole that exists in the regulator’s reach over blood pathology testing, especially where pre-market reviews are concerned. The Walgreen chain adoption of Theranos was legally defined as a pre-market entry.
The money poured into Theranos, the day of reckoning with regulators pushed back by years.
This is in part a story of Silicon Valley start-ups with investors clamouring for the next Google, the next Amazon, the next Microsoft and Holmes playing the part dressed in black from head to toe, wearing turtleneck sweaters in what appeared to be a weird nod to Apple founder Steve Jobs.
Startups now take longer to go to market and the efficacy of their products stay untested in the marketplace for years while investors create paper billionaires based on promises and graph-laden prospectuses.
But the real story is the power of a free press and the reach of investigative journalism. It is almost certain that the United States of America v Elizabeth Holmes trial would not be taking place without the indefatigable work of Wall Street Journal medical reporter, John Carreyrou.
On October 15, 2015, the Wall Street Journal published the first of a series of exposes on Theranos, detailing false claims from the company, the failures of its technology, and the lies it was telling. Carreyrou, who chased whistle blowers and sought the advice of scientific experts, kept the pressure up.
Rupert Murdoch, the Executive Chairman of News Corp, publisher of The Australian, was a significant investor in Theranos. Holmes contacted Murdoch in an effort to get Carreyrou to back off.
Murdoch reportedly told Holmes, “I’ll leave it to my editors.”
Carreyrou’s reports continued and they were devastating. Holmes, whose face has graced the covers of too many magazines to count, blustered her way through a series of staged publicity events. But the jig was up and before long it all fell apart.
In January 2016, US pathology regulator the Centre for Medicare and Medicaid Services conducted inspections of Theranos laboratories and determined that practices and procedures posed an “immediate jeopardy to patient health and safety.”
By October that year, Theranos closed its laboratory operations and began the gruesome business of settling a bank of lawsuits. In 2018, the Securities and Exchange Commission charged Holmes with civil securities fraud. A settlement was arrived at without Holmes admitting or denying any liability.
A young, driven woman who sought to up-end medical science now faces a jury of her peers, accused of fraud. The post-mortems are flying thick and fast. They will go on for years. She is and will remain a focus of media fascination. Documentary studies abound. No doubt movies will one day be made. The truth is, the media in no small way made Elizabeth Holmes but one journalist who would not be cowed unmade her and brought about her spectacular fall from grace.
As Holmes traipses into court, the turtleneck sweater affectation long gone, she knows she faces a 20-year sentence if convicted. The trial continues.
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It had promised to spark a revolution in medical science. At its heart the concept was simple. A prick of the finger with a drop of blood taken and held in a tiny vial would be subject to a raft of pathological testing in a portable machine that could be installed anywhere.