as they were concerned, the visit had gone swimmingly.
* * *
—
A MONTH LATER, in September 2010, a group of Walgreens executives met with Elizabeth and Sunny in a conference room at the drugstore chain’s Deerfield headquarters. The mood was festive. Red balloons with the Walgreens logo floated above a table laden with hors d’oeuvres. Wade Miquelon and Dr. J were unveiling “Project Beta,” the code name for the Theranos pilot, to senior Walgreens executives.
Standing in front of a slide titled “Disrupting the Lab Industry” projected on a big screen, one of the Walgreens executives was singing along to “Imagine.” To celebrate the alliance, the innovation team had come up with the idea of adapting the lyrics to the John Lennon song and using it as the partnership’s anthem. When the awkward karaoke act was over, Elizabeth and Sunny encouraged the Walgreens executives to get their blood tested. They had brought along several black-and-white machines to the meeting. The Walgreens executives lined up to get their fingers pricked behind Kermit Crawford, the president of the pharmacy business, and Colin Watts, the head of the innovation team.
Hunter, who was now working for Walgreens full-time as an onsite consultant for the innovation team, didn’t take part in the meeting. But when he heard that several Walgreens executives had had their blood tested, he figured this was an opportunity to finally see how the technology performed. He told himself to follow up with Elizabeth about the test results next time they talked. In a report he’d put together after the Palo Alto visit, Hunter had warned that Theranos might be “overselling or overstating…where they are at scientifically with the cartridges/devices.” He’d also recommended that Walgreens embed someone at Theranos through the pilot’s launch and had volunteered one of his Colaborate colleagues, a petite British woman by the name of June Smart who’d recently completed a stint administering Stanford’s labs, for the assignment. Theranos had rejected the idea.
Hunter asked about the blood-test results a few days later on the weekly video conference call the companies were using as their primary mode of communication. Elizabeth responded that Theranos could only release the results to a doctor. Dr. J, who was dialed in from Conshohocken, reminded everyone that he was a trained physician, so why didn’t Theranos go ahead and send him the results? They agreed that Sunny would follow up separately with him.
A month passed and still no results.
Hunter’s patience was wearing thin. During that week’s call, the two sides discussed a sudden change Theranos had made to its regulatory strategy. It had initially represented that its blood tests would qualify as “waived” under the Clinical Laboratory Improvement Amendments, the 1988 federal law that governed laboratories. CLIA-waived tests usually involved simple laboratory procedures that the Food and Drug Administration had cleared for home use.
Now, Theranos was changing its tune and saying the tests it would be offering in Walgreens stores were “laboratory-developed tests.” It was a big difference: laboratory-developed tests lay in a gray zone between the FDA and another federal health regulator, the Centers for Medicare and Medicaid Services. CMS, as the latter agency was known, exercised oversight of clinical laboratories under CLIA, while the FDA regulated the diagnostic equipment that laboratories bought and used for their testing. But no one closely regulated tests that labs fashioned with their own methods. Elizabeth and Sunny had a testy exchange with Hunter over the significance of the change. They maintained that all the big laboratory companies mostly used laboratory-developed tests, which Hunter knew not to be true.
To Hunter, the switch made it all the more important to check the accuracy of Theranos’s tests. He suggested doing a fifty-patient study in which they would compare Theranos results to ones from Stanford Hospital. He’d done work with Stanford and knew people there; it would be easy to arrange. On the computer screen, Hunter noticed an immediate change in Elizabeth’s body language. She became visibly guarded and defensive.
“No, I don’t think we want to do that at this time,” she said, quickly changing the subject to other items on the call’s agenda.
After they hung up, Hunter took aside Renaat Van den Hooff, who was in charge of the pilot on the Walgreens side, and told him something just wasn’t right. The red flags were piling up. First, Elizabeth had denied him access to their lab. Then she’d rejected his proposal to embed someone with them in Palo Alto. And now she was refusing to do a simple comparison