Silicon Valley’s Biggest Scam: The True Story of Elizabeth Holmes and the Theranos Affair

“One drop of blood to test them all.” No, perhaps Tolkien’s masterpiece didn’t read like that. Yet this is what Elizabeth Holmes and her “revolutionary” company Theranos (founded by Holmes when he was 19) set out to do: analyze more than 200 molecules from a single drop of blood taken from the fingertip. This technique actually already existed and is still used to this day someone analysis, but it allows at most to analyze around forty molecules (as in neonatal screening), certainly not 200 and certainly not all with the same instrument, as Holmes boasted. It promised to revolutionize the American testing system, with fast and painless sampling, and reduce its costs. Only in 2015 did the first investigations and complaints reveal that it was one gigantic scamthe largest ever perpetrated in Silicon Valley: the journalistic investigation of Wall Street Journal led to the bankruptcy of Theranos and, in 2022, to an 11-year prison sentence for Elizabeth Holmes, who entered prison on May 30, 2023.

The Theranos case and Elizabeth Holmes: the revolution of medical analysis

It’s 2003: Elizabeth Holmes leaves university at 19 and shortly after founds her medical device company in Silicon Valley, “Theranos”, a portmanteau of the terms therapy And diagnosis (therapy and diagnosis)

In the space of a few years the charismatic founder managed to convince hundreds of investorsalso important personalities in politics and journalism, and in 2013 he signed an agreement with Walgreensone of the largest pharmacy chains in the United States, by installing its own sample collection points in stores in Arizona. The company quickly gained prestige, credibility and above all a large capital: in 2015 Theranos was valued over 9 billion dollars and Elizabeth Holmes tops the list of Forbes of the “American 50 self-made richest women”.

Holmes’ revolutionary idea concerned blood tests: her technology would be able to carry out the analysis of over 200 molecules from a simple one drop of blood taken with a fingerstick (as diabetics do to control blood sugar). The analysis was then carried out in the company’s laboratories by another revolutionary device, Edisona small-sized analysis machine (about the size of a computer) capable of defeating larger, bulkier and slower competitors. The goal was to make blood tests accessible to everyone, reducing time, costs and “hassle” of the withdrawal.

The bankruptcy of the company after an article in the Wall Street Journal

It is a 2015 article published on Wall Street Journal by the investigative journalist John Carreyrou to explode the cloud of smoke created around Theranos. In his article, Carreyrou, prompted by an Opinion Paper by Professor Eleftherios Diamandis which denounced the total lack of data or information and the scientific inconsistencies of the technique used by Theranos, also describes a working environment marked by secrecy and insulation. Information was also hidden within various departments and employees were forced to sign confidentiality agreements or fired if they raised concerns and questions.

The article also reveals that most of the analyzes were not carried out on Edison (it seems he only carried out about ten), but on standard machinery and what’s more diluting the samples received: in this way any result was completely wrong and unusable.

Carreyrou’s article led to the opening of an investigation byUS Centers for Medicare and Medicaid Services (CMS), a kind of American state health insurance, which blocks the company’s activity. After the CMS inspection, Theranos’s descent into hell begins, ending with thearrest in 2021 and 2022 the conviction for fraud by Elizabeth Holmes and the company’s medical director, Ramesh Balwani.

Because there were no checks by the authorities on the Silicon Valley scam

The story of Silicon Valley’s biggest scam arises from the fact that medical device legislation, both in America and Europe, is less stringent than that of drugs. There is in fact a small loophole in the legislation whereby a laboratory can prepare its own analysis methodswithout having to submit documentation to the competent bodies, provided that they do not sell them externally and use them only for internal analyses.

This legislative exception for laboratory-developed tests is in fact adiscount for universities and research centres and small laboratories so that they can develop diagnostic methods and tests interior. In fact, especially for women rare diseasesit is often unsustainable to face the costs of bureaucratic approval from the FDA or other bodies. This exception allows researchers and doctors to develop and offer patients specific tests for these conditions.

Holmes therefore does not sell its technology to third parties she didn’t have to to present official documentation, nor to publish their data. On the contrary, universities and research centers usually share with the scientific community its research and tests developed to stimulate technological advancement.

Fingerstick blood sampling is nothing new

The sampling technique proposed by Holmes was not even that “revolutionary”. Taking a drop of blood for analysis is a technique calleddried blood spots” (DBS), literally “dried blood spots”, introduced in the early 1950s by the American doctor Robert Guthrie in obstetric practice.

The drops are collected and absorbed onto a special cardboard and, once dried, they can be preserved without the need for intermediate procedures or to be kept in the freezer, as happens instead for venous sampling vials. Convenient, practical and practically painless, but the withdrawal must still be carried out by trained staff and follow a certain procedure.

It is still used today for newborn screening of more than 40 hereditary diseases (the drop is taken from the heel of the newborn), for the measurement of electrolytes and for the analysis of some blood parameters (in addition to blood sugar, triglycerides and cholesterol can also be evaluated). It is also used in the therapeutic monitoring of drugs, to control their plasma concentration and possibly adjust the dosage, or for the detection of substances of abuse.

So why didn’t Theranos’ idea work?

The difference with what Theranos boasts is that they are used to analyze dried blood stains specific techniques for the various molecules, they are not all analyzed together! Then consider that a drop of blood has a volume of approximately 25 μl and that a maximum of ten drops can be taken, for a total of 250 μl: this represents an enormous limit. First there are analytics tools that require larger volumes of sample (this is also why Theranos diluted its samples).

Secondly, many molecules they are not abundant enough in the blood to be detected in such a small volume. In short, let’s put our souls at rest: for now we must continue to rely on the classic venous sampling for the majority of analyses.