Too Late for a QMS: Theranos' Ignoring FDA Compliance Will Cost it Billions
Theranos, the once-hot clinical testing start-up, has taken a beating in the press recently. With almost $700 million in venture funding and buttressed by promises of dramatically new and better ways of testing blood samples, the company was once poised to be a model for life sciences companies of the future. Agile and smart, Theranos rapidly moved into a huge market on the back of its proposed innovative solutions.
"...given the amount of scrutiny they're under, I would have expected them to be particularly careful about the regulatory issues surrounding research on human subjects."
Because of some disastrous mis-steps, however, Theranos is now unable to bring to market some of their most promising services because the FDA has determined the products were not adequately tested and validated. In late 2015, the Wall Street Journal reported that testing results were not accurately reported by the company because the processes for handling blood samples did not meet regulatory standards. Those samples, therefore, were invalidated and the company's plan to bring their solution to market were essentially ended. That finding alone wiped out more than $8 billion in Theranos' market value.
The company attempted to bounce back when it announced a new product, miniLab, in early August. This blood testing device was built to be used outside of a lab and change the paradigm for clinical tests. As global health concerns like the Zika virus weigh increasingly heavily on the minds of medical professionals, government agencies and individuals alike, a product like miniLab could be used in the field and in remote areas where Zika and other blood-borne diseases are most prevalent. It looked like a bold way out of the mess that Theranos found itself in.Yet, once again, a careless attitude towards testing and regulatory compliance has gotten the company in trouble. As the Wall Street Journal reported, an FDA inspection discovered that Theranos had collected "...some data supporting the accuracy of the Zika test without implementing a patient-safety protocol approved by an institutional review board." Especially because humans were used on these studies, the issue of safe and ethical treatment raised major red flags.
As a result of these issues being uncovered, Theranos has withdrawn its submission for a fast review and clearance from the FDA. These findings, and the company's reaction to it, will do irreparable damage to their brand, to say nothing of their ability to operate in the future under draconian penalties.
How is it that a once high-flyer like Theranos could fall so greatly? In our world, it's not hard to see why and how this happens. Medical and life sciences testing is complex, cumbersome, and requires strict adherence to guidelines, and Theranos should be applauded for their efforts to introduce a new and better way of doing it. We know, from deep experience, that when their are poorly defined processes, multiple reporting levels and little visibility into processes, mistakes are likely to happen. There is no skirting of process in this field, and while innovation is encouraged, it has to be done in such a way that it minimizes risk. Similarly to the dictum our physician friends operate under, we believe that in this field: first, do no harm.
We are not privy to how Theranos operates, but it is clear that they did not adhere to regulatory compliance through the trial, collection and development processes. Whether that was just sloppy work or purposeful ignorance, their plight demonstrates the need for life sciences companies to create both a behavioral and solution-based approach to regulatory compliance, internal training, user document control, all of the other elements of ensuring quality management.
In the WSJ article, a clinical lab director said, "It's unfortunate for Theranos to be caught in another compliance issue so soon after the major issues were reported with their clinical testing laboratory. Given the amount of scrutiny they're under, I would have expected them to be particularly careful about the regulatory issues surrounding research on human subjects."
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