A wonderful machine that can read anything in a single drop of blood. The story of the great fraud in the world of medicine [FRAGMENT OF THE BOOK]

19-year-old Elizabeth Holmes raised a million dollars for her revolutionary project – a portable machine that analyzes the health of a person on the basis of one drop of blood. She was quickly hailed as “Skirt Jobs”, and no one wondered how a person who left chemical engineering after his first year managed to develop a breakthrough technology. By the time.

1. On January 3, the Federal Court of San Jose found Holmes guilty of 4 of the 11 charges against her. The woman is threatening up to 20 years in prison
2. Elizabeth Holmes, founder and president of Theranos, was widely regarded as Steve Jobs in a skirt. She dropped out of college and her company was set to revolutionize the medical industry in 2014 with a machine that would greatly improve blood testing, reads the book’s synopsis
3. Investors have gone crazy: Theranos was valued at $ 9 billion during the funding campaign. At its peak, the company was worth up to $ 19 million, although it finally collapsed in 2018
4. Holmes’ assumption that underpinned the project that critical health information could be read from a single drop of blood using a portable device turned out to be a lie
5. Below we present an excerpt from the book “Bad Blood” by John Carreyrou, which was published by Marginesy. The story of Elisabeth Holmes is a story about a great medical fraud, but also about sick ambition and unbridled pride,
6. More information can be found on the TvoiLokony home page

It was the second Monday of February. I sat at a cluttered desk in the Wall Street Journal newsroom in the heart of Manhattan, wondering which topic to tackle now. I recently completed my one-year Medicare fraud investigation, and had no idea what to do next. After sixteen years in this editorial office, there is one thing that I still haven’t mastered: I couldn’t move smoothly, efficiently and quickly from one project to the next.

The telephone rang. It was Adam, the author of the blog Pathology Blawg. Eight months earlier, I had asked him to explain to me the intricate rules for billing lab services – I needed this information for an article in my Medicare series. He patiently explained which laboratory procedures corresponded to specific billing codes – I used this knowledge later to expose the frauds of the company that managed one of the major cancer treatment centers.

Elizabeth Holmes, child prodigy of Silicon Valley

Adam said he came across something that could turn into a huge scandal. People often tip journalists. Nine out of ten times it turns out to be a false alarm, but I always find time to listen to my interlocutors. You never know. Besides, at that moment I felt like a dog whose favorite bone had been taken away. I desperately needed a new one.

Adam asked if I knew the material in one of the latest issues of New Yorker about Elizabeth Holmes, the wonder child of Silicon Valley, and her company Theranos. I nodded. I subscribed to this magazine and read it frequently when taking the subway to work or home.

I remembered that several things in this article immediately struck me as suspicious. For example, there are no publications that, thanks to independent verification, could confirm the scientific theses put forward by the company. For several years, I wrote about problems plaguing the health service – I could not think of any significant discoveries and advances in medicine that had not been independently verified. I was also surprised by the brief description by which Holmes summed up the operation of his secret blood testing devices: “From a chemical point of view, there is a chemical reaction that generates a signal that comes from a chemical interaction with the blood sample. This signal is then translated into a result which is verified by qualified laboratory personnel ”. That’s what a high school student in chemistry might say, not a scientist doing advanced research in a laboratory. The author of the New Yorker article called the description “comically ambiguous.”

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When I thought about it, I found it hard to believe that a woman who dropped out of chemical engineering after her first year had managed to develop a breakthrough technology. Yes, Mark Zuckerberg learned to code on his father’s computer when he was ten, but medicine is different: you can’t learn it yourself in the comfort of your home. It takes years of study and decades of research to gain the right experience. It is not for nothing that many of the Nobel laureates in the field of medicine were in their sixties when their achievements were recognized.

Adam said that after reading the article he had similar conclusions. He published his doubts on a blog. Someone read this post and a group of people contacted him as a result. At first he didn’t want to disclose their identities or explain what they had in common with Theranos, but eventually concluded that these people had information about the company that would definitely interest me. He promised to ask if they would like to talk to me.

Theranos – a wonderful machine and great doubts

In the meantime, I managed to find some basic information about Theranos. Among other things, I came across an interview that appeared on the editorial page of the Wall Street Journal seventeen months ago. I haven’t seen him before. I thought it was interesting to say: the paper for which I work played an important role in raising Holmes to the rank of a celebrity, because nowhere before has there been material summarizing her alleged achievements. The situation was awkward, that’s true, but I didn’t care. There has long been a clear divide between the editorial team and the newsroom. If it turned out that I actually stumbled upon some dark secrets hidden by Holmes, two teams of our newspaper would contradict each other not for the first time.

