Theranos and the Paradigm Shift in Communications
January 4, 2022
I began my PR career at a pivotal moment. After graduating from Yeshiva University with a degree in Public Relations and Communications in 2016, I found myself acclimating to firm life, working on what would quickly become my passion – healthcare and pharmaceutical communications. Just 10 months later, John Carreyrou, investigative reporter at the Wall Street Journal, made headlines with his second feature story on Elizabeth Holmes and the Silicon Valley unicorn, Theranos.
Carreyrou called into question Theranos’ ‘novel’ Edison device and flagged fraudulent activity among its executive team. As a result, my clients in the diagnostics space started being asked in interviews, “How are you different from Theranos?” Since then, I’ve immersed myself in understanding the house of cards that once was Theranos, following the story through a PR lens.
On the most foundational level, the United States versus Elizabeth Holmes trial highlights the fate of companies that focus on the dollar sign and not the patient. Elizabeth’s deceit cost lives, investment money and, perhaps most terrifying, time that patients did not have.
On January 3, 2021, Elizabeth Holmes was found guilty of one count of conspiracy to defraud investors, as well as three wire fraud counts tied to specific investors. She faces up to 20 years in prison and a fine of $250,000, plus restitution, for each count.
As a communications professional, the rise and fall of Theranos is more than a cautionary tale. It highlights the responsibility of communicators. While Theranos is not representative of the diagnostics industry, the scandal shed a light on the need for transparent and honest communication to help patients make informed health decisions. Since 2015, we’ve seen a shift in how healthcare and pharmaceutical companies communicate with their audiences, leading with more transparency, integrity and honesty.
- Corporate Communications: From the founding of Theranos, Elizabeth poured money into PR before she even had a working product. Theranos’ website, advertisements, and investor decks cited unsubstantiated claims that had little-to-no scientific backing. Since then, companies have put a greater emphasis on demonstrating clinical efficacy while staying away from making sweeping statements about their potential impact.
- Media Communications: Theranos gave reporters yet another example of the value of skepticism. The most well-known major cover story – among many – about Elizabeth was “This CEO is out for blood,” written by Roger Parloff, a Fortune Magazine reporter. Parloff spent a lot of time with Elizabeth when penning his story and was swept up in her lies. His testimony in court was compelling, his recordings and notes provided irrefutable evidence. Elizabeth used the Fortune spotlight to mislead the public as some kind of proof for her claims and misleading statements that she later shared with investors once the article was published. A year later, Parloff penned another article, “How Theranos Misled Me.” Journalists have a duty to share the truth and Theranos gave them a stark reminder of how cautious they must be – even when speaking with a lauded CEO.
- Medical Communications: Theranos’ messaging across its website, investor presentations and study data were riddled with misleading language and outlandish claims. The consequences of her actions misled doctors and patients, challenging companies in the healthcare space to be even more vigilant about the way they communicate clinical data and boosting the importance of running all corporate messaging through rigorous MLR review processes.
- Investor Communications: Holmes used her investor calls to hint at partnerships with the Department of Defense, suggest the Edison could perform 200 tests, and imply that Edison was validated by the ten largest pharmaceutical companies in the world. Theranos investors learned a tough lesson and will likely approach up and coming startups with a healthy measure of cynicism.
- Board Communications: The Theranos board of directors was taken to task for not guiding Elizabeth through Theranos’ growth. However, aside from the lone medical professional who switched to politics before joining Theranos’ board, its members consisted mainly of former politicians and high-ranking military members. Without medical experience, Theranos’ high profile and impressive board lacked scientific chops and were duped along with the rest of the world. As members of a medical advisory board offer credibility and guidance, it is vital to share such selections with patients and investors, as it demonstrates measures taken to ensure patient safety and financial success.
The stunning downfall of the former tech icon is a wake-up call to all those who communicate on behalf of the healthcare and pharmaceutical ecosystem. As medicine continues to burst with innovation, we not only have an opportunity – but a responsibility – to communicate openly with patients, doctors, healthcare providers, partners and investors.