First it was repeated reports that their technology failed to work even in highly scripted dog and pony shows for potential investors, now we discover that the company was doing of this while using regulatory loopholes to avoid FDA oversight:
This suggests one of two possibilities: either Theranos’ customers received test results generated by equipment that no federal official checked for accuracy, or Theranos wasn’t using the proprietary technology behind its $9 billion valuation to return results to patients. A recent report from The Wall Street Journal pointed toward an extreme version of option number one: that Theranos actively hid its proprietary technology from lab inspectors, which would explain why the inventions were never checked. And Theranos has publicly proclaimed it used its technology on patients, which means either that the company’s lying or patients received tests that had not been validated by any federal authorities.I'm beginning to think that the whole startup culture is a code word for some sort of charity for overpriviliged white boys.
"CMS did not inspect the Theranos proprietary technology."Theranos first came under scrutiny after a report in the Journal in October, which said that Theranos’ inventions were only used on a small number of tests sold to patients. On Sunday, the paper reported that during an inspection by Centers for Medicare and Medicaid Services auditors, employees who worked in the "Normandy" section of the Theranos lab were told not to enter or exit the lab; the inspectors toured the section of the lab that housed traditional lab instruments Theranos bought from other companies but never saw the Edison machines — Theranos’ highly publicized blood analyzers. This account fits with lab inspection documents that The Verge obtained from CMS, which do not mention Theranos’ proprietary technology at all. There’s a reason for that: "CMS did not inspect the Theranos proprietary technology," a spokesperson for CMS told The Verge in an email. Consequently, at no point between Theranos opening its first wellness center in 2013 and a surprise inspection by the FDA in August did any federal official examine the company’s proprietary technology — either its Edison machine, which reads samples, or its "Nanotainer" device, which stores blood from pinprick testing.
The lack of inspection was possible in part because Theranos registered its technology in categories that have minimal oversight. Theranos sold its tests under a designation that even the US Food and Drug Administration calls a regulatory loophole: the "lab-developed test." Under this designation, no pre-market FDA approval is required for the company’s blood tests — as it typically is for most drugs and devices. The category was meant for research hospitals, which sometimes adapt commercial tests to suit patients’ needs, and Theranos is one of several companies using the loophole to sell its tests to the public. Instead of the FDA, regulation of Theranos’ labs fell to the Centers for Medicare and Medicaid Services.
Theranos also registered its blood containers as FDA Class I medical devices in 2013, according to the FDA. That category of medical device doesn’t require an FDA inspection. No FDA inspectors entered a Theranos facility until August of this year, during a round of surprise inspections. In the FDA’s inspection report, it referred to Theranos’ Nanotainer as an "uncleared medical device" and altered its registration to a Class II medical device, which requires greater oversight.
CMS declined to provide us with additional information about Theranos. The FDA provided some information about Theranos’ regulatory status — including the fact that Theranos registered its containers as Class I in 2013 — but declined to reveal anything further about the company.