An HBO Documentary about the Theranos Fraud Raises Concerns

Elizabeth Holmes founded Theranos to develop a device that could do 200 tests on a single drop of blood in a minute. She lied; it failed; she is being tried for fraud and conspiracy. The HBO documentary The Inventor tells the story but has some flaws. We can learn lessons from what happened.


Alex Gibney’s film The Inventor: Out for Blood in Silicon Valley first aired on HBO on March 18, 2019. It is an expertly done portrayal of Elizabeth Holmes’ incredibly successful rise and catastrophic downfall. Holmes had a dream: she wanted to revolutionize the world of medicine by enabling patients to bypass doctors, order their own blood tests, and avoid venipunctures. She founded the company Theranos to develop a machine called the Edison that could do 200 blood tests on a single drop of blood from a fingerstick. She thought it would save lives. After she became the world’s youngest self-made female billionaire, the fraud was exposed: the machine did not work and couldn’t possibly work. The company folded and Holmes and the company president (her colleague/lover Ramesh “Sunny” Balwani) were indicted for multiple counts of wire fraud and conspiracy. The trial is in progress; they are out on a half-million-dollar bail. They pleaded not guilty; if convicted, they will face up to 20 years in prison.

There were a couple of things wrong with the movie, but far more was wrong at Theranos. It’s a cautionary tale that has many lessons to teach us.

Elizabeth’s story

The story almost beggars belief. Elizabeth Holmes was a Stanford engineering student with no background in science or medicine who dropped out of school at age 19 to found a blood-testing company. Young, attractive, charismatic, enthusiastic, and articulate, she was easily able to enlist prominent people as board members and financial backers, including Henry Kissinger, Betsy DeVos, George Shultz, James Mattis, Carlos Slim, and the Waltons. Rupert Murdoch put up $125 million. She got an incredible amount of favorable media exposure, was revered as a genius, won awards, became a billionaire, and used bulletproof glass, private planes, and bodyguards. When the lies were exposed, her net worth went from $9 billion to zero practically overnight.

Lies, distortions, and secrecy

Theranos criticized the establishment. “We’re going against an entire system that doesn’t believe prevention is possible.” They attacked a competitor, Quest Diagnostics, saying “Their entire product strategy is lies, built around getting people sick and then living off their diseases.” They claimed to have government contracts that never existed.

The one knowledgeable scientific expert in the company, Ian Gibbons, tried to tell Elizabeth the technology wasn’t working and explained the science that showed the goal of getting 200 accurate blood tests in one minute from one fingerstick was simply impossible. She didn’t listen. Faced with having to testify and either lie or betray his company by telling the truth, Gibbons committed suicide.

A culture of secrecy developed. Pieces of the device would fall off during testing, and they didn’t want anyone to see. They got inaccurate results. There was a false negative rate of 35% on their test for syphilis; out of 100 patients with syphilis, 35 would be falsely told they didn’t have it. They actually did most of the tests on commercial machines with blood samples from venipunctures, not fingersticks. When patients asked why they were getting a traditional venipuncture, they equivocated. They played games with regulators and inspectors. They had a huge celebration when the FDA finally approved ONE rarely used test for herpes to be run on the Edison device. The other 200 tests never earned approval. Only about 15 tests were ever actually run on the Edison; for all the rest, they used commercial machines.

Many employees became suspicious. Those who realized the truth and tried to report their observations were threatened with legal action. They were told they had signed non-disclosure agreements that prohibited them from revealing trade secrets or even criticizing the company. George Schultz’s grandson Tyler worked for the company and showed his grandfather clearly documented evidence of malfeasance, but his grandfather refused to believe the evidence. He believed whatever Elizabeth told him, and he ordered his grandson not to talk to reporters. Tyler was forced to resign. When the truth finally came out, George praised his grandson for his integrity, for being responsible to truth and patient safety.

Employees were spied on and prevented from communicating with each other. There were two worlds in Theranos: the carpeted world of hype about changing the world, and the tiled world that knew nothing worked and it was all a lie. Employees who questioned the size of the Edison device were accused of lacking vision and being stuck in the old ways; they were told they might be happier working elsewhere. They were asked to have faith that Theranos would eventually succeed.

Walgreens and Arizona law

They partnered with Walgreens to do the tests. They hoped that eventually everyone would be able to get their blood tests from a Walgreens within 5 miles of their home. They lobbied Arizona and got the law changed making it legal for consumers to get lab tests without a doctor’s order. They offered vouchers and gift cards. They expressed the goal that “no one will have to be stabbed by a big needle to get blood any more.”

