Jury also heard testimony about Holmes’ claims that the Edison device was doing clinical laboratory testing for the military in overseas theaters
During the seventh week of ex-Theranos CEO Elizabeth Holmes’ criminal fraud trial, headline-making testimony continued nearly non-stop. A former Theranos product manager took the stand offering damning testimony that tied Holmes to questionable product demonstrations and exaggerated claims about the military’s use of the Edison blood-testing device. And a Pfizer scientist testified to alleged improper use of the Pfizer logo by Theranos in a report that went to Walgreen executives.
Those claims contributed to the federal Securities and Exchange Commission (SEC) charging Holmes in 2018 with fraud and stripping her of control of Theranos, the SEC stated in a news release.
CNN reported that former Senior Product Manager Daniel Edlin, who worked at Theranos from 2011-2016, acknowledged in court that the Edison device had never been used in a war zone or installed on a medivac helicopter. He also noted that Holmes had final say over his communications with the DOD.
According to CNN, “Edlin said he worked directly with Holmes to support the relationships with the military and Defense Department. He said, ‘the end goal’ for these discussions ‘was to start a research program that would compare Theranos’ testing to the testing available to the military at that time.”
Edlin testified that Holmes was ‘highly involved’ with these communications, CNN reported.
“I’d say any substantive communication I had with the military, I either discussed with her ahead of time … or email drafts were reviewed and approved before I sent them back out,” he testified.
Elizabeth Holmes, ex-CEO of now-defunct blood-testing company Theranos, is seen above leaving a San Jose, Calif., courthouse following a hearing. Holmes faces 10 counts of wire fraud and two counts of conspiracy to commit wire fraud for allegedly misleading investors, clinical laboratories, patients, and healthcare providers about Theranos’ proprietary blood-testing Edison technology. Holmes has pleaded not guilty. (Photo copyright: Reuters.)
During cross examination, Edlin walked back some of his damaging testimony. When asked by defense attorney Kevin Downey, JD, of Williams and Connelly, LLP, if he or anyone else at Theranos was intentionally trying to deceive investors or other visitors during the demonstrations, Edlin responded, “Of course not,” according to Palo Alto Online.
To counter the prosecution’s claims that Theranos’ Edison machines were unsuitable for military use because they could not operate in high temperatures, Downey introduced an email from an Army doctor at the US Command in Africa praising the Edison after examining it in high temperatures. The doctor also, according to court documents, proposed the Army provide more funding to test the Edison’s capabilities, Palo Alto Online reported.
Nevertheless, according to The Wall Street Journal (WSJ), the Edison was never sent to a US military laboratory in Afghanistan for study, nor was it used in Africa to run blood tests.
Former Pfizer Scientist Testifies to Misuse of Intellectual Property
In another broadside to the Holmes defense, former Pfizer scientist Shane Weber, PhD, testified Holmes used the Pfizer logo in investor materials without the company’s permission in order to pass off as credible a study aimed at validating the Edison device.
The WSJ reported Weber told jurors that in 2008 he had reviewed a 15-page Theranos study involving cancer patients, but that he had stated in his own internal report to Pfizer at that time that nine conclusions in the study—including a statement that the “Theranos system performed with superior performance”—were “not believable.” Pfizer eventually heeded Weber’s advice to not enter into a partnership with Theranos.
Prosecutors stated that as part of Theranos’ negotiations with Walgreens, which ultimately invested $140 million in the blood-testing company, Holmes had placed a Pfizer logo on the top of each page of the cancer study report before sending it to Walgreens executives, claiming it was an independent due-diligence report on Theranos technology.
Weber told jurors that he had not known about the altered report until he was shown the document by prosecutors. He stated the logo was added without Pfizer’s permission, the WSJ reported.
Unfortunately for Walgreens, the retail pharmacy chain entered into a business agreement with Theranos without extensively examining or testing the Edison device, which Theranos had claimed could quickly and accurately run 200 diagnostic tests using a finger-stick of blood. Instead, the company relied on the opinions of its own staff healthcare experts and outside experts, none of whom fully tested the technology either, the WSJ stated.
