Lessons from Theranos - Restructuring Biomedical Innovation

Abstract

After raising more than $700 million, Elizabeth Holmes, the founder and chief executive officer of a healthcare startup once valued at $10 billion, was found guilty on four charges of defrauding investors. Founded in 2003, Theranos Inc. was a privately held corporation that aimed to disrupt the diagnostics industry with rapid, direct-to-consumer laboratory testing using only "a drop of blood" and the company's patented Nanotainer technology. By exploiting gaps in regulatory policy, Theranos brought its panel of laboratory tests to patients without pre-market review or validation from peer-reviewed scientific research. Investigations into Theranos' dubious operations and inaccurate test results exposed the failed venture which had squandered millions of dollars. Theranos affected the lives and health of patients further disrupting an already tenuous relationship between healthcare and the public - the importance of which cannot be understated in the setting of the COVID-19 pandemic. As medical systems address a national public health crisis and pervasive structural inequities, we must align stakeholder incentives between industry and academic biomedical innovation to rebuild trust with our patients.

Keywords: Biomedical innovation; Diagnostics; Funding; Research; Theranos; Venture capital.