Theranos, Cleveland Clinic Enter Into Strategic Relationship

Theranos, the California-based company whose revolutionary method for collecting blood for specimens has so far been confined to a handful of retail clinics in Arizona and California, inked its fi big deal with a major provider earlier this month. The pact with the Cleveland Clinic includes having the big Midwestern health system run trials toward using the Theranos system for its own laboratory services as well as expanding the nascent lab’s relatively small test menu. Cleveland Clinic officials said the agreement, which they described as a strategic alliance, came as a result of top-level negotiations between the health care system’s CEO, Toby Cosgrove, M.D., and Theranos CEO Elizabeth Holmes. “Health care innovation is essential to making care more accessible, affordable and timely for patients. This relationship could open up new opportunities for both patients and physicians to be part of high-quality, low-cost healthcare,” Cosgrove said in a statement. “We’re excited to begin exploring new initiatives that can offer improved care for our patient’s health care dollar.” Theranos’s blood collection system does not require any needles. Blood is drawn through the capillaries in the fingertips of patients using a nearly microscopic lancet. The company requires only a few drops of blood to perform a wide variety of tests. Theranos’ test menu is also priced at about 50 percent below Medicare rates, with assays such as a lipid panel costing less than $3. The company was founded by Holmes as a teenager when she dropped out of Stanford University. Holmes and Theranos were the subject of a lengthy New Yorker magazine profile last year. Her firm was recently valued by Forbes magazine at $9 billion. Until the Cleveland Clinic deal, Theranos’s primary business relationship had been with the consumer drugstore chain Walgreens, where it provided testing services in 40 locations in the Phoenix area and one in California near its Palo Alto headquarters. This new alliance suggests the company may play a major role in revamping laboratory technology at major clinical providers throughout the U.S. “This alliance with a world-renowned health system like Cleveland Clinic furthers our mission, and is another step in our work to bring access to high-quality, affordable lab testing to everyone and help improve the quality and cost of care,” Holmes said in a statement. The full scope of the relationship between Theranos and the Cleveland Clinic will be developed in a series of incremental steps, according to Kandice Kottke-Marchant, M.D., who heads Cleveland Clinic’s Pathology and Laboratory Medicine Institute. The first step will be to scrutinize the compatibility of the Theranos technology through a series of clinical studies that will involve specific Cleveland Clinic patients, Kottke-Marchant said. Those studies are still in the development stage, although she added that they would likely focus on fairly routine chemistry and hematology tests, with draws and testing performed using Theranos’s equipment. The resulting data might also be published in peer-reviewed journals. “As an academic institution, we’d like to have that published,” Kottke-Marchant said. In addition to that facet of the agreement, the Cleveland Clinic’s pathologists will also perform interpretive testing on behalf of Theranos patients. “Since they only do a subset of tests, Theranos will seek to utilize our reference lab,” Kottke-Marchant said. Currently, Theranos’s test menu has about 250 assays, compared to more than 1,200 performed by the Cleveland Clinic, according to Kottke-Marchant. Kottke-Marchant declined to disclose the financial terms of the relationship. Theranos, which has a reputation for secrecy, did not respond to a request seeking comment. Takeaway: Theranos has entered into its first significant agreement with a clinical institution regarding the use of its draw and testing technologies.