Though Holmes advertised Theranos as a Silicon Valley technology startup, at its core Theranos was a blood testing company with a diagnostic laboratory subject to the same regulatory compliance requirements as any other lab. [i] See, e.g., [iii] See In The Federal Soon afterward, a Theranos lab in California was found by the government to be a threat to patient health and safety. world. When Theranos eventually appointed a lab director, it was a dermatologist who was not actually qualified to run a clinical laboratory and was mostly an absent figurehead. Theranos had also been thinking of conducting HIV tests before the former lab director talked Holmes and Balwani out of it. Theranos also set up protocols that allowed unlicensed personnel to conduct quality control procedures and process patient samples in the lab. v. Barnhill, a case involving Blue Bell Creameries, paints a roadmap for how degree with a Board Certification in Pathology," the WSJ points out. Finally, Theranos cheated on proficiency testing, a Each Theranos board member was highly testing technology and revenue projections. reagents (solutions used for blood testing), and that Theranos failed to notify [vi] See Caremark Liability for Regulatory Compliance Oversight, Harvard Law School Forum on Corporate Governance and Financial Regulation, Gail Weinstein, Warren S. de Weid, and Philip Richter (July 8, 2019) (available at https://corpgov.law.harvard.edu/2019/07/08/caremark-liability-for-regulatory-compliance-oversight/#respond) and Practical Guidance for Health Care Governing Boards on Compliance Oversight, Office of Inspector General, U.S. Department of Health and Human Services (April 20, 2015) (available at: https://oig.hhs.gov/compliance/compliance-guidance/docs/Practical-Guidance-for-Health-Care-Boards-on-Compliance-Oversight.pdf). So it is not clear that additional governance activity by Theranos’s board would have demonstrably prevented the course of events for the company. ethics program and shall exercise reasonable oversight with respect to the Holmes’s grand vision was torevolutionize blood testing and place these miniature labs in homes across theworld. Wall Street Journal obtained copy of letter sent by CMS to Theranos, dated March 18, 2016, that notified its executives of sanctions that include revocation of Theranos’ CLIA license and a process by which the medical lab company can appeal Theranos, the high-profile clinical laboratory company, had a day of reckoning yesterday. Since then, a dermatologist named Sunil Dhawan has replaced the director, … Balwani regularly fired employees who dared question him. ... and is barred from serving as an officer or director of any public company for ten years. Board Member Expertise. Balwani, 53, was employed at Theranos from September of … Less than two weeks later Holmes fired both employees. Board of Director Lessons from Theranos by Jamie Flinchbaugh on 01-07-20 Theranos has captured the attention of many, in part because the hype surrounding its founder reached such massive peaks, and partly because the degree of fraud is on par with 19th-century snake … earlier provided evidence that had convinced them to remove Holmes. that Theranos’s “nanotainer” for collecting blood from finger pricks was an This article is not about the gripping tale of deception, manipulation, and intimidation fostered by Holmes and Balwani (and other bizarre facts, such as Holmes communicating in a fake deep voice for years after starting Theranos) – Carreyrou, ABC’s Rebecca Jarvis in the podcast The Dropout, and many other talented journalists have thoroughly covered those topics. Minutes. There are additional examples of serious compliance-like concerns the So what should a board of directors do to oversee compliance? approved hiring Balwani as president and COO despite having no blood testing, The recent Delaware decision in Marchand [v] Marchand v. Barnhill, 212 A.3d 805 (Del. Blue Bell’s board, however, had no committee to address food safety issues, no processes or protocols for management to update it about food safety practices or risks, no regular schedule for considering food safety risks inherent to the industry, there was no evidence management notified the board of red or yellow flags from regulators about reported listeria problems, and there was a complete lack of any discussions about food safety in board meeting minutes – even during the time of the listeria outbreak. Still, the first qualification Theranos has on its website for the Newark lab-director job is "M.D. In other words, Theranos’s Become a member today and see what APhA can do for you. with applicable industry, legal, and regulatory frameworks, the broad experience. The board should put management on notice that it takes compliance seriously and expects compliance accountability across the organization. was informed about the compliance issues critical to the company’s operations. The media has reported extensively about Holmes and the downfall of Theranos, which was at one point valued at $9 billion. (AP Photo/Jeff Chiu) Holmes, an aspiring billionaire, claimed she feared needles. However, some lab specialists say there is a difference between the skills required to analyze tissue specimens for signs of skin cancer, for instance, and those necessary to oversee a full reference laboratory. Plaintiffs survived a motion to dismiss because their complaint included Then Theranos saw the end of another large partnership, this time with Walgreens. revolutionize blood testing and place these miniature labs in homes across the Culture Development. Ensure board composition includes necessary expertise, or the board has access to necessary expertise. (“CMS”) conducted a surprise inspection of the lab in September 2015 and found Theranos also segregated Board minutes should reflect efforts to establish, implement, and continually monitor key compliance matters, and should include management reports on risks and compliance issues. Holmes’s grand vision was to early detection and preventative medicine. When questioned in a 2018 deposition for an investor lawsuit, former Theranos lab director Dr. Adam Rosendorff commented on Theranos technology, referring to as “the miniLab.” John Carreyrou’s best seller Bad Blood: Secrets and Lies in a Silicon Valley Startup covers the whole sordid tale. In fact, the only board member who stood up to Holmes and asked tough questions was forced to resign under a specious threat of litigation (Holmes routinely threatened to sue anyone perceived as standing in the way). The lab’s current director is Sunil Dhawan, a dermatologist with no background in laboratory science. Theranos searches for lab director to oversee laboratory, Ambulatory Care Review and Recertification Activities, Sterile Compounding Review and Recertification Activities. multi-national pharmaceutical company. §8B2.1(b)(2)(A) (Nov. 2018). patients about flawed test results. For some Theranos … This will help ensure critical issues and information are reported to the board. Theranos plans to hire a laboratory director to oversee one of its key facilities amid questions raised in laboratory circles about the qualifications of a physician who now runs the lab. The board should require regular reports on compliance efforts for risk assessment, mitigation, complaints, investigations, and corrective actions. Board Education. When the FDA inspected the lab, it determined However, the claims later proved to be false. That’s when The […] its proprietary miniature lab equipment from the commercial analyzers it used The basic There is no indication that any other board member, however, was even interested the lab, Theranos only showed the inspectors the lab with the conventional blood test results run on its proprietary equipment. ... “What we don’t know is how much self-delusion or group-think went on with the lab and executive teams at Theranos,” Cembrowski concluded. 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