Theranos Pulls Zika Test from FDA Review after Problems Flagged; Anyone Else Hear a Death Knell?

Blood-testing firm Theranos Inc. (Palo Alto CA) said it voluntarily withdrew a request to the U.S. Food and Drug Administration for emergency clearance of its new Zika-virus blood test.

Theranos withdraws request to the #FDA for emergency clearance of its new #Zikavirus blood test Click To Tweet

Theranos made the decision after the FDA said the company did not include proper patient safeguards in a study, the Wall Street Journal reported, citing people familiar with the matter.

“We hope that our decision to withdraw the Zika submission voluntarily is further evidence of our commitment to engage positively with the agency,” Dave Wurtz, Theranos’s vice president of regulatory, quality and clinical affairs said in a statement. “In my mind, this was a positive interaction with the FDA, and I’m grateful for its collaborative approach. We are confident in the Zika tests and will resubmit it.”

The diagnostic test for Zika can detect additional strains of the mosquito-borne virus from blood drops taken from a finger prick from patients, Theranos CEO Elizabeth Holmes said earlier this month.

The company said it collected finger-stick blood samples from patients, including from those in the Dominican Republic, and ran the tests.

However, after an inspection earlier this month, the FDA concluded that Theranos had collected some data supporting the accuracy of the test without implementing a patient-safety protocol approved by an institutional review board, the Journal said.

The FDA’s inspection was triggered by Theranos’s request for “emergency-use authorization” to sell its new Zika test, the WSJ said.

Steve’s Take: What a sad tale this latest revelation is for someone with so many talents, so much going for her in this wild and wacky world of start-up celebrity billionaires.

It was supposed to be the beginning of a new era when Elizabeth Holmes, the pop idol CEO of beleaguered blood-testing company Theranos, took the stage at a major scientific conference last month and presented new technology and data on a supposedly “breakthrough” Zika test. She told thousands of scientists that the Silicon Valley company had already submitted the test to the Food and Drug Administration, seeking emergency use authorization.

But federal inspectors visited Theranos soon afterward and found that that some of the Zika data collection had gone forward without an essential safeguard to prevent patient harm, according to a Wall Street Journal report published late Tuesday. The company confirmed that it has withdrawn its Zika test from consideration for emergency clearance from the FDA.

The setback comes as the federal Centers for Medicare and Medicaid Services considers Theranos’s appeal of harsh sanctions that included a two-year ban on Holmes owning or operating a laboratory after numerous deficiencies were found at its laboratory in Newark, CA.

“It’s unfortunate for Theranos to be caught in another compliance issue so soon after the major issues were reported with their clinical testing laboratory,” Stephen Master, director of the central lab at Weill Cornell Medicine, said, according to The Washington Post. “Given the amount of scrutiny they’re under, I would have expected them to be particularly careful about the regulatory issues surrounding research on human subjects.”

Regretfully, this Zika test debacle is more evidence of a pervasive, slipshod and mostly opaque pattern of doing business that led to Ms. Holmes getting banned from the blood-testing business for two years.

Theranos may very well be a maverick business that’s disrupting the established players in the world of blood testing, but there is a nagging fear it may turn out to be just another chapter in American healthcare’s long history of hucksterism, according to Fortune.

The 19th century medicine shows featured charismatic pitchmen who made grandiose claims about magical elixirs that could cure all manner of ailments. Many wonder if Ms. Holmes was following in that tradition.

Channeling the image of Apple’s Steve Jobs, sporting his trademark black turtleneck, Holmes mesmerized trade shows with thrilling claims regarding a secretive diagnostic technology for which supporting research was guarded due to intellectual property concerns.

Holmes, who dropped out of a Stanford engineering program to launch her business in 2003, invented the blood-testing process that requires only a few drops of blood from someone’s finger rather than the standard vein puncture that called for vials of blood. With $400 million in investment, the company valued itself as a $9 billion enterprise, making Holmes worth half that amount. Now, her stake has collapsed to zero.

Jane Chin, PhD, a contributor to Forbes, penned a much-needed clarification back in July of what Ms. Holmes’ 2-year ban really signifies. In a caustic but accurate account Dr. Chin explains that the FDA did not ban Holmes from operating labs for two years and impose an undisclosed monetary fine; CMS (Centers for Medicare & Medicaid Services) did.

This is an important distinction, because FDA regulates food and drug/device safety, while CMS tracks down people and companies that steal from (defraud) the government’s Medicare/Medicaid reimbursement system, as well as regulate clinical laboratories.

With this bureaucratic distinction in mind, Dr. Chin furnishes some shrewd perspective:

“Getting on the wrong side of CMS is asking for a death wish in the healthcare business. Pharma companies will sooner pay hundreds of millions and even billions of penalty dollars (and many do: see Big Pharma’s Big Fines) than be banned from doing business that involves Medicare and Medicaid Services. The loss of business from CMS is catastrophic to a life science company and is equivalent to a death sentence for the entire product franchise.”

Dr. Chin continues,

“Banning an individual, on the other hand, requires CMS to decide there is enough evidence of willful wrongdoing and fraud to warrant a ban. Most of the bans that are covered by business news involve physicians defrauding Medicare and Medicaid, and CMS does not appear to be doing a very good job figuring out which sleazy doctors are simply going on to defraud another branch of its reimbursement system.”

There hasn’t in recent memory been a precedent of a celebrated company founder getting the CMS “stamp of death” (Chin’s words) ban in such a public and spectacular manner. People may not feel sympathetic to the venture capitalists who invested some $750 million in Theranos, but we taxpayers fund CMS. Theranos has not only defrauded venture capitalists, but us taxpayers whose money gets pooled to fund Medicare and Medicaid, Chin says.

Like Dr. Chin, I wanted Holmes to be a success story, not one that will be lumped with Ryan Lochte, Bill Cosby, David Petraeus and many more. Holmes might admit to inviting comparisons to Steve Jobs because of her youth, even her customary black turtlenecks.

Steve's Take: It will take a miracle for Elizabeth Holmes to emerge unscathed from this failure Click To Tweet

As I remarked in an earlier piece, “A Steve Jobs she isn’t, yet. But a good storyteller, absolutely.” Unfortunately, she has fallen from a rarified, dizzying height, as they say. It will take a miracle for her to emerge unscathed from this ugly lesson in hubris in the white-hot, star-focused biotech arena. I hope she’s the rarest of rare exceptions.