Two weeks after our interview, Adam put me in touch with Richard and Joe Fuiszami, Phyllis Gardner, and Rochelle Gibbons. At first, I was disappointed to hear about the Fuisha involvement in a legal dispute with Theranos. Even if, they claimed, they had been wrongly accused, they were not impartial and therefore unfit as informants.

But I pricked my ears when I heard they were talking to Theranos’ lab manager, who had recently resigned and reportedly also knew a thing or two about the abuses in the company. I also came across the story of the tragic death of Ian Gibbons – I was intrigued by Rochelle’s confession: her husband had told her on several occasions that Theranos’ technology was not working. In court, such a statement would have been dismissed as a rumor, but for the journalist it was credible enough to take a closer look at it. I already knew what I had to do if I wanted to go one step further: talk to Alan Beam.

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By the time I could call Alan, my voicemail rang six times. I didn’t leave a message, just kept trying. On February 26, 2015, on a Thursday afternoon, a man whose accent I couldn’t place finally picked up. I made sure to speak to Alan, introduced myself, and said that, as far as I know, he recently quit Theranos due to business concerns.

I sensed that the man was very nervous, but he clearly wanted to get it out. He has agreed to speak to me on the condition that I keep his identity a secret. Theranos’ lawyers were taking their toll on him, and he was sure the company would sue him if they found out he was talking to a journalist. I promised not to reveal his name. I made this decision without hesitation. Without it, I would only have second-hand news and real-life speculation. If he doesn’t tell me anything, nothing on the subject.

Confusion over blood dilution

After we established the basics of our communication, Alan calmed down a bit and we talked for another hour. At first he confirmed that Ian Gibbons was telling the truth: Theranos’ devices were not working. They never passed the quality control. Moreover, Theranos only used them for a few tests. Most of the studies were carried out on commercial analyzers and blood samples from patients were diluted.

I didn’t immediately understand what this dilution was about. Why would they do this, and why did he see something wrong with it? Alan explained that this was how the company wanted to compensate for Edison’s handicap – their equipment could only perform one category of testing, namely immunoassays. Theranos did not want people to know that the technology was of limited use, so a method was developed that allowed tests to be carried out on a small blood sample using conventional devices. So the fingerstick blood sample had to be diluted to get more fluid. The problem, Alan argued, was that during dilution, the concentration of the analytes in the blood dropped to a level that would not allow a conventional machine to calculate an accurate result.

He also added that he was trying to delay the introduction of Theranos tests to the Walgreens chain and warned Holmes that the results of the blood sodium and potassium tests were completely unreliable. Potassium levels significantly above the normal range were detected in healthy patients. The results were “idiotic”. I had barely understood this piece of information when Alan mentioned something called proficiency testing. He was adamant that Theranos was violating their federal rules. He even pointed to the appropriate legal basis in the Code of Federal Regulations: 42 CFR Part 493. I wrote these numbers down in a notebook and remembered to check them later.

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Holmes allegedly insisted that she would revolutionize the methodology of blood tests, although her knowledge of science and medicine was poor, which only confirmed my earlier assumptions. My interlocutor also claimed that on a daily basis it is not she who runs the company, but a certain Sunny Balwani. Alan didn’t beat around the bush – he said Sunny was a dishonest bastard and managed people through intimidation. Then another sensational piece of news was released: Holmes and Balwaniei had more than a job in common. From the articles in New Yorker and Fortune, and from the information on Theranos website, I already knew that Balwani is the company’s president and director. If Alan was telling the truth, the whole situation took on a new meaning: here is the founder of a tech start-up, the first woman in Silicon Valley to become a billionaire, is sleeping with her company’s president twenty years older – second to God.

Journalistic investigation – how was the great hoax discovered?

From a management point of view, it didn’t look very good, but in the end we are talking about a private company. The world of start-ups in the Silicon Valley has not developed rules specifying such behavior. I was more interested in why Holmes appeared to be hiding her relationship from the board members. How else to explain the fact that the “New Yorker” introduced her as single, and Henry Kissinger said that he and his wife are trying to match the boss of Theranos? If Holmes was not honest with the board members about her relationship with Balwani, what else could she be hiding from them?

