When the blood-testing company Theranos opened to the public in 2013, founder Elizabeth Holmes made bold claims of having revolutionized the diagnostic-lab business. With just a few drops of blood pricked from a finger (as opposed to several vials drawn from a syringe in the arm), the company said it could not only run the full range of laboratory tests, but also turn around results within hours, all at a low cost.

Theranos received fawning early media coverage, but last October Wall Street Journal reporter John Carreyrou took a more critical look. With descriptions of unreliable equipment, skeptical employees and deficient practices, he reported that the company’s PR blitz outpaced its actual medical technology. On this week’s podcast, Carreyrou talks with ProPublica senior reporter Charles Ornstein about why he decided to look into Theranos in the first place, the problems with the company’s claims, and the recent actions from federal inspectors and Walgreens that lend credence to his investigation.

[NOTE: After the recording of this podcast, the Wall Street Journal reported that Walgreens threatened to terminate its retail partnership with Theranos unless it addresses mounting problems.]

Elizabeth Holmes, founder and CEO of Theranos, speaks at the Fortune Global Forum in San Francisco, Monday, Nov. 2, 2015. (AP Photo/Jeff Chiu)

Highlights from their conversation:

• Investors have poured millions into Theranos (which is valued at $9 billion) despite having little information on the company’s operations.
  Carreyrou: What people saw in it – other than Elizabeth Holmes' pitch that she had made this scientific breakthrough – is not clear. I've heard, and pretty much ascertained during my reporting, that the company did not offer any information about the science, and about how the technology worked, about how its laboratory instrument worked, or about its financials. So investors who were ponying up this money were, for the most part, going in blind.


• The problems, Carreyrou says, are bigger than dishonest marketing.
  Carreyrou: I had ex-employees telling me that they questioned the accuracy of the Edison machine [Theranos’ proprietary lab instrument], and that Theranos was also doing things like diluting small blood samples in order to create a bigger volume to run them on commercial analyzers. That also created problems with accuracy. … I talked to patients and doctors in Arizona, and came up with anecdotal evidence of a test that didn't seem to square with comparative tests done at other laboratories. All of that made me realize that it wasn't just about a company that had overhyped its science and its breakthroughs, but it might also be a matter of public health.


• Holmes and Theranos also played a role in the passage of an Arizona law that allows people to get blood tests without a doctor’s order.
  Carreyrou: That was controversial, because there are many in the medical profession, including the general practitioners who would usually be the middlemen and give you that prescription, who say, "Well, how is that progress?" Because once the patient has those test results, more likely than not, they're going to need a doctor's opinion to decipher them and to know what those results mean. So why not keep the doctor involved from the beginning so that, first of all, there is a logic for getting the blood test, and then there's an expert opinion there when the test results arrive to help you interpret them.



Listen to this podcast on iTunes, SoundCloud or Stitcher. For more, read Carreyrou’s Hot Startup Theranos Has Struggled With Its Blood-Test Technology, and Walgreens Threatens to End Theranos Agreement.