How Elizabeth Holmes Made A Billion Medical Fraud

A life 2023

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How Elizabeth Holmes Made A Billion Medical Fraud
How Elizabeth Holmes Made A Billion Medical Fraud
Video: How Elizabeth Holmes Made A Billion Medical Fraud
Video: Elizabeth Holmes exposed: the $9 billion medical ‘miracle’ that never existed | 60 Minutes Australia 2023, February

Alexandra Savina

Last week it became known that Elizabeth Holmes, the creator of Theranos, will stand trial in the summer of 2020. She faces up to twenty years in prison and a millionth fine. Last summer, she and former Theranos president Ramesh Balwani were indicted by a grand jury in a total of eleven charges. Two relate to prior conspiracy to commit fraud (against investors, doctors and patients), another nine are simply fraudulent.

At the same time, just a few years ago, Elizabeth Holmes was considered a feminist icon: a young entrepreneur at the age of nineteen, dropped out of her studies at Stanford to start her own business. She was called a visionary and the youngest billionaire who made her own fortune (Theranos was estimated at nine billion dollars), numerous articles were devoted to her, and Time magazine included her in the 100 most influential people of 2015.


What happened to Elizabeth Holmes sounds like a classic entrepreneurial success story. Since childhood, she was interested in engineering and dreamed of making a billion-dollar fortune - and also studied diligently and, in her free time, independently mastered the Chinese language. Her great-great-grandfather was a famous surgeon - probably because of this, the woman decided to devote herself to medicine. Later, Holmes began to study chemical technology at Stanford - and already in her first year she asked Professor Channing Robertson to allow her to attend the courses he teaches with graduate students. Then, in 2004, as a sophomore, she announced that she was leaving university to pursue her own business. The girl planned to turn the market for medical services and radically change the way blood tests are performed - Robertson decided to support her.

Holmes said that she decided to do blood tests for several reasons: firstly, like many, she was afraid of needles and the procedure itself, and secondly, she wanted the diagnosis of diseases to become more accessible, quick and simple. Instead of the traditional analysis, when blood is collected from a vein in several tubes at once, Holmes Theranos company promised a tiny painless injection - and that one drop of blood would be enough for a detailed diagnosis. Samples were to be delivered to the laboratory in "nano-containers" - and tested on another development of the company, a device called Edison. In size, it resembled a bread maker, but this did not seem to affect the power: according to the company, the gadget carried out up to thirty tests on one blood sample and gave results in just a few hours - instead of several days.

Holmes hired former Apple employees, called the company's developments "the health ipod," and even adopted the habit from Jobs.

to secrecy

The idea really sounded revolutionary: instead of an unpleasant procedure, it was fast and painless, instead of the standard fifty dollars for an analysis, only about three. It was backed by investors, including Oracle co-founder Larry Ellison, Rupert Murdock and the Walton family, heirs to the Walmart supermarket empire, to raise $ 400 million. In 2013, Theranos opened dozens of pharmacy centers across states: forty-two in Arizona, two in California, and one in Pennsylvania. Elizabeth Holmes also worked to ensure that patients could order tests themselves, without going to the doctor - this would further reduce their costs and save time.

Unsurprisingly, the entrepreneur was regularly called the "new Steve Jobs." Judging by the stories of the environment, Holmes really was largely inspired by his example: she hired former Apple employees at Theranos, called the company's developments “the health ipod,” and even adopted Jobs's habit of secrecy, including in business.It got to the details: like Jobs, Holmes wore black turtlenecks - according to former employees, she switched to them when she learned that her idol prefers Issey Miyake.

But for all the dizzying success of Theranos, what the company did was questionable. For example, in the famous profile of The New Yorker, Holmes describes the process as broadly as possible: “There is a certain chemical process, a chemical reaction that creates a signal from a chemical interaction with the sample. This translates into a result, which is then evaluated by certified laboratory personnel. " She said the company was able to handle tiny blood samples through "miniaturization and automation." There were practically no medical professionals on the board of directors of the company - the bulk of them were former civil servants.


In October 2015, Theranos history took a dramatic turn. The Wall Street Journal published an investigation by John Carrero into the company's activities. The journalist says that he worked on it for ten months - the management of the startup tried to stop him and threatened him with a lawsuit, but the publication still came out. It turned out that Theranos practically did not use their own developments - blood samples were analyzed not on Edison, but on standard laboratory equipment (although representatives argued that the latter is used only occasionally). At the same time, the results of analyzes on own Theranos equipment turned out to be less accurate. The US Food and Drug Administration (FDA) became interested in the company's activities: it was almost immediately banned from taking blood samples for Edison, with the exception of one - for the herpes virus. For a time, Theranos worked as a standard laboratory. It also turned out that Holmes and Balwani presented investors with a much more optimistic picture of the company's financial outlook.

Later it turned out that questions about the technologies that Holmes was going to use had arisen earlier. Phyllis Gardner, who taught Holmes at Stanford, says that back in 2002 she came to her to show her an idea - a patch that would test the body for a bacterial infection and administer an antibiotic. Gardner told her that this was impossible, since it would not work to deliver the right amount of the drug to the right place - but Holmes ignored this remark.

Following the FDA, Theranos became interested in

and the FBI. The company was forced to invalidate the results of analyzes collected over two years.

Other details were revealed - for example, that Holmes hid that she was in a romantic relationship with Ramesh Balvani. A difficult atmosphere reigned in the company: Holmes made sure that only she had full information about the activities of Theranos, and gave out the rest in portions - which prevented employees from interacting and working on a common product. She kept a close eye on her colleagues and encouraged the habit of working late.

Following the FDA, the FBI also became interested in the activities of Theranos. Lawsuits from investors followed; the company was forced to invalidate the results of the analysis of the samples collected over two years and reimburse 76 thousand customers for the costs of them. Last spring, Holmes settled out of court with the US Securities and Exchange Commission - she had to pay $ 500,000 and 19 million shares of Theranos were confiscated from her. She was also banned from holding executive positions in joint stock companies for the next ten years.

Theranos finally ceased operations last September. Since then, John Carreru has managed to release a bestseller about Elizabeth Holmes - in addition, several documentaries and a podcast have been dedicated to her. Adam McKay is working on a film starring Jennifer Lawrence. What awaits Elizabeth Holmes herself, time will tell.Only one thing is clear: a woman who has made her way into the "male" environment of Silicon Valley does not always turn out to be the feminist heroine that everyone is waiting for.

Photos: HBO Documentary Films

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