Testimony in the Elizabeth Holmes fraud trial is expected to continue through December. Therefore, clinical laboratory managers and pathologists should expect headline-making news to continue as well. Dark Daily will continue its coverage as the trial moves forward.
Under-resourced British healthcare system faces a record high backlog of care with 5.61 million people in England waiting for hospital-based medical procedures
Healthcare in the United Kingdom (UK) is about to become much more expensive. The UK government has announced plans to substantially increase payroll taxes to fund the surging demand for care due to the COVID-19 pandemic. But that may only be the part of the healthcare-funding iceberg visible above the surface. Below the surface is a healthcare system where wait times for access to many types of care—including cancer diagnoses—are already unacceptable.
Some pathologists and medical laboratory executives in the US who have long questioned healthcare reformers’ desire to introduce an NHS-like single-payer healthcare system in this country will not be surprised to learn that the UK’s notoriously underfunded National Health Service (NHS) is facing a record waitlist for hospital-based medical diagnostic tests and procedures.
Consequently, Reuters reported, the high cost of fighting the COVID-19 pandemic has pushed British Prime Minister Boris Johnson into breaking with election promises and announcing plans to raise payroll taxes to record levels so that more money can be funneled into the struggling government-run healthcare system.
Speaking to lawmakers in the House of Commons, British Prime Minister Boris Johnson (above) acknowledged his tax plan breaks his Conservative Party’s election year pledge to not raise VAT (value-added tax), income, or national insurance taxes. He insists that the COVID-19 pandemic created unprecedented challenges for the national health system. “I accept that this breaks a manifesto commitment, which is not something I do lightly, but a global pandemic was in no one’s manifesto,” he told lawmakers, Reuters reported. (Photo copyright: The Independent.)
5.6M People on Growing NHS Waiting List for Treatments and Procedures
When the COVID-19 pandemic struck the UK in March 2020, the NHS suspended elective surgeries such as hip or knee replacements and cataract removal and postponed many patients’ medical laboratory diagnostic tests.
In “Record 5.6M People in England Waiting for Hospital Treatment,” The Guardian estimated that 1.4 million patients were added to the waiting lists during the pandemic’s first 18 months. More than one-third of the 5.6 million people waiting for care in July 2021 had been on a waitlist for at least 18 months, the paper noted. Since then, the waiting list has grown by 150,000 people per month, as more people who did not seek or could not access NHS treatments during the pandemic returned to their doctors’ offices.
Johnson’s tax hike formula for fixing the record NHS backlog and improving social care for the elderly created shockwaves in the UK’s Conservative Party, which, like the Republican Party in this country, has championed low taxes. But Johnson maintains the government is out of options.
“It would be wrong for me to say that we can pay for this recovery without taking the difficult but responsible decisions about how we finance it,” Johnson told Parliament. “It would be irresponsible to meet the costs from higher borrowing and higher debt,” he added.
But Johnson’s proposal drew the wrath of some members of his own party and provided the opposition Labor Party with ammunition to denounce the prime minister’s leadership during the pandemic.
In “U.K. Is Among First Western Nations to Increase Taxes to Cover COVID-19 Costs,” The Wall Street Journal (WSJ) reported that Labor Party leader Keir Starmer compared Johnson’s tax increases to putting a bandage “on gaping wounds that his party inflicted,” and questioned why they weren’t levied more directly on the rich. The UK government says the wealthiest 14% will pay about half of the extra tax revenues, the WSJ noted.
“This is a tax rise that breaks a promise that the prime minister made at the last election … Read my lips, the Tories can never again claim to be the party of low tax,” Starmer told Reuters.
The BBC graphic above illustrates how the tax hikes, which were approved by the Parliament on September 8 by a 319 to 248 vote, will increase the national insurance payroll tax paid by workers and employers by 1.25% each. CNBC reported that the UK government projects the increased taxes will raise £36 billion (US$49.6 billion) over the next three years. (Graphic copyright: BBC.)
Politics versus Hard Facts
According to The Guardian, in 2023-2024, national insurance contributions will be rebranded as a health and social care levy, with more of the money raised going to social care. The added funding will enable the UK government to implement a new cap on total care costs so that no individual will pay more than £86,000 (US$117,142) over their lifetime for social-care programs. Currently, many seniors are forced to sell their homes to meet unexpected care costs, the newspaper noted.
