Following the raid, the company’s co-founders resigned
from the board of directors
Microbiome testing company, uBiome, a biotechnology developer that offers at-home direct-to-consumer (DTC) test kits to health-conscious individuals who wish to learn more about the bacteria in their gut, or who want to have their microbiome genetically sequenced, has recently come under investigation by insurance companies and state regulators that are looking into the company’s business practices.
CNBC
reported that the Federal Bureau of
Investigation (FBI) raided the company’s San Francisco headquarters in
April following allegations of insurance fraud and questionable billing
practices. The alleged offenses, according to CNBC, included claims that
uBiome routinely billed patients for tests multiple times without consent.
Becker’s
Hospital Review wrote that, “Billing documents obtained by The Wall Street
Journal and described in a June 24 report further illustrate uBiome’s
allegedly improper billing and prescribing practices. For example, the
documents reportedly show that the startup would bill insurers for a lab test
of 12 to 25 gastrointestinal pathogens, despite the fact that its tests only
included information for about five pathogens.”
Company Insider Allegations Trigger FBI Raid
In its article, CNBC stated that “company insiders”
alleged it was “common practice” for uBiome to bill patients’ insurance
companies multiple times for the same test.
“The company also pressured its doctors to approve tests
with minimal oversight, according to insiders and internal documents seen by CNBC.
The practices were in service of an aggressive growth plan that focused on
increasing the number of billable tests served,” CNBC wrote.
FierceBiotech reported that, “According to previous
reports, the large insurers Anthem, Aetna, and Regence BlueCross BlueShield
have been examining the company’s billing practices for its physician-ordered
tests—as has the California Department of Insurance—with probes focusing on
possible financial connections between uBiome and the doctors ordering the
tests, as well as rumors of double-billing for tests using the same sample.”
Becker’s Hospital Review revealed that when the FBI
raided uBiome they seized employee computers. And that, following the raid,
uBiome had announced it would temporarily suspend clinical operations and not
release reports, process samples, or bill health insurance for their services.
The company also announced layoffs and that it would stop
selling SmartJane and SmartGut test kits, Becker’s reported.
uBiome Assumes New Leadership
Following the FBI raid, uBiome placed its co-founders Jessica
Richman (CEO) and Zac
Apte (CTO) on administrative leave while conducting an internal
investigation (both have since resigned from the company’s board of directors).
The company’s board of directors then named general counsel, John Rakow, to be interim CEO,
FierceBiotech
reported.
John Rakow (center) is shown above with uBiome co-founders Jessica Richman (lower left) and Zac Apte (lower right). In a company statement, Rakow stressed that he believed in the company’s products and ability to survive the scandal. His belief may be based on evidence. Researchers have been developing tests based on the human microbiome for everything from weight loss to predicting age to diagnosing cancer. Such tests are becoming increasingly popular. Dark Daily has reported on this trend in multiple e-briefings. (Photo copyrights: LinkedIn/uBiome.)
After serving two months as the interim CEO, Rakow resigned
from the position. The interim leadership of uBiome was then handed over to
three directors from Goldin
Associates, a New York City-based consulting firm, FierceBiotech
reported. They include:
SmartFlu: a nasal microbiome swab that detects bacteria and viruses associated with the flu, the common cold, and bacterial infections.
What Went Wrong?
Richman and Apte founded uBiome in 2012 with the intent of
marketing a new test that would prove a link between peoples’ microbiome and their
overall health. The two founders initially raised more than $100 million from
venture capitalists, and, according to PitchBook,
uBiome was last valued at around $600 million, Forbes
reported.
Nevertheless, as a company, uBiome’s future is uncertain. Of
greater concern to clinical laboratory leaders is whether at-home microbiology
self-test kits will become a viable, safe alternative to tests traditionally performed
by qualified personnel in controlled laboratory environments.
From point-of-care diagnostic tests to ancestral DNA home-testing, this company’s spit tubes are used by more medical laboratories than any other brand
Most clinical laboratory specialists know that OraSure Technologies of Bethlehem, Pa., was the first company to develop a rapid point-of-care DNA diagnostic test for HIV back in the 1990s. This was a big deal. It meant physicians could test patients during office visits and receive the results while the patients were still in the office. Since many patients fail to follow through on doctors’ test orders, this also meant physicians were diagnosing more patients with HIV than ever before.
