Report: Conditions Ripe for Another Theranos

February 1, 2019 Ben DiPietro

When Wall Street Journal investigative reporter John Carreyrou visited LRN in December to speak about his work unraveling the fraud that was the blood-testing company known as Theranos, he told those in attendance he thought it was likely there would be similar scandals in the future in Silicon Valley.

A group of researchers agree.

The researchers, connected to Stanford University’s Meta-Research Innovation Center, published a paper in . which they point a lack of transparency in the research being conducted by life sciences companies--and warning the conditions are ripe for another Theranos fraud to occur.

The group analyzed research of the largest privately held life sciences companies that was available publicly, and found most haven’t published significant research in peer-reviewed journals. What was published was mostly from two companies.

Dr. John Ioannidis, one of the study’s authors and the co-director of the center, was one of the first people to raise questions about the lack of proper scientific literature coming from Theranos.

“Many years ago I was the first person to say that Theranos had a problem,” Ioannidis told TechCrunch. “The problem that I had then was that Theranos did not have any peer-reviewed evidence to show.”

During his discussion with LRN founder Dov Seidman, Carreyrou--whose book, "Bad Blood," detailed the rise and fall of Theranos and its founder, Elizabeth Holmes, talked about Silicon Valley culture and what happens when ambitious people with big dreams get so blind with making their ideas succeed that they cross lines of ethics and integrity.

"Some people in Silicon Valley even to this day are dismissing this, as I was telling you earlier, as sort of an isolated event and an outlier, arguing that sophisticated VCs never went near Theranos, that the board of directors was certainly full of these people with prestigious, older men with prestigious resumes, but not necessarily people from the Valley, and so on and so forth," said Carreyrou.

"I actually think that it's still very much a story that says a lot about the Silicon Valley and its product," he said. "The behavior that I recount in this book is very much a product of Silicon Valley culture, everything from the culture, the ethos of disrupting, breaking things, and apologizing later."

It was a grave mistake applying the culture of Silicon Valley and its sometimes “loose ethics” to healthcare, Carreyrou said. "This wasn't just a corporate fraud, this was a corporate fraud in which the public health was put at risk," he said. "Most people don't have any tolerance for that."

Seidman said the noble purpose behind Theranos’ mission made for an enticing pitch that snares some investors and gets them to put their money in despite actual evidence to justify their enthusiasm.

“If you take all this, and then you put in the middle of it something that people felt is so good for humankind, that really makes quite a cocktail,” said Seidman. “Because democratizing medical testing, creating a world where no one has to say goodbye to a loved one too soon, you take all of this, and then you put at the center such a noble purpose, it could be pretty intoxicating.”

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