Lawmakers stand by blood-testing law despite company's woes

CEO was once at top of Forbes' list of America's Richest Self-Made Women

By Gary Grado
The Daily Record Newswire

PHOENIX - Supporters of a 2015 law that benefited the business of Theranos stand by its passage as good public policy, even as the company and CEO Elizabeth Holmes are accused of fraud.

But one supporter, Rep. Eric Meyer, D-Paradise Valley, said he thinks Holmes misled lawmakers, who might have voted differently had they known about the company's problems, which began to surface around the time the bill was signed into law.

Holmes personally lobbied the Legislature and Gov. Doug Ducey to pass and sign HB2645, which allows a person to get tested for any medical condition without a doctor's order.

The bill's sponsor, Rep. Heather Carter, R-Cave Creek, said she believed in the concept of "direct access testing" long before Holmes got involved.

"The policy I believe was the best public policy because people fundamentally have a right to their own health information," Carter said.

The bill passed both chambers with only two senators, a Republican and Democrat, voting against it.

Holmes showed up at the Capitol with the aura of celebrity and the respectability of having an estimated net worth of $4.5 billion. She was considered one of the youngest self-made billionaires, and the leader of an apparently innovative company, which claims to have an inexpensive method of testing blood using only the amount drawn from a pin prick.

That has all changed. Forbes, which in 2015 put her atop its list of America's Richest Self-Made Women, said June 1 she's now worth "nothing," and a federal class action filed May 26 in California by a Maricopa County man alleges her company has committed fraud on the public.

In testimony before an Arizona legislative committee, Holmes said the bill was a model for the nation and it was a "basic human right" to have information about one's own health. Her personal story to partly explain her motivation for passing the bill pulled at heartstrings. She said her favorite uncle died of cancer, which might have been prevented had he been able to get blood testing without a doctor's order.

Theranos, a California-based company, in 2013 entered a partnership with Walgreens to house Theranos Wellness Centers in California and Arizona. Carter and other lawmakers met Holmes at a grand opening of a Walgreens store in Carter's district.

Carter said Theranos was no different than any other business with an interest in a bill that lobbies the Legislature.

"The policy that is put forth is not company specific, it's based upon what we believe as a Legislature is best practice for the citizens of Arizona," Carter said.

She said Theranos competitors began offering direct access blood testing after the law took effect.

Dr. Robert Stern, medical director of Sonora Quest Laboratories, said the company began offering its own service, which allows consumers to order select testing on their own.

Stern said Sonora Quest believes a person most effectively manages his health by involving a medical provider, but the company is "excited to allow consumers a more active role in managing their health.

"Direct Access Testing gives consumers more choice, flexibility and control over their own health in a convenient, efficient and confidential way," Stern said in an emailed, prepared statement.

Meyer, who is a physician, said the law's impact will be to drive down health care costs, which is good, but allegations that the company's tests aren't accurate means people might have been harmed.

"We make decisions as legislators based on the facts as we know them," Meyer said.

Meyer and Carter and other lawmakers stood with Ducey when he signed the bill into law April 6, 2015, at a Theranos lab in Scottsdale.

Ducey's action is noted in the lawsuit, with attorney Rob Carey saying the company "worked closely with leaders in Arizona.

"Its assistance came from the top: Arizona Gov. Doug Ducey wholeheartedly adopted Theranos's claims and pressed to change the law for Theranos to do business," the lawsuit states.

Ducey met with reporters May 26 to answer questions on a range of topics, and he didn't answer directly the question of whether it was a mistake to change the law.

He said Arizona is moving up in Chief Executive magazine's list of the best states to do business.

"You can see we're doing the things that have companies moving here, making investments here," Ducey said, allowing only that "there are going to be companies that do well and there are going to be companies that have issues."

Carey said Ducey wasn't wrong for signing the legislation, but he was wrong to hold out Theranos as an example of the advantages to consumers given that the governor could have learned that the company didn't have the technology promised to provide reliable test results.

The complaint alleges Theranos "creates the impression that it is providing consumers with the most advanced, accurate, least invasive, and highest quality testing available in the market," but has kept it a secret that its labs are negligently maintained and operated, that the company doesn't follow proper procedures, and it doesn't make good on its promises to consumers.

The plaintiff, Casey Jones, visited a Theranos Wellness Center at a Phoenix Walgreens in September 2015 because he had heard all the publicity about it and on the recommendation of his doctor.

He paid $77.70 and was given a conventional blood test, which was much different than what he was expecting.

After his visit he read that Theranos technology doesn't work and has serious quality control problems with its labs.

"Because of the reported issues with Theranos, Mr. Jones has serious concerns about the lab results he received, including the reliability and accuracy of the tests," the lawsuit said.

Forbes based its new lower estimate of Holmes' wealth on the fact there have been many questions raised about the accuracy of its testing and the company's secrecy surrounding its technology and the data to support its accuracy.

The publication also stressed that Theranos hasn't delivered on promises it would present data reflecting its accuracy, and there are questions about whether a market actually exists for its testing.

Published: Wed, Jun 08, 2016