In an interview with Holmes and Balwani, Alan mentioned his concerns about proficiency testing and the reliability of Theranos tests. Apparently, he raised this topic many times, both in private and in e-mail. Balwani dismissed him every time, at best he refused to answer, and if he did deign to answer, he also included Theranos’ attorney as addressee and added “Please keep the above content as confidential as all other information communicated between the client and the solicitor.”

As the lab manager whose name was on the CLIA compliance license, Alan worried that he would be held responsible if government officials ever opened an investigation into Theranos. Wanting to protect himself somehow, he sent correspondence with Balwani to his private e-mail account. Theranos’ authorities found out about this and threatened to sue Alan for breach of confidentiality.

Even more than possible criminal liability, he was worried about the risks to patients using Theranos’ services. In an interview with me, he described two possible scenarios that could lead to adulterated tests, both macabre. A false positive result may expose the patient to unnecessary surgery. Things were even worse with a false-negative result: a patient suffering from a serious condition would not receive a proper diagnosis and could die.

After the conversation, I felt a familiar adrenaline rush – that feeling was with me every time I made a breakthrough. But I had to get down to earth – after all, I had only taken the first step in a process that was going to be in debt. I still did not understand many issues, and above all, the information obtained had to be confirmed somehow. I couldn’t put all of these revelations into my reportage citing one anonymous source, even if it was credible.

During my second interview with Alan, I stood in the sun at Prospect Park in Brooklyn and watched my two sons, ages nine and eleven, with one eye. They played with their friends. It was the last Saturday of February, hailed as New York’s coldest month in eighty-one years.

After our first conversation, I sent Alan a text asking if he could think of his former colleagues wanting to confirm what he had told me. He sent me the names of seven people. I contacted two of them. They both seemed nervous and agreed to talk to me as long as I didn’t reveal them. One of them, the former Theranos lab technician, didn’t say much, but her words gave me the impression that I was on the right track. She was very concerned about what was happening in the start-up and for the safety of patients. She resigned because she felt bad that she was endorsing the research conducted in this way with her name. The second of my interlocutors was the technical explorer of the laboratory. From him, I learned that there is a culture of fear and secrecy in Theranos.

Promises that cannot be fulfilled

I told Alan that I had made some progress. Apparently this information pleased him. I asked if he had saved the e-mails he sent himself to his private Gmail account somewhere. Unfortunately, the lawyer ordered him to delete all the copies, according to the statement that the company had forced him to sign. Documentary evidence was an obligatory element of such reports. In this situation, I faced an extremely difficult task, but I tried not to show disappointment.

Our conversation turned to proficiency testing. Alan explained how Theranos approached the subject, and on which commercial analyzers most of the blood tests were performed. Both were Siemens, which confirmed the information that Andrew Perlman, Phyllis Gardner’s husband, heard from a sales representative he met on the plane. Alan revealed something else that he did not mention in our first interview: Theranos’ lab consisted of two parts. There were commercial analyzers in one, and Edisons in the other. Only the room with the commercial analyzers was shown to a state inspector. Alan took this as a hoax. He also said that Theranos was working on a next-generation device, code-named 4S – it was supposed to replace Edison and eventually perform even more tests, but it reportedly didn’t work at all and it wasn’t even put in a laboratory. Diluting the fingerstick blood samples and analyzing them on Siemens machines was supposed to be a temporary solution, but in the end it was adopted permanently because the 4S project ended in a fiasco.

It was starting to make sense: Holmes and her company had made promises that they had not been able to deliver, and to save face, they were caught by just a makeshift makeshift. This can be done with smartphone software or applications, but when it comes to a medical product on which people are to base their key decisions about their own health, this is unacceptable. At the end of our second conversation, Alan said one more interesting thing: George Shultz, the former secretary of state and board member of Theranos, had a grandson, Tyler, who worked for the company for a while. Alan wasn’t sure why Tyler quit, but he hardly broke up with Theranos in a friendly atmosphere. I was writing down all the information in the smartphone app all the time – now I added Tyler’s name to it; maybe I just found another informant.

In the weeks that followed, I made some progress, but also encountered a lot of obstacles. To confirm the information I received from Alan, I contacted more than twenty current and former employees of Theranos. Many of them did not respond to my emails and calls. I was able to speak to only a handful of people – all of them signed a strict confidentiality clause and were unwilling to risk the case in court for breaching it.

