Patients pile lawsuits on Theranos as Walgreen’s laments not vetting tests

Two suits seeking class-action status filed by patients who say they got scammed.

Beth Mole – May 26, 2016 5:58 pm | 96

Theranos CEO and founder Elizabeth Holmes. Credit: Max Morse for TechCrunch

Amid the looming possibility of federal sanctions and criminal charges, Theranos is now facing two lawsuits by patients who say they were duped into using the company’s blood testing services. Apparently, Walgreens also feels hoodwinked.

The pharmacy chain, which signed a blood testing deal with Theranos back in 2013, failed to vet claims about the company’s proprietary testing devices prior to getting into bed with the unproven startup, according to a report in The Wall Street Journal.

Walgreens made moves to try to get out of the deal after quality and accuracy problems at Theranos came to light last October. But, fearing breach-of-contract litigation that could open the door to Theranos getting billions in damages, Walgreens has yet to nix the partnership. They have, however, shelved plans to expand Theranos testing in Walgreens pharmacies. Currently, Theranos runs 45 “wellness centers” in Arizona and California, including 40 in Walgreens stores.

Prior to signing the deal, Walgreens executives and consultants made several attempts to look over Theranos’ shoulder and check that its famed Edison blood testing devices worked as the company said. Theranos initially claimed the machines could run more than 200 tests with just a few drops of blood. However, Theranos failed to hand over an Edison to researchers hired by Walgreens to kick the tires and ensure it worked correctly, despite initially agreeing to do so. The young company, initially valued at $9 billion, didn’t even allow Walgreens executives to enter its lab or walk around the company’s headquarters without a chaperone, the WSJ reports.

Theranos did provide an Edison prototype and sample testing kits to a Walgreens executive. But the machine only spit out test results such as “low” and “high” so that Walgreens couldn’t compare the results to standard blood testing equipment. Nevertheless, Walgreens moved forward with a deal, partly out of anxiety that Theranos might partner with a competitor.

From media coverage and reports from federal regulators, it is now clear that Edison devices were only ever used to run 12 tests and that they were inaccurate and unreliable. The company recently voided two year’s worth of Edison test results and corrected tens of thousands of others in a bid to dodge sanctions from federal regulators.

Those broken promises and the risks they posed to patient health spurred two Theranos patients to file lawsuits against the company Wednesday and Thursday, respectively. Both suits were filed in Northern California and seek class-action status, arguing that the company misrepresented the quality and accuracy of its tests.

In an e-mail to reporters, a Theranos spokesperson wrote that the lawsuits are “without merit” and that “the company will vigorously defend itself against these claims.”