Theranos CEO props up testing model at AHIP, targets states blocking access

Theranos Chairman, CEO and Founder Elizabeth Holmes (L) and TechCrunch Writer and Moderator Jonathan Shieber speak onstage at TechCrunch Disrupt at Pier 48 on September 8, 2014 in San Francisco, California. (Photo by Steve Jennings/Getty Images for TechCrunch via flickr)

Elizabeth Holmes, founder and CEO of Theranos, says her company’s plan to disrupt the diagnostic testing industry is moving ahead, despite skeptics’ concerns over the sustainability of the model and risks of over-testing.

Holmes, speaking at the annual America's Health Insurance Plans Institute meeting in Nashville last week, claimed direct-to-consumer laboratory testing and price transparency are an integral piece of health reform and a solution to America’s disease and cost problems.

“We have to provide direct access to testing, to facilitate a new era of individual-physician partnership around preventative care,” said Holmes, a 31-year-old self-made microbiologist and billionaire.

[Also: Cleveland Clinic taps Theranos, bets on cheaper diagnostics]

Theranos technology requires a small drop of blood from a fingertip—not a vial from a vein—to screen for hundreds of conditions, with everything limited at half of what Medicare reimburses. “Great change is possible and we can build a system that is transparent, engages consumers and embraces scientific advancement,” Holmes said.

People in Palo Alto, California, where Theranos is based, and across Arizona can order one of its tests online or in-person at a Walgreens, see the results themselves and share them with doctors. The Cleveland Clinic is also partnering with Theranos to study and possibly use the diagnostic technology in its patient services.

While over-testing is a concern, Homes said many American patients actually don’t follow through and receive tests ordered by a doctor. “Some can’t afford the tests, the locations and hours for lab testing can make tests inaccessible for those who do not have the means to take time away from work,” she said. “Today, most people have to go to an emergency room to get a lab test late at night or on a weekend. An additional barrier is fear of needles, a basic human fear.”

So far, Theranos has drawn a $9 billion valuation and a board including Bill Frist, MD, of the Hospital Corp. of America’s founding family, economist George Shultz and former Secretary of State Henry Kissinger. If Theranos goes according to Holmes’ plan, receiving blood-based health tests will be much more convenient, affordable, safe and frequent. A large swath of the current lab industry could also be put out of business.

Meanwhile, the issue of diagnostic accuracy issue ,looms over Theranos from critics in the lab industry and scientists who point out that the company hasn’t published peer reviews of its technology.

[Also: Clinical diagnostic lab testing market to almost double through 2017]

Holmes said that the Food & Drug Administration should be the ultimate scrutinizer.

“We are not required to [submit tests to the FDA] but we have made this commitment because we believe that FDA oversight plays a critical role in ensuring that individuals and their physicians get the most accurate test results.”

Barriers to the patient-consumer

While some direct-to-patient lab tests are available in many places through Theranos forerunners like Direct Labs, 20 states limit or prohibit the ability for residents to get their own lab tests, according to Holmes. Thirteen states require a physician's’ pre-authorization and 9 only allow a certain number of tests.

These are “tremendous impediments to critical, life-saving data,” Holmes said, adding that until recently people weren’t even guaranteed access to their test results.

Access to over-the-counter HIV tests has helped control the AIDS epidemic through early detection, Holmes said, and the same principle could help address diabetes, the seventh-leading contributor to death in the U.S. As many as 8 million Americans are estimated to have undiagnosed diabetes, and those adults with have a 50 percent higher risk of death, with the risk of developing cardiovascular disease and diabetes complications, Holmes said.

National model

Recently, Theranos has made a foray into public policy to help design what Holmes considers the ideal system to empower and serve patients in their health. In July, a new takes effect in Arizona that “for the first time in our country allows Arizonans to obtain and pay for any laboratory test they want without a written authorization from a healthcare provider and that provides complete indemnification for physicians around the results, so they can fully engage with their patients on preventive testing,” Holmes said.

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“This simple new law can serve as a model for our nation and is essential to the creation of modern healthcare system focused on preventative care,” she argued. "The lack of engagement of the consumer has a profound effect on the market itself: There is no pressure for prices to drop. Every person should know how much a test will cost them before that test is done."

Americans will become more attuned to the costs of testing with more direct-to-consumer testing by Theranos and others, and that “transparency will drive pricing down, reducing their healthcare costs,” Holmes said.

“Tests that were once only accessible as confirmatory tests due to costs become accessible to provide more actionable information,” she said. “Those lower costs will help Medicare, Medicaid and private payers achieve greater savings, and advances in science and technology will multiply if consumer demand fuels a market for better services at lower cost, like every other industry where the market functions.”

Twitter: @AnthonyBrino