“One message to voters and investors is that taxes are set to rise for years to come,” the WSJ editorial board wrote, predicting the cost of social care will escalate as the UK’s population ages, and that the planned diversion of future taxes for social care will be presented as a “cut” in NHS funding. They maintained that the danger in Johnson’s decision goes deeper than breaking an election campaign pledge or nationalizing more of the UK’s healthcare economy.
“The larger problem is that national healthcare and other entitlements become ever more unaffordable even as they are politically impossible to reform,” the newspaper stated. “The Tories are becoming tax collectors for the entitlement state, which is deadly for parties of the right.”
Bloomberg noted that the UK Institute for Fiscal Studies predicts the planned April 1 tax increase will “raise the UK tax burden to its highest-ever sustained level since records began in 1955—about 35% of national income.”
But, according to the UK-based The Health Foundation, at £2,646.95 (US$3,648.43) per person in 2019, the United Kingdom spends less on healthcare than many developed countries. Less per person than the:
US (£6,782.80),
Germany (£4,131.21),
France (£3,307.54),
Japan (£2,949.19) and
Canada (£2,823.07).
And when healthcare costs are viewed as a percentage of a country’s gross domestic product (GDP), the UK (8% GDP) lags behind the US (13.9%), Germany (9.9%), Japan (9.3%) and France (9.3%) and exceeds only Canada (7.6%) and Italy (6.4%).
While US hospitals, healthcare systems, and patients continue to struggle with ever-increasing healthcare costs, reformers who promote a single-payer healthcare system as an answer to this nation’s healthcare ills may want to take a hard look at the outcomes of the UK’s model.
Clinical laboratory managers and pathologists interested in how the US healthcare system can be improved might be well-served to study the experience of the National Health Service in the UK, that, like all other health systems in the world, has its own unique methods for how it serves its population.
Schwan’s concerns about inaccurate or unreliable COVID-19 serology tests were supported when the FDA issued more restrictive rules for these medical laboratory tests on May 4
During a conference call with investors about the company’s first-quarter results, Schwan said of the recently-launched COVID-19 antibody assays, “These tests are not worth anything, or have very little use,” according to reporting from Reuters and other publications. “Some of these companies, I tell you, this is ethically very questionable to get out with this stuff.”
On May 3, Roche announced that its own Elecsys Anti-SARS-CoV-2 antibody test for SARS-CoV-2, the coronavirus that causes the COVID-19 illness, had obtained an emergency use authorization (EUA) from the federal Food and Drug Administration (FDA). In its news release, Roche stated that “the serology test has a specificity greater than 99.8% and sensitivity of 100% (14 days post-PCR confirmation).”
In a separate interview with Bloomberg, Schwan said about antibody testing, “It is very important to pick the right test and then to validate those tests with enough patients.” He then returned to the issue of poor quality in some antibody tests for the SARS-CoV-2 virus, saying, “Unfortunately, there are a number of tests already out there in the market which are not reliable simply because they haven’t been tested sufficiently.”
In reference to the initial release of serological COVID-19 antibody tests, CEO Severin Schwan (above) said during Roche Holding’s first quarter earnings call that, “It’s a disaster. These tests are not worth anything, or have very little use,” reported CNBC. He added, “This is really what matters. Every kind of amateur could produce an antibody test. The two of us could do it overnight in the garage. That’s not the problem. The question is, does it really work? And for that, you have to do testing and validation.” (Photo copyright: Reuters/Arnd Wiegmann.)
A ‘Wild West’ of Unregulated Assays
Prior to issuing tougher rules for how a manufacturer can market a COVID-19 serological test, the FDA had listed about 200 serological tests designed to identify antibodies produced by the human immune system in response to a SARS-CoV-2 infection. This is the process of seroconversion, which is the development of detectable antibodies in a patient’s blood against a pathogen. Detection of IgG antibodies indicates exposure to SARS-CoV-2, according to ARUP Laboratories.
