Let industry regulate itself

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From Vox

Theranos was supposed to revolutionize blood tests. Now its CEO faces an industry ban

Updated by Julia Belluz on April 13, 2016, 3:33 p.m. ET 

Elizabeth Holmes's revolution has gone awry.Larry Busacca/Getty Images

Elizabeth Holmes once promised to disrupt the multibillion-dollar blood testing industry with her revolutionary finger-prick tests.

Now the 31-year-old founder of biotech startup Theranos may be on the brink of being banned from the industry entirely.

According to a March 18 letter obtained by the Wall Street Journal — the latest revelation in the newspaper's impressive investigation into Holmes's crumbling empire — US health regulators are threatening to close down Theranos because the company failed to address deficiencies that pose a threat to patient health and safety.

In the letter, the Centers for Medicare and Medicaid Services says it plans to revoke Theranos’s lab license and prohibit its owners — including Holmes and company president Sunny Balwani — "from owning or running any other lab for at least two years," the Journal reported.

CMS will reconsider these actions if the Theranos executives can provide good evidence for why they shouldn't be shut down. The company has already responded, and CMS has not yet reached a final decision.

"If the sanctions are imposed," reporters John Carreyrou and Christopher Weaver write in the Journal, "some would take effect within eight days. Others would take longer, including revoking the California lab’s license, which could occur in 60 days." The company could also appeal the decision, which could delay any regulatory sanctions.

Theranos claimed to offer faster, cheaper, painless blood tests

Theranos's current set of problems started with an October Wall Street Journal published investigation. In it, Carreyrou showed that the company's claims of a health care revolution were overblown. Contrary to Holmes's public statements, Theranos had allegedly been collecting blood samples using the traditional way and then diluting them so they could be run on machines made by other companies — not their much-hyped Edison technology (more on that below).

What's more, the Journal's investigation, as well as a follow-up story, suggested there were major concerns about the accuracy of Theranos's test results.

Theranos had claimed it had the technology to take blood from a simple painless prick and run multiple tests on that tiny, raindrop-size sample rather than the multiple vials usually required. The sample would be sent to a lab in a "nanotainer" and tested on Theranos’s proprietary technology, known as "Edison machines." Theranos also promised to deliver results in a few hours, to eliminate anxiety-inducing waits. Holmes said the tests would cost about half of current Medicare and Medicaid reimbursement rates for tests.

It seemed promising. In 2013, Theranos opened 42 "wellness centers" in Walgreens pharmacies in Arizona, two in California, and one in Pennsylvania. Holmes had also started lobbying state governments to allow patients to order Theranos tests without having to go through the cumbersome annoyance of getting a doctor's note — a step that, in theory, would further cut down on time and cost to patients.

By 2015, Holmes had persuaded Arizona's legislature to pass a law allowing patients to skip right to her labs and order up whatever menu of testing they wanted, without doctors' approval.

So not only was Holmes trying to upend the way blood testing is done, she was also trying to change how people interact with the health care system. Considering that every person gets blood tests at some point, the change she promised was a big deal.

Many of Theranos's claims were never validated, raising suspicions

More recently, however, critics had begun asking for proof that Theranos's technology actually works, and that its results are accurate. After all, the evidence on this wasn't public: The Food and Drug Administration hadn't cleared Theranos's tests. And Holmes had never published her claims in peer-reviewed journals.

Holmes and Theranos's PR team deflected these critics by citing intellectual property concerns and suggesting that any complaints were being planted by rival testing companies, such as Quest and Laboratory Corporation. Here's how Ken Auletta of the New Yorker described Holmes's stonewalling:

What exactly happens in the machines is treated as a state secret, and Holmes’s description of the process was comically vague: "A chemistry is performed so that a chemical reaction occurs and generates a signal from the chemical interaction with the sample, which is translated into a result, which is then reviewed by certified laboratory personnel." [Holmes] added that, thanks to "miniaturization and automation, we are able to handle these tiny samples."

Then in October 2015 came the massive Wall Street Journal investigation. Carreyrou eventually discovered and reported that it appears Theranos rarely even used its much-hyped Edison technology in its tests. Instead, the startup allegedly relies mostly on older technology by companies like Siemens for the bulk of its testing. (This was in contrast to the company's claims that it used older machines only for "certain esoteric and less commonly ordered tests.")

What's more, there are real concerns that the company's signature Edison machines — the ones that have garnered all the hype — aren't nearly as accurate as claimed. On this point, Carreyrou cited former employees, internal emails, and doctors. One Theranos employee even complained to regulators that Theranos had been gaming the system, "failing to report test results that raised questions about the precision of the Edison system."

