Theranos Scandal
Theranos Scandal
Introduction
Theranos was Health care company founded in 2003 in the USA. It was one of the most popular company in the USA which was in Silicon Valley, USA. Edison was the device that was invented by Theranos company. It was claimed that it can perform hundreds of tests without any lengthy time and effort and cost will be also be minimized. The CEO of the company was Elizabeth Holmes whose personality collected a good amount of investment and a very strong and popular board of members and investor that is why many investors blindly believe in the company. But later on, it was found that it was a fraud, Holmes faked doctor, patient, investor and board member. We will be discussing Theranos Scandal.
Theranos, the health care company was founded in 2003 by 19-years-old Elizabeth Holmes. Earlier the name of company was Real Time Cures but later Theranos name was given this word was combination of 2 English word they are therapy and diagnosis. Holmes was born in 1984 in Washington. This company first focus on developing a simple and effective method for blood diagnosis. Elizabeth share his idea about the device to the professor but they do not believe in her they said it is not possible and it is against the law of physics and science and she decided to dropped out of a Stanford and began raising millions of dollars in funding. The company claimed that its technology could offer over 100 of tests from just some drops of blood pricked from the finger, and the result of test can be directly sent to the patient’s phone in hours, and the cost of the test will be less and time required for testing will be little.Her hunger for success in the medical field was inspired by her grandfather, Dr. Christian Rasmus Holmes who has established University of Cincinnati and General hospital.
She convinces, some professor of the Sandford university joined in her project and start developing the device. She convinced other person for investing who does not have knowledge about the medical science like owner of software company Oracle, and other political as well as security personal and some other popular rich person, that is why all the investor trusted her blindly and invest huge amount of money in the company. She collected about 6 million dollars for the company in no time. The device was made ready and the name of the device was given Edison. The name Edison was given because Thomas alba Edison the great scientist who have invented lots of device also have to failed many times before being success also have to face many failures for his invention. She did not share anything about the device showing trade secret. The company grow large in such a way that, she become the self-made world young woman billionaire. She has claimed that this device is revolutionary blood analyzer that will help to get the results without lengthy process, this device will search for numerous health indicator, medication and hormone and even cancer sign. Her company once have the value of 9 billion which turns to zero in in a couple of year.
She did not share anything about the device to the board member and employee, showing trade secret. Her board member was strong because many popular rich person-like united states Secretary of State and other trustful person. So, many investors like to invest in the company and believe the company. The company was also in the prime location. She was born in well connected family with a rich family so, it was easy for her to collect investment. Theranos company has valued for 9 billion US dollars. She was so popular in the US. Barack Obama the president of USA made Elizabeth Holmes the US ambassador for global entrepreneurship and added to the board of fellows at Harvard Medical School.
Holmes fired employee for questioning the company’s reliability and honestly. She has fired many workers of the company who raise voice against the process and raised question against her. So, many workers resigned. She wants to be next Steve Jobs she, has copied many activities of Steve jobs she even has hired the apple’s head of software, Avie Tevanian. He has also resigned from the company after one year. She was in the peak all the popular news media like Time, Glamour, Forbes, CNBC, CNN has cover her. Some people found that Edison device does not work properly as claimed by the company and they took these details to the popular journalist, John Carreyrou of the Wall Street Journal. John began investigating countless sources and former employee come out to share their old experience, they anonymously provided information about the Edison machine. Therano, found that people are going against them so, they attack everyone who was going against them, they used their power of money to sue who are going against them, they even tried to close the case to the wall street journal but they refused. They have even hired private investigators to stalk anyone they suspected.
In October 15, 20015 news was pressed in the wall street journal regarding the Theranos machine. People as well as board of member start questioning but Elizabeth Holmes defended. Later U.S food and Drug administration gave surprise result of Theranos, in investigation it was found that Edison blood testing machine only could perform 12 out of 240 tests those results were also not accurate. Criminal investigation starts against them and they were found guilty, Elizabeth Holmes paid 4.5 million to Arizona state. It is believed that they have voided nearly a million lab results Theranos was dissolved in September 2018.