Public health experts have raised questions about the proliferation of such tests for the new coronavirus. Under the FDA’s previous March 16 rules—which were more relaxed than those FDA applied when granting EUAs—the agency was swamped with requests to review more than 200 COVID-19 antibody tests. The looser regulations resulted in nearly no oversight of those tests, reported the Associated Press (AP).
In comments to the AP, Eric Blank, DrPH, Senior Director of Public Health Systems and Programs for the Association for Public Health Laboratories (APHL), said, “Right now it’s a wild west show out there. It really has created a mess that’s going to take a while to clean up.”
“In the meantime,” Blank added, “you’ve got a lot of companies marketing a lot of stuff and nobody has any idea of how good it is.” Blank confirmed to Dark Daily that he made these comments and stands by them.
Calls for Closer Scrutiny of Serological Antibody Tests
In response to the FDA’s March 16 rules for COVID-19 serology tests, APHL requested the federal agency to review its looser approach to reviewing these tests. The impact of the FDA’s much tougher COVID-19 serological testing rules released on May 4 was immediate.
In a press release issued on May 2, the FDA said, “to date, the FDA has authorized 105 tests under EUAs, which include 92 molecular tests, 12 antibody tests, and one antigen test.”
Clinical laboratories in the United States still face difficult challenges if they plan to launch their own COVID-19 serology testing programs. They must select one or more tests from among the antibody and antigen tests that have an FDA EUA. However, data for each of these tests is not as comprehensive as is the data for diagnostic test kits reviewed by the FDA and cleared for market under the pre-market approval process.
This webinar was conducted by James O. Westgard, PhD, and Sten Westgard of Westgard QC, Inc., and the full program is available for free download by clicking here, or by placing this URL in your web browser: https://www.darkdaily.com/webinar/quality-issues-your-clinical-laboratory-should-know-before-you-buy-or-select-covid-19-serology-tests/.
In the webinar recording, the Westgards provide a detailed overview of what elements are required for a clinical lab to have confidence that its COVID-19 serology testing program is producing accurate, reliable results. They explain that labs must understand the unique aspects of the populations they are testing in their communities. All of these factors can then be used by labs to evaluate the different COVID-19 serology tests available for them to purchase, and to select the test that best fits their lab’s capabilities and the characteristics of the patient population that will be tested.
Another important requirement for clinical laboratories to understand is the list of steps necessary to bring up a COVID-19 serological testing program. That starts with validating the test, then bringing it into daily production. As that happens, issues associated with quality control (QC), proficiency testing (PT), and regulatory compliance take center stage, so that the clinical lab has high confidence in the accuracy and reproducibility of the COVID-19 serology test results they are using in patient care or in support of employers who are screening employees for COVID-19.
To register for the June 11 webinar, click here, or place this URL in your web browser: https://www.darkdaily.com/webinar/achieving-high-confidence-levels-in-the-quality-and-accuracy-of-your-clinical-labs-chosen-covid-19-serology-tests/.
New COVID-19 Intelligence from Dark Daily
Announcing Dark Daily’s new COVID-19 STAT Intelligence Briefings! This free service for clinical laboratories, anatomic pathology groups, and diagnostics companies features:
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This critical information includes effective ways labs can restore their cash flow to pre-pandemic levels and get test claims paid by government and private payers.
One popular feature is the COVID-19 Live! conference calls that happen every Tuesday and Thursday for 30 minutes at 1 PM, EDT. Visit the COVID-19 STAT Intelligence Briefings website and join us for the live calls.
This is not the first time genetic-testing company Orig3n has been scrutinized by state and federal investigators over its business practices
It’s not often that multiple employees of a clinical laboratory company go public with criticism about the quality of their lab company’s tests. But that is what is happening at Orig3n. Problems at the Boston-based genetic testing company were the subject of an investigative report published by Bloomberg Businessweek (Bloomberg).
In September, Bloomberg reported that 17 former Orig3n employees said the company’s Deoxyribonucleic acid (DNA) tests sometimes failed to deliver the intended results or were often contaminated or inaccurate. The individuals had been employed by the company as managers, lab technicians, software engineers, marketers, and salespeople between 2015 and 2018.
