Review: The Dropout

Hulu's limited TV series on Elizabeth Holmes shows how regulators failed to catch massive, dangerous medical fraud.

Elizabeth Holmes, founder of the disgraced medical tech company Theranos, was once seen as the embodiment of Silicon Valley. In some sense, she still is, although for dramatically different reasons.

Hulu's limited TV series The Dropout tells Holmes' story over a decade, from her career's humble start in a run-down office building where gunshots flew nearby to a palatial headquarters when the company's valuation was hitting $9 billion. Theranos sold a blood-testing technology that, according to its own hype, would revolutionize preventive medicine by scanning for a litany of potential diseases in a tiny draw of blood. It won Holmes glowing profiles in major media outlets and forged a corporate board that included former Secretary of State George Shultz.

What started off looking like a Silicon Valley success story did not end that way. We see the operation slowly and then rapidly unravel, as some workers within the company become disenchanted with the broken blood-testing machines and error-ridden diagnoses. (Those included, among other mistakes, a customer receiving a false positive for HIV.) As the company begins its descent, so too does Holmes, played with an unnerving intensity by Amanda Seyfried, who nails her subtle, wide-eyed ferocity and characteristic baritone voice.

It wasn't eagle-eyed regulators who caught the fraud. It was those disenchanted employees, followed by journalist John Carreyrou of The Wall Street Journal. The Food and Drug Administration isn't known for throwing caution to the wind—Americans have just watched its foot-dragging bureaucrats block access to lifesaving treatments in the age of COVID-19. Yet for more than 10 years, it somehow failed to spot the fraud at the heart of Theranos.

Comments

[Alan Vanneman]

Uh, this is a pretty massive misreading of the series. Watch it and you'll see. It was the feds who nailed Elizabeth Holmes, who fooled "the market" for years, building a multi-billion dollar empire on hot air. Watch the series, which is excellent, and you'll see. Or read "Bad Blood", the book by the WSJ reporter who broke the story.

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

The FDA and the market BOTH took 10 years to uncover the fraud, and that was only due to a whistleblower. Meanwhile, the FDA was the one tasked by Congress with supervising such companies, supposedly monitoring them with the intent of looking for fraud, mistakes, and incompetence, and with the full snoopy power of the State behind it.

The market sure didn't cover itself in glory, but the FDA covered itself in its own shit. Only a statist would chalk that up as an FDA win.

Fuck off, slaver.

[Brandybuck]

You are correct. It was the grunt employees who did them in. People who refused to be a part of the big lie.

If it were just a website they would have just left. But this was a medical company. Whistle blowing is a moral duty. So one blows the whistle. What is sad is that it took so long.

As for the FDA, fuck them. They care about signatures on pieces of paper. The FDA does not do any testing. Audits are random and only check for signatures on pieces of papers. They do insist that particular forms and documents be signed, but so long as they are that's it. The FDA doesn't actually do anything of substance UNTIL something happens. Like a death. Or a whistle blower.

They idea that the FDA has medical technologists examining the technology claims of a company is naive. They have no such thing. They do want to see safety and efficacy studies, but it's NOT the FDA who conducts them. They are bureaucratic regulators, nothing more.

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

I did not realize how much the FDA depends on companies reporting on themselves correctly -- always assumed in the back of my mind that they must do some actually technical snooping at some point. But it makes sense, in a bureaucratic way: all they want to do is force you to lie so they can charge you with the easily-proved lie instead of having to get technical in front of a bored jury. Like the FBI. Government modus operandi writ large.

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[Overt]

To be fair it didn't take anybody "Ten years" to figure anything out.

As with any tech startup, there is a euphoric phase with lots of movement, experiments, failures and successes. And as with many startups, Theranos started to come upon technical hurdles that made their business case less and less viable.

And like some few startups, Theranos refused to give in and its leaders were constantly skating the line between smoke and mirrors and outride fraud. They increasingly erred towards the latter. Until it was clear to many in the company that they weren't just exaggerating how far along in the science they were, but they were outright lying about the science and what they were accomplishing.

Expecting the market to know up front that speculative science isn't going to pan out is silly. Indeed, one of the things we have found is that if you want to cause a market to under-appreciate risk, get a bunch of government entities to stamp seals of approval on them. (c.f. SEC, Fannie Mae, etc)

[Brandybuck]

Being in the medical technology industry, in the heart of Silicon Valley, I remain baffled how Theranos managed such a scam for so long. But at the same time, not baffled at all. It happened because a shyster was running the show.

The medical industry is extremely regulated, but it's all about checking signatures on documents. Audits all all about checking the signatures. If something real is found then heads will roll, but until them a good shyster can get away with a lot.

It did not help that all be big names were in her camp, including former President Clinton.

Note that the FDA didn't take this bitch down, her employees did. The real regulation comes from people who do the right thing. My fear is that they are becoming rare.

The only baffling bit I'm left with is how she thought she could get away with it. My assumption is that she found herself in over her head and was too afraid to turn around.

[Á àß äẞç ãþÇđ âÞ¢Đæ ǎB€Ðëf ảhf]

I worked at a company which adopted ISO-9000 in the early 1990s. As I understood it them, it was a very simple system: you write down what you do, and auditors come in once or twice a year to verify that you do what you have written down. They don't care one whit whether your processes are useful or not; your ISO-9000 written procedures are available for potential customers and the public at large to inspect, and if they think the procedures are useful, they rely on the auditors to uncover fraud.

I really liked the premise, assuming I did understand it correctly as "say what you do, and do what you say, as verified by auditors". The flaw in the execution at that company was that management didn't care about that basic premise, had several weeks advance notice of audits, and always ran around in a panic just before each audit. But change those audits to unannounced, or just one day's notice, and it seems to me like a very good system, far better than bullshit like government inspections.

[Brandybuck]

FDA has basically the same thing. The provide you with a basic development process, but the main thing is that you document that you are doing what you say you are doing. Various bits and pieces have to be there, of course but the definitions are loose enough to drive trucks through.

[Overt]

"The only baffling bit I'm left with is how she thought she could get away with it. My assumption is that she found herself in over her head and was too afraid to turn around."

It was awhile ago when I read the news story that would eventually become the book. But my understanding is that they were convinced (at first at least) that they just needed to buy more time for their technology to be ready. So that started with exagerating their results. And then it was buying a competitor's machine "as a testing baseline" and using it to actually do the lab work. And using the machine incorrectly to get the throughput they promised.

I've worked with these types of people before. They "Fake it until they make it." They are the types that will declare success when they put out a slick working (but highly scripted) demo, and fix the warts behind the scenes. This whole "Day Zero Patching" ethos comes from this idea that you hit milestones of success and fix things behind the scenes.

The problem for these guys was that they couldn't fake it long enough to make it. Eventually it was clear to the employees that they weren't just buying time, they were putting off the end days and they went from exaggeration to outright fraud. It was Breaking Bad in the corporate world.

[This Is The Zodiac Speaking]

If only you and your omniscience had only kicked the door in, the entire rotten edifice would have crumbled down.

If you really are in the medical technology industry as anything more than a custodian, it's very easy to understand why Theranos lasted as long as it did.

[Unicorn Abattoir]

Elizabeth Holmes, founder of the disgraced medical tech company Theranos

She was stopped before she could kill off half of the universe.

[Dillinger]

seyfried is underrated as an actress.

[This Is The Zodiac Speaking]

I'd love to vulcanize my whoopee stick in her squish mitten