Two flaws in the movie

The movie complements journalist John Carreyrou’s book Bad Blood: Secrets and Lies in a Silicon Valley Startup. It accurately covers the same information and the on-screen interviews and film clips give it a greater impact than print sources. It lasts two hours and its production values are excellent. But it made a couple of mistakes. Even before the film debuted, it had already been criticized on the Internet. Alaric Dearment pointed out two major flaws: it didn’t point out that life sciences venture capital was conspicuously lacking, and it chose an ND to speak for the medical community. Venture capital is often invested in risky small startup projects that seem to show great promise. Sometimes they succeed and give huge returns. But more often they fail. Not doing any homework before investing is more than risky. It is positively foolish, or just plain stupid. No one wanted to invest life science venture capital. Others should have noticed and asked why. They didn’t. They didn’t consult any knowledgeable experts. They believed a charismatic engineering student drop-out’s lies, invested their venture capital, and lost their money.

The mistake that annoyed me the most was the movie’s choice of a spokesperson for the medical community. Instead of an MD, they interviewed an ND, Stephanie Seitz. She was presented as “a physician.” She argued that physicians are needed to interpret the results of lab tests and that Theranos would not answer the kind of questions she would ask any lab. ND’s are not physicians and are not considered part of the mainstream medical community. They are only licensed in 20 states. Naturopathy schools teach pseudoscientific nonsense like homeopathy, and one ex-naturopath who is now exposing the truth calls naturopathy “essentially witchcraft“.

Doesn’t Gibney know the difference between MD and ND? When a documentary makes a serious mistake like this, it discredits the rest of their message. If you know an ND is “Not a Doctor”, how can you trust that the rest of the information in the documentary is any more accurate?

Another very basic problem

They badly needed a knowledgeable medical spokesperson. Anyone who understands screening tests knows that doing 200 blood tests at once is a terrible idea. It is not a way to detect diagnoses early and save lives; it’s a way to worry patients unnecessarily with false positive test results. Because of the way normal lab values are determined, if you do 20 tests on a normal, healthy person, you will get, on average, one abnormal result that is a false positive. So a Theranos fingerstick, even if it were accurate, would average ten false positives. Even true positives may not be worth pursuing; early treatment may do more harm than good due to various phenomena we have discussed on this blog like lead time bias, slow growing lesions that will never become symptomatic, and harmless incidentalomas. And false positives can lead to a wild goose chase with invasive testing and even death. So Elizabeth’s whole quest to revolutionize medicine was misguided.

Even her desire to avoid venipuncture is misguided, based on her personal fear of needles. I have had blood draws that were practically pain-free and finger-sticks that were much more painful, and we know some tests on fingerstick samples give less reliable results. If given a choice, I would pick venipuncture every time.

Did she deliberately commit fraud?

Elizabeth believed in herself and was able to convince a lot of very intelligent people to believe in her. She was protected for years by her political connections. She still believes you can fail 10,000 times and succeed the 10,001sttime. She remains unrepentant. She does not seem to realize that inaccurate tests can harm patients. One has to wonder what was going on in her head. Did she consciously know she was lying? Was she unconsciously reconstructing reality for self-protection? Did she believe so strongly that she was able to deceive herself and convince herself that what she wanted to be true really was true? We can never know for sure what is happening in another person’s mind, and sometimes they themselves don’t really know. This question has come up repeatedly in our discussions about alternative medicine. Does that chiropractor really believe he is repositioning bones that are out of alignment? Does that homeopath really believe that his highly dilute remedies are distinguishable from water? Does that iridologist really believe he can diagnose you by looking at your eyes? Does that quack really believe he can cure cancer? I suspect sometimes it’s a mixture of wishful thinking and self-deception rather than any conscious intention to defraud patients.

Conclusion: Theranos was a fraud, but we can learn lessons from it

Don’t invest in an area you know nothing about without getting input from experts who do know.

If the experts are skeptical, they could be wrong; but you should at least try to understand their reasons for skepticism.

Don’t put your trust in charismatic individuals; insist on trustworthy data.

If something sounds too good to be true, it probably is.

When someone makes a claim, don’t accept it without fact-checking.

Easy come, easy go.

You, too, can be fooled.

If you’re going to cheat, don’t get caught. (:-)

This article was originally published in the Science-Based Medicine BlogT

Dr. Hall is a contributing editor to both Skeptic magazine and the Skeptical Inquirer. She is a weekly contributor to the Science-Based Medicine Blog and is one of its editors. She has also contributed to Quackwatch and to a number of other respected journals and publications. She is the author of Women Aren’t Supposed to Fly: The Memoirs of a Female Flight Surgeon and co-author of the textbook, Consumer Health: A Guide to Intelligent Decisions.