The former employees claimed that Orig3n “habitually cut
corners, tampered with or fabricated results, and failed to meet basic
scientific standards,” Bloomberg reported. The individuals also stated
that advice intended to be personalized to individual consumers’ genetic
profiles was often just generic information or advice that had no scientific
basis.
According to Bloomberg, the individuals also alleged
that Orig3n’s lab was careless in its handling of genetic samples in several
ways, including:
Multiple samples being labeled with the same
barcode;
DNA and blood samples for stem cell bank
misplaced or mixed up;
No controls to ensure accuracy;
Handling methods that could lead to
contamination; and
Fabricating results when a test outcome was
unclear.
The former employees also stated that “Orig3n ran tests without proper authorization in its lab at the 49ers’ stadium, and that managers regularly compelled them to write positive reviews of Orig3n’s tests on Amazon.com and Google to offset waves of negative feedback,” Bloomberg reported.
“Accurate science didn’t seem to be a priority. Marketing
was the priority,” said a former lab technician who spoke with Bloomberg
on the condition of anonymity. Orig3n denied the accusations in a statement,
describing them as “grossly inaccurate,” and claimed the former employees were
simply disgruntled.
“In some cases, former employees are former employees for a reason,” Orig3n Chief Executive Officer Robin Smith told Bloomberg. “We’ve found after employees are gone that they have not done things appropriately.”
In 2018, NBC Chicago(NBC) conducted an investigation into various consumer DNA testing kits. NBC sent DNA samples to several different testing companies. This included non-human samples, which NBC’s investigators had obtained from a female Labrador Retriever.
With the exception of Orig3n, all of companies identified
the DNA as non-human and did not process the kits. Orig3n did, however, process
the canine DNA. It then returned a seven-page analysis that suggested the
subject of the sample “would probably be great for quick movements like boxing
and basketball, and that she has the cardiac output for long endurance bike
rides or runs,” NBC reported.
This would be funny if it weren’t so concerning.
Following reports that it had processed dog DNA, Orig3n stated
it had made changes and improvements to the company’s testing methodologies. Smith
also stated Orig3n’s lab protocols had been improved as well.
“Sometimes we look at the accuracy of things and go, ‘Man,
that’s not working,’” Smith told Bloomberg. “Our approach and our
philosophy is [sic] to constantly improve the products.”
Serious Accusations of Clinical Laboratory Malfeasance
Founded in 2014 with the intent of creating the world’s largest stem cell bank, by 2016, Boston-based Orig3n had refocused its attention on the burgeoning field of direct-to-consumer DNA testing. On its website, Orig3n sells several DNA-testing kits with varying costs.
Orig3n’s attempt to offer free genetic tests to large numbers of people at a professional sporting event in the fall of 2017 may be what caught the attention of federal investigators and led to a deeper investigation. Dark Daily previously covered this controversy, which centered around Orig3n’s plan to distribute free genetic testing kits to fans at a Baltimore Ravens football game.
In that situation, state and federal healthcare regulators blocked the giveaway over concerns about protected health information (PHI). Now, Orig3n is being accused of questionable business practices by 17 of its former employees.
The former employees’ statements that the company’s genetic
testing lab did not follow appropriate test protocols—and that it allegedly
mishandled specimens and even reported false test results—are serious
allegation of malfeasance and warrants an investigation.
Pathologists and clinical laboratory managers know that patient
harm can potentially result from inaccurate genetic test results if used for
clinical purposes. Dark Daily will continue to follow the investigation
into Orig3n.
Affected patients speak about emotional, financial, and medical costs of receiving inaccurate results from the startup’s faulty Edison ‘finger-stick’ blood draw testing device
Healthcare consumers trust America’s clinical laboratories and anatomic pathology groups to provide accurate test results. When those test results are inaccurate, the loss of public trust can trigger a sharp decline in referrals/revenue and draw an avalanche of lawsuits by those harmed by inaccurate results.