Since the Journal's story, other critics have come forward and claimed that their blood test results from Theranos didn't quite match those from standard labs. In a follow-up, the Wall Street Journal confirmed that the FDA had pressured Theranos to stop using its Edison technology on almost all of its blood tests save for one (a test for Type 1 herpes simplex) because of concerns about the machine's accuracy.

So how did Theranos get so much hype with such weak claims?

There's no shortage of Silicon Valley companies that claim to be changing the world, but Theranos stood out for a couple of reasons: It had an amazing origin story, it was led by a young woman in a mostly male tech industry, and it promised to solve a problem that was relevant to most people.

Holmes, the company's founder, dropped out of Stanford as a sophomore in 2004. She said she'd started the company both to address her phobia of needles — one that she realized many people shared — and out of the desire to help people diagnose potential diseases faster and at more accessible prices. Her message that billion-dollar lab companies were ripping people off with costly, outdated, and unnecessarily painful technology deeply resonated.

Over the next decade, Holmes managed not only to get her own Stanford professor and mentor on board, but also to attract $400 million from venture capitalists, and assemble a star-studded board that included former US Secretaries of State Henry Kissinger and George P. Shultz.

In this context, it's not surprising that favorable press followed: Holmes could be found, always in Steve Jobs–esque black, on the cover of Forbes and Fortune, and was even the subject of an in-depth New Yorker profile. She was named "the world's youngest self-made female billionaire" by Forbes and "America's coolest billionaire" by Inc. magazine, and even made Time magazine's list of the "100 most influential people."

This whole episode should be a cautionary tale: If a secretive tech company is claiming to revolutionize an entire industry with technology that still hasn't been validated, be skeptical.

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Mitsubishi Motors has admitted falsifying fuel economy data for more than 600,000 vehicles sold in Japan. Tyre pressure figures were falsified by employees to flatter mileage rates, the company said. Almost 470,000 vehicles that Mitsubishi made for Nissan were affected and the issue was uncovered after Nissan found inconsistencies.

Mitsubishi Motors admits falsifying fuel economy tests - BBC News

Mitsubishi struggled for years to regain consumer trust after a defects scandal in the early 2000s that covered up problems such as failing brakes, faulty clutches and fuel tanks that fell off vehicles. This is the first time that a Japanese car maker has reported misconduct involving fuel economy tests. In 2014 South Korean car makers Hyundai and its affiliate, Kia, agreed to pay $350m in US penalties for overstating their vehicles' fuel economy ratings. They also resolved claims from car owners. Mitsubishi's announcement follows on from the Volkswagen's emissions scandal last year, in which it was found to have cheated diesel emissions tests in the United States and elsewhere. VW is recalling millions of cars worldwide as a result of the scandal and has set aside €6.7bn (£4.8bn) to cover costs.

Mitsubishi Motors admits falsifying fuel economy tests - BBC News

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This is what you get when you let industry regulate itself..

The decision to demonize fat for its caloric density and heart-clogging effects, a decision that drove people away from butter and cheese and towards low-fat foods that required plenty of sugar to have some flavor, wasn't just bad science, according to a report analyzing historical food industry documents published September 12 in the journal JAMA Internal Medicine.

That national dietary shift from fat towards sugar came about at least in part because of a major 1967 review of dietary science. Those historical documents reveal that a food industry group called the Sugar Research Foundation (SRF) paid three Harvard researchers $6,500 (about $50,000 today) to discount research that increasingly showed links between sugar and heart disease and to point the blame at fat instead. The industry group selected the data the Harvard scientists used for the review and suggested the research they include. Their final paper, published in the New England Journal of Medicine, set the US diet on a new course.

"The documents leave little doubt that the intent of the industry-funded review was to reach a foregone conclusion," Marion Nestle, Paulette Goddard Professor of Nutrition, Food Studies, and Public Health at New York University, wrote in a commentary published alongside the new analysis.

Should you eat a low-fat diet? - Business Insider

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The US is in the midst of a harrowing opioid painkiller and heroin epidemic, which led to a record number of drug overdose deaths (more than 52,000) in 2015. Unlike other drug epidemics, the current one did not start with an illicit substance. It began with legal drugs: opioid painkillers like OxyContin and Percocet, which were heavily marketed by pharmaceutical companies to sell as much of their product as possible. The marketing, which downplayed the risks of opioids, was so misleading that in 2007 Purdue Pharma, producer of OxyContin, paid hundreds of millions of dollars in fines for it. The US Drug Enforcement Administration claimed in 2003 that Purdue’s marketing was “aggressive, excessive and inappropriate” and “very much exacerbated” abuse and criminal trafficking of opioids. But instead of learning the lessons of the American opioid epidemic, a new report by Harriet Ryan, Lisa Girion, and Scott Glover of the Los Angeles Times suggests that drug companies are simply taking their message to a global audience.

