Theranos, the blood-testing startup that's been mired in controversy for months, is in even hotter water now after a government agency found problems with its Northern California lab, saying some of its practices "pose immediate jeopardy to patient health and safety."
Theranos initially came under fire after an October 2015 article in The Wall Street Journal questioned the accuracy of its tests, which the company had initially said could be done using only a single drop of blood.
The company's business model includes offering more than 100 simple blood tests directly to patients at a much lower cost than traditional blood labs, in addition to developing its own technology to test that blood.
The company has seen its fair share of ups and downs, but its single biggest mistake--and arguably what has the potential to disrupt the industry if it were to work--centers on its decision to offer its tests directly to consumers.
A potentially fatal flaw
Many new health companies have made waves by treating healthcare like any other product you might buy. Take 23andMe, for example: Rather than making an appointment at the doctor, sitting for an array of expensive genetic tests, waiting days for the results and then having to trek back to the office to discuss them at your physician's convenience, the company offered a simple, straightforward alternative: Spit in a tube, mail it in, and get results online in a visual, simple-to-understand format.
Theranos wants to do something similar, but with blood instead of spit. Skip the arduous, traditional blood-test process. Show up at your local Walgreens, fill in a form, and get your results in a few hours.
Here's the problem: Doing it this way--without a doctor involved--puts the company under far more scrutiny than they'd endure if they included physicians in the process.
Dozens of biotech leaders we've spoken with agree that the idea of offering healthcare products directly to customers is challenging. Many have told us they wouldn't do it--it's hard enough to do so with doctors involved. The FDA has strict regulatory oversight over information they deem could influence the health of a patient.
"The worst thing you can do in facing with the FDA is offer a test directly to the consumer,” Genalyte CEO Cary Gunn told Business Insider during the JPMorgan Healthcare conference in January. Gunn's company is working on developing a rapid test for diseases like rheumatoid arthritis. It's similar to Theranos in that Genalyte aims to do it by having the test read only a single drop of blood. But Gunn said he aims for it to be used only with the involvement of a physician.
Even with the recent challenges, Theranos VP of Communications Brooke Buchanan said the company's commitment to patient health and access hasn't changed.
Theranos isn't alone in facing the issue of how to offer a test directly to consumers. Many "disruptive" Silicon Valley health companies have run into this regulatory problem as well.
But because it focuses on blood tests, which provide information that the average person could act on, like diagnosing a sexually transmitted disease or monitoring an existing diagnosis, Theranos faces an additional layer of complexity in getting its tests--which would eliminate the key element of a trained healthcare professional--approved.
Miscommunication: The flaw of every teen drama befalls the Theranos narrative as well
Of course, no single error can be to blame for Theranos' fall. Plenty of other missteps along the way have contributed to the confusion around the accuracy of its tests--and how blood-testing diagnostics work in general. Theranos has been purposefully tight-lipped about how its proprietary technology worked from the outset, perhaps for fear of competitors catching wind of what the company was up to.
Holmes then went on to explain, in veiled terms, a bit about how the company runs its tests in an attempt to dispel some claims about dilution methods. But it was this initial miscommunication over how the tests work that eventually also culminated with a Fortune senior editor admitting that he'd been "misled" by the company while he'd reported on it for a June 2014 cover story.
When it comes to the scientific community, of course, the only communication that really matters is the data, something Theranos says it's working on making publicly available now through peer review.
"You have to be willing to show what you're doing," Linda Avey, a cofounder of 23andMe told Tech Insider in November 2015. "The proof is in the data."