Theranos first made its unproven finger-stick blood draw device available to consumers in September 2013, when it announced a partnership with drugstore chain Walgreens (NASDAQ:WBA). At its height, Theranos operated 40 “Wellness Centers” in Walgreens stores in Arizona and a single location in California, which were the source of much of its revenue. USA Today reported the metro Phoenix-area centers alone sold more than 1.5 million blood tests, which yielded 7.8 million tests results for nearly 176,000 consumers. Theranos shuttered the wellness centers in 2016 after CMS inspectors found safety issues at Theranos’ laboratories in California and a Wall Street Journal (WSJ) investigation raised questions about the company’s testing procedures and accuracy claims. Ultimately, Theranos voided the results of all blood tests run on its Edison device from 2014 through 2015.
Breast-cancer survivor Sheri Ackert (above) told the WSJ she panicked when blood-test results from Theranos indicated her cancer may have reoccurred or were indicative of a rare type of tumor. After being retested by a different clinical laboratory, her results were found to be normal. Click here to watch a WSJ video about Ackert’s experience. (Photo/video copyright: Mark Peterman/Adya Beasley/Wall Street Journal.)
USA Today outlined the impact Theranos’ supposedly low-cost, cutting-edge technology had on several customers:
A woman inaccurately diagnosed with the thyroid condition Hashimoto’s disease changed her lifestyle, made unnecessary medical appointments, and took medication she didn’t need;
A woman inaccurately diagnosed with the autoimmune disease Sjögren’s syndrome was checked for food allergies before being retested and found not to have an autoimmune condition; and,
An Arizona resident who had heart surgery visited a Theranos clinic five times to monitor the results of blood-thinning drug warfarin and was switched to a different drug. He had to have a second heart surgery to drain blood from the pericardial sac and believes more accurate test results could have averted the follow-up operation.
Arizona resident Steven Hammons visited a Theranos clinic several times to have his blood tested. He’d been placed on blood thinners following heart surgery. He was taken off the blood thinners presumably based on the results of those tests. However, as USA Today reported, one test result was later found to be inaccurate. Hammons, who underwent a second procedure to remove blood that had built up around his heart, told USA Today he was concerned about the safety of his fellow citizens.
“That makes me very concerned and worried for the safety of other Arizonans,” said Hammons, who once worked in the medical services division of a private health insurance company. “Government had a role in patient safety. The powers that be dropped the ball.”
Arizona Attorney General Mark Brnovich spearheaded a lawsuit against Theranos under the state’s Consumer Fraud Act, which led to a $4.65 million settlement covering full refunds for every Arizona customer who used the company’s testing services.
“Theranos may have not only had some erroneous test results, but they may have misread my rising blood pressure level as well,” Brnovich told The Republic in a 2017 article announcing the state’s fraud settlement with Theranos. “They said that about 10% of the results were inaccurate. The problem is, as an Arizona consumer, you don’t know whether you were part of that class or not.”
Downfall of a Once-Vaunted Clinical Laboratory Company
Dark Daily and sister publication The Dark Report have written extensively about these events. Former CEO Elizabeth Holmes founded Theranos in 2003 when she was just 19-years old. By 2013, Holmes had become a media sensation based on her claims that “Theranos had developed a medical technology that could do what seemed to be impossible: Its secret machines could run thousands of medical tests using the blood from a tiny finger-prick, and do so quickly and cheaply,” Bloomberg reported in a recent article outlining Holmes’ fall from grace.
While Holmes continues in the role of Chairman of Theranos’ Board of Directors, she was stripped of control of the company as part of the SEC settlement in 2016. The SEC found Holmes and then-company President Ramesh “Sunny” Balwani had fabricated claims Theranos technology had been validated by the Food and Drug Administration (FDA) and pharmaceutical companies and battle-tested by the US military in Afghanistan.
As a result, the SEC also barred Holmes from serving as an officer or director of any public company for 10 years. In October 2016, Theranos announced it would be closing its laboratory operations and focusing on its effort to create miniature medical testing machines, which it did. Nevertheless, the fallout continues.
As pressures on medical laboratories and pathology groups to cut costs while delivering quality care and value increases, laboratory leaders must not lose sight of the fact that accuracy of results remains the key to maintaining trust with healthcare consumers and a financially viable business.
