Report: Walgreens Signed Theranos Deal Despite Problems With Tests

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A few years ago, back when lab-testing startup Theranos was still a hot and revolutionary company valued at billions of dollars, the company signed a deal to put retail lab-testing clinics in Walgreens stores. Now, Walgreens employees are reportedly wondering whether they were too eager to sign on with the company without having an outside observer ensure that the tests are actually accurate.

According to interviews with their employees by the Wall Street Journal, Walgreens was anxious to sign on with a promising startup, and the idea of expanding their business into the very large market of doctor-ordered and direct-to-consumer blood tests.

Theranos promised the ability to run tests that were less expensive and much easier to administer, and Walgreens made a deal to put clinics in their drugstores nationwide. To date, they had a few dozen in stores in Arizona and California. In hindsight, Walgreens employees now say, they should have looked more closely at the company’s results compared to other labs, but they were concerned that the company might sign on with a different drugstore chain.

The problem was that Theranos never really answered questions from Walgreens about the technology, or let executives see the devices at work. Was this simply secrecy about a new and exciting technology, or was the company hiding something?

Walgreens hired a former executive for an old-fashioned lab-testing company to check out quality control data, sending him with some of their own executives to check out the startup’s results. There was test data, but nothing showed conclusively whether the tests had been run on the company’s proprietary machines or on standard equipment from an outside company.

“The results were actually really good, but I was never allowed to go into the lab,” the retired Quest executive told the WSJ. “I have no idea that the results I saw were run on the Edison devices or not.”

When Theranos recently voided two years’ worth of test results, they caused a problem for the doctors and patients who had used the service, and one patient is trying to put together a class action lawsuit on behalf of patients who were harmed by inaccurate test results: maybe they received treatment they didn’t need, or didn’t pursue treatment that they did need.

A Theranos spokesperson called the suit “without merit,” and patients who were actually harmed would need to come forward. Voiding test results from the last two years was part of a plan to get back in compliance with federal regulations; otherwise, the startup’s relationship with Walgreens could be in jeopardy. One testing center in a drugstore has already closed.

Craving Growth, Walgreens Dismissed Its Doubts About Theranos [Wall Street Journal]
Angry customer files class action suit against Theranos [The Verge]