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One of the former high-ranking lab workers agreed to speak to me, but only informally. It was an important distinction for the journalist: Alan and two other former Theranos employees agreed to speak to me on the condition that I did not reveal their names. So I was able to quote in the article what I learned from them, but without giving the source of the information. This time, the former employee agreed to talk to me informally, which meant that I had no right to use the knowledge thus acquired. Nevertheless, the conversation turned out to be helpful, as the man confirmed many of Alan’s earlier statements. Thanks to this, I was sure that it is worth looking further. My interlocutor summed up the situation in the company as follows: “Theranos works more or less as if someone were trying to build a bus while driving it. It is known that sooner or later someone will die. “

After a few days, Alan contacted me again. This time, he had good news to deliver. I asked him to call the law firm in Washington again, which was accepting notices of abuses. He was to find out if he would be able to retrieve the e-mail correspondence with Balwani, which he had sent to the office in the fall, when he first made contact. Now he was calling to tell me that the office had sent him correspondence. He handed it over to me immediately. It contained eighteen proficiency testing emails. The authors and recipients were: Sunny Balwani, Daniel Young, Mark Pandori and Alan. The e-mails showed that Balwani angrily reprimanded Alan and Mark Pandori for having analyzed the proficiency samples on Edison, then reluctantly admitted that the device “failed” the test. Nor was there any doubt that Holmes knew about the whole incident: her address was on the copy of most of the e-mails.

Blood from a vein is different from blood from a finger

This is how I proceeded in my search. Unfortunately, I took a step back right after that. In late March, Alan felt fear. He did not back out of what he had told me so far, but he did not want to get involved in the story any longer. He couldn’t handle the risks mentally. He found that talking to me made him feel stressed and disturbed in his new job. I tried to convince him to change his mind, but he stubbornly stuck to what he was doing, so I figured I’d give him a break. I was counting on the fact that he would want to resume our cooperation soon.

While this was quite a setback, I did manage to make some progress on other fronts. I needed an experienced lab technician’s neutral opinion on the dilution of blood samples and the Theranos proficiency testing method, so I called Timothy Hamill, vice president of the Department of Laboratory Medicine at the University of California San Francisco. Tim confirmed that both practices are questionable. He also explained the pitfalls of using fingerstick blood samples for testing. Unlike blood drawn from a vein, blood from a finger is contaminated with fluid from the tissues and cells, which affects the test result and the accuracy of measurements.

“I would be less surprised if they said they were time travel and came from the twenty-seventh century than if they said they had dealt with the problem,” he said.

Before Alan changed his mind about our collaboration, he also mentioned an Arizona nurse, Carmen Washington, who worked at the Walgreens clinic and complained about the quality of Theranos tests. For several weeks I tried to track down this woman. Finally, I managed to call her. She said three of her patients had questionable test results, including a XNUMX-year-old girl whose high potassium levels indicated a risk of a heart attack. Carmen was of the opinion that such a result made no sense in a healthy teenage girl. The other two patients had surprisingly high levels of TSH, a thyroid hormone. Carmen invited them to the clinic one more time and took their blood again for testing. The second time, the results were well below normal. After this incident, she lost confidence in Theranos’ finger blood tests. Such cases were in line with what Alan had said. The TSH test was part of the group of immunological tests Theranos performed on Edison, and I knew now that the machine had failed the proficiency test.

Carmen Washington’s story was helpful, and soon I found something much better: another employee who had the courage to report irregularities in the company. I wrote a message to Tyler Shultz on LinkedIn after noticing that he was viewing my profile. He probably found out from his former associates that I was interested in this case. It had been over a month since my message, and I was starting to lose hope that any of it would come to pass when the phone rang.

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It was Tyler. He was eager to talk, though he was worried that Theranos might be chasing him for it. He was calling from a prepaid phone so that it would not be tracked. I agreed to make him anonymous, and then he told me an overview of his employment history with the company. He worked there for eight months.

He explained to me that he was talking to me for two reasons. First, much like Alan was concerned that patients would receive inaccurate test results. He also had the reputation of his own grandfather at heart. While he had no doubts that Theranos’ deceptions would come to light someday, he did not want to rush the process, wanting to give his grandfather a chance to clear his own name. George Shultz was ninety-four and may not have much time left.

“He survived the Watergate and Iran-Contras scandals with an impeccable reputation,” Tyler said. – I’m sure he will come out of it this time unscathed, as long as he has the opportunity to clarify the matter.

Final evidence

As Tyler departed from Theranos, he printed the e-mail he wrote to Holmes and Balwan’s reply. He smuggled these documents under his shirt. He also retained email correspondence with the New York State Department of Health regarding proficiency testing. I listened to it with genuine pleasure. I asked him to send me all these materials. He did it immediately.