Painkiller companies are now globally exporting addiction for profit — just like Big Tobacco - Vox

We’ve seen this story before: As Americans smarten up to a dangerous drug’s risks, the drug companies take their product to other parts of the world. Over the past few decades, the US has started to win the fight against tobacco. After the US surgeon general’s 1964 report linked tobacco to lung cancer and heart disease and aggressive education campaigns followed, smoking rates in the US have drastically dropped. The percentage of US adults who identified as current cigarette smokers fell from more than 42 percent in 1965 to less than 17 percent in 2014.

Given that as many as 540,000 people die from tobacco-related causes every year, this trend has saved a lot of lives and should continue to do so. But what was good for public health was bad for tobacco companies. So they began pushing their product outside the US and Europe. Not only have they aggressively marketed cigarettes but they’ve fought anti-tobacco laws and regulations abroad — like mandatory labels that would warn consumers about the risks of tobacco use. The result is that tobacco companies have seen profits surge, even as their business in the US and Europe declined..

Painkiller companies are now globally exporting addiction for profit — just like Big Tobacco - Vox

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For years the oil industry has appealed to the executive branch and courts to de-fang a U.S. rule forcing Exxon Mobil Corp., Chevron Corp. and other producers to disclose their payments to foreign governments. Now, the Republican takeover in Washington is handling it for them.

Exxon Set for Early Victory as Congress to Rescind Payments Rule - Bloomberg

Congressional Republicans are not wasting any time going after former president Barack Obama’s climate change legacy. House Republicans are putting the final touches on legislation to overturn an Obama executive order limiting the amount of methane that can be vented and flared from oil and gas drilling sites on federal lands. The bill, along with another piece of legislation overturning an order protecting streams and wildlife around coal mines, is set to be introduced Monday,

House Republicans ready bill to overturn methane rule | Fuel Fix

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[T]he idea that regulations stunt job growth more broadly is not supported by research. Many of the academic studies that have explored the question find that regulations don’t decrease jobs in the overall economy. They sometimes reduce jobs in certain sectors, but they create new jobs in others. A factory that makes lead additives for gasoline might be shut down because regulations have banned lead additives. But new jobs will then be created at a factory that makes catalytic converters, which are emissions-control devices for cars. Some workers, then, benefit from regulation, while others lose. That doesn’t mean that the losses aren’t real and painful for the people who held those jobs, but the overall picture is not one that can be accurately characterized by the phrase “job-killing.”

Donald Trump: Trickle Downer of the Week

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Methane emissions from human activities generate one quarter of all the warming that Earth is experiencing, and the oil and gas industry is one of the leading emitters of the greenhouse gas. It's a dangerous — and hard to track — situation. The Environmental Defense Fund announced this week at the TED Conference in Vancouver, Canada, that it's working on a satellite, called MethaneSAT, that will identify and measure human-caused methane emissions, with a particular focus on the oil and gas industry.

TED2018: Oil industry methane pollution tracked by new satellite - Business Insider

Doesn't need regulation either, right?

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The American oil and gas industry is leaking more methane than the government thinks — much more, a new study says. Since methane is a powerful greenhouse gas, that is bad news for climate change. The new study, published Thursday in the journal Science, puts the rate of methane emissions from domestic oil and gas operations at 2.3 percent of total production per year, which is 60 percent higher than the current estimate from the Environmental Protection Agency. That might seem like a small fraction of the total, but it represents an estimated 13 million metric tons lost each year, or enough natural gas to fuel 10 million homes.

Thanks to a boom in hydraulic fracturing in states like Texas and Pennsylvania, natural gas has quickly replaced coal as the leading fuel used by America’s power plants. It has also helped, to some extent, in the fight against climate change: When burned for electricity, natural gas produces about half the carbon dioxide that coal does. The shift from coal to gas has helped lower CO₂ emissions from America’s power plants by 27 percent since 2005. But methane, the main component of natural gas, can warm the planet more than 80 times as much as the same amount of carbon dioxide over a 20-year period if it escapes into the atmosphere before being burned. A recent study found that natural gas power plants could actually be worse for climate change than coal plants if their leakage rate rose above 4 percent..

The Natural Gas Industry Has a Leak Problem - The New York Times