Today, OraSure is the dominant company in the spit tube
industry. OraSure claims its tubes contain patented chemical preservatives that
can maintain the specimen’s integrity for up to two years at room temperature.
That’s a long time. And this one feature has made OraSure popular with
direct-to-consumer (DTC) genetic home-test developers.
OraSure provides nearly all of the specimen receptacles used
by individuals searching for their ancestral roots. It’s estimated that about
90% of the DTC genetic-testing market uses the company’s spit tubes. This is
partly because OraSure makes the only tubes approved by the US Food and Drug
Administration (FDA) for home DNA-testing purposes.
“The FDA approval gives customers confidence,” Mark Massaro, Managing Director, Senior Equity Analyst at investment bank Canaccord Genuity Group, told Bloomberg. “That, and they can preserve saliva for a long time.”
The OraSure spit tube above contains a patented mix of chemicals that can maintain saliva’s integrity for up to two years at room temperature. This is critical for ensuring specimens arrive at medical laboratories in usable condition to produce accurate test results. (Photo copyright: Zhongjia Sun/Bloomberg Businessweek.)
Spit, Close, Recap, Send
To use the saliva-testing DNA kits, an individual first
spits into the tube and then snaps the cap on the tube shut. This action
perforates a membrane which contains a patented, chemical mix of preservatives.
These chemicals help preserve the sample and minimize contamination from
non-human DNA that may be present.
“You’ve got to make it as easy as possible for a person to
spit in the tube, close the tube, recap the tube, and send it to you without
any variation,” Stephen
Tang, PhD, President and Chief Executive Officer at OraSure, told Bloomberg.
Saliva samples are very susceptible to environmental factors
like temperature and are extremely time sensitive. They need to be properly
handled and stored to prevent any degradation and ensure the most accurate test
results. Once in the spit tube, a saliva sample can last more than two years at
room temperature, according to the company.
“That’s the secret,” Tang stated. “Saliva is not pure. It’s
got a lot of bacteria and other stuff swimming in it.”
OraSure reported the company made $182 million in revenue in
2018, with about $20 million of that amount being profit. DNA Genotek, Inc., a subsidiary of OraSure
designed the T-shaped spit tubes being used for consumer-DNA testing kits.
Other Clinical Laboratory Uses for Specimen-Collection Devices
In addition to the consumer-DNA industry, OraSure’s tube technology is used in clinical and academic laboratory situations as well as in veterinary DNA testing. The company is focused on expanding the uses for their specimen-collection technology. They have recently begun using their technology to collect urine specimens for diagnosing sexually transmitted diseases and other conditions. OraSure also has added devices for feces collection, to better compete in the developing field of microbiome for gut bacteria analysis.
“We are all about the integrity of the sample collection,”
Tang says. “It’s a wide-open field.”
Ancestry Sued by OraSure
In 2017, Ancestry.com agreed to pay OraSure $12.5 million to
settle a lawsuit which alleged the company had copied OraSure’s patented DNA
testing technology to produce their own saliva-based DNA test.
According to the lawsuit, Ancestry.com purchased saliva test
kits from DNA Genotek in 2012 and 2013 for the purpose of collecting saliva
samples from their customers. In 2013, Ancestry.com filed for a patent of their
own for an improved variation of the kits reportedly without DNA Genotek’s
consent.
OraSure also has devices for substance abuse testing,
cryosurgical kits for the testing of skin lesions, and kits for forensic
toxicology.
Maintaining specimen integrity is critical to ensure lab
test results are accurate and reproducible. OraSure’s spit tube technology
solves the problem of preserving specimens while they are transported to
clinical laboratories and other pathology facilities.
FDA’s assertion of power to regulate genetic tests is a familiar argument to pathologists and clinical laboratory scientists, but does create problems for 23andMe
It has been national news since November 22, when the Food and Drug Administration (FDA) sent a letter to 23andMe ordering it to stop the sale of direct-to-consumer genetic tests. The FDA said that 23andMe had failed to prove the validity of its genetic tests and gave the company 15 days to respond and identify the steps it would take to address FDA concerns.
This event has fulfilled the predictions of many pathologists and clinical laboratory professionals. Having dealt with the FDA throughout their careers, experienced medical laboratory scientists knew that the FDA would eventually take enforcement action against 23andMe, if the company did not provide adequate scientific information to support the clinical validity of its genetic tests. (more…)
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