The time has come for a trip to Palo Alto. Before that, however, I had to go somewhere else.

I needed proof that the company was reporting inaccurate test results. I could only get it after finding doctors who had obtained questionable results and referred patients for re-examinations. I figured it would be best to look for such people in Phoenix, since Theranos offered his research there in more than forty facilities. For starters, I wanted to visit Carmen Washington, but found out she no longer works at the Walgreens clinic on the corner of Osborn Road and Central Avenue, and does not remember the names of the three patients she mentioned.

I had one more lead. I looked at Yelp with user reviews, hoping someone else might have had a bad experience with Theranos. I was lucky because I came across the opinion of a doctor who signed herself as Natalie M. You can send a message to the author of the opinion on the Yelp portal, so I immediately did so and provided my details asking for contact. She called the next day. She introduced herself as Nicole Sundene, a family doctor in Fountain Hills, a suburb of Phoenix, very dissatisfied with Theranos’ offer. Last fall, she referred the patient to the emergency room because of disturbing test results, which turned out to be false. I flew to Phoenix to see Dr. Sundene and her patient. By the way, I also planned to pay an unannounced visit to other offices that had benefited from Theranos’ research. From a source related to this sector, I obtained contact information for six such centers.

Dr. Sundene’s patient, Maureen Glunz, has agreed to meet me at Starbucks near where she lives. The tiny woman in her fifties was a walking confirmation of Alan Beam’s fears. The test results reported by Theranos showed incredibly high levels of calcium, protein, glucose and three liver enzymes. The woman complained of ringing in her ears (she later found out she was simply not getting enough sleep), so Dr. Sundene began to suspect a stroke. She immediately referred her to the hospital. Mrs. Glunz spent four hours in the emergency room on Thanksgiving. Doctors performed a complete set of examinations on the spot, including tomography. The patient was sent home as the results were normal. It didn’t stop there. The following week, Maureen had MRI performed twice, just in case. The woman admitted that her fears subsided for good only after these results showed that she was fine.

The case of Ms Glunz was convincing because it showed that inaccurate research results entail both emotional and financial costs for the patient and, above all, great fear. As an independent real estate agent, Maureen had individual insurance with a high excess. The emergency room visit and the MRI cost her a total of $ XNUMX – she had to get it out of her own pocket.

In Dr. Sundene’s office, I also learned that it wasn’t just Mrs. Glunz’s results that seemed suspicious. The doctor said that more than twelve of her patients had unbelievably high scores on the potassium and calcium levels. She did not believe they were true. She even wrote a complaint to Theranos, but the company never responded to her.

I decided to do a little experiment with Dr. Sundene. She wrote me a referral for research; the next morning I took them to the Walgreens facility near my hotel. As recommended for the test, I went on an empty stomach to get the most accurate result. The health club at the Walgreens pharmacy did not bring me to my knees: just a room not much bigger than a wardrobe. There was a chair and small water bottles in it. Unlike Safeway, Walgreens did not spend a fortune on remakes and did not open upmarket clinics in its facilities.

I took my seat and waited a few minutes for the technician to enter my referral into the computer. Then she called someone. When she finished talking, she asked me to roll up my sleeve and tighten the armband around my arm. I asked why he wasn’t drawing blood from his finger. She explained that some of the tests ordered by the attending physician require venous blood collection. It didn’t surprise me. Alan Beam warned that, of the more than 240 tests offered by Theranos, only 80 are performed with fingerstick blood samples (12 of them on Edison and 60–70 on reworked Siemens devices); all other research requires something that Holmes in interviews compared to a medieval torture device: a nightmare syringe with a needle. I have received confirmation of this information. After I left Walgreens, I drove my rental car to a nearby LabCorp facility to get another blood test there. Dr. Sundene has promised to send me the results from both sites as soon as they arrive. After reflection, she said that she would also go to research in both centers, so that we would have a better comparison and more material for further research.

For the next few days, I knocked on doctor’s office doors. In Scottsdale, I spoke to three doctors: Adrienne Stewart, Laura Beardsley, and Saman Rezaie. Dr. Stewart mentioned a patient who at the last minute postponed her long-planned trip to Ireland because the results of the study sent by Theranos suggested that she may be suffering from deep vein thrombosis, which causes clots, usually in the legs. People with thrombosis should not travel by air as the clot can break off and travel as far as the lungs, where it causes a pulmonary embolism. Dr. Stewart decided to ignore Theranos’ result after the ultrasound of the legs and the re-examinations were normal.