1.Legal issue
Elizabeth Holmes has intentionally fraud the board of member, patient and citizen. The machine which was claimed to perform more than 240 blood tests could perform only 12 of them. We are going to discuss legal issue below:
1.1 Legal action
The Securities and exchange commission said company founder Holmes must return millions of shares to the privately held company, and pay a five hundred thousand fine and even cannot serve as an officer or director of a public company for 10 years. Famous company Walgreens also appleade Theranos for $140 million, hoping to recoup some of its investments in the company in the wake of their disastrous partnership. But in February 12,2020 US judge drops some charges against Holmes.Although some charges were dismissed, but wire fraud charges were let stands.
1.2 Wire fraud
Mail fraud Wire fraud are federal crimes in the unites states that involve mailing or electronically transmitting something associated with fraud. The indictment alleges that Holmes and Balwani defrauded doctors and patient. Theranos was electronic device that is operated with the help of electricity and that can transmit data from one device to another device. Holmes and Balwani were indicted in June 2018 with two counts of conspiracy to commit wire fraud and nine counts of wire fraud.
1.3 What Elizabeth Holmes did wrong?
Holmes claimed that Theranos machine could perform around 240 test, but it was later found that it could only test 12. It was claimed that Theranos was only using their own equipment to perform blooad testing but it used third-party machine for most of the test. Likewise, it was claimed that certain pharmaceutical companies had endorsed Theranos’s technology but Theranos was not used by the pharmaceutical company. It was also claimed that Theranos machine are used in military, battlefield but they were actually not used in military. It was claimed that Theranos company was growing by utilizing the revenue from the existing contracts but the company was growing by collecting cash from the investors.
1.4 Food and Drug Administration Report
The FDA of USA release two partially redacted from 483 reports on ongoing investigation into Theranos, stating that the company of Elizabeth’s Theranos company used uncleared and unsuitable medical devices to run its blood tests. . It was found that only 12 tests can be performed from the Theranos medicine and the results of those 12 were also not accurate.
1.5 Final court Decision
The final decision of court is yet to come, it is said that due to corona virus it will be delayed. The federal judge presiding over the criminal trial of Holmes, has ruled that proceeding will be delayed until October. As I have already mentioned in above that some charges were dismissed in the February.
2. Social Issue
Issue that has been recognized by society as a problem that is preventing society from functioning at an optimum level or in normal word, we can say social issue is a problem that influences many citizens within a society. Theranos scandal causes a lot of social issues and problem we are going to discuss below: -
2.1 Impact on society
Theranos device claimed that their device can give the result of more than 240 test and even can predict the deadly disease like cancer. But later it was found that it could perform only 12 tests only out of 240 test they have claimed. And it was founded later that they have voided more than million lab reports of the general citizen. Blood test are done for very serious issue like selecting the dosage for medicine, diagnosis it is believed that 70% of diagnosis is done according to the medical lab report. But Theranos was providing inaccurate result, because many of the people have to face problem and their health condition degrade. It is also believed that the people due to this scandal starts doubting on medical process that uses modern information technology.
2.2 Morality
Human being is a social animal he/she cannot live without society. And human can distinguish between wright and wrong. Being a citizen of a country using the fundamental right and facility given by the country we should show good moral character towards the country. But Elizabeth Holmes was morally wrong because she has fraud knowingly to her board members, investor and other citizen who uses her product. Good Health care service is fundamental right of people. But Theranos device was giving inaccurate result which may have hamper or degrade the health condition of the people.
2.3 Cheated Investor
Elizabeth was from well-connected rich family. So, it was not difficult for her to collect the initial fund for the project she became successful to collect laager amount of fund in no time. Her board of members and investors were popular rich person and well known person of the USA, but they don’t have knowledge about the Medical field. So, other investor also blindly belief her and invested large amount of money, she lied board member and investor by claiming that company is collecting good revenue from the product. The company was once got the value of 9 billion US dollar. But the company have not made good amount of profit from its product, all the money were from the investor.
2.4 Trust issue.
Theranos was the popular company in the USA, Silicon Valley with 800 employees working together in a world class office. Investor were so excited because of lots of popular and rich person were in the board of member. So it was easy for company to collect the investment from the people. Due to high demand, the company was once valued to 9 billion US dollar, but later on when the company was found to be cheating investor, member, doctor and patient the company value started degrading and the company once valued of 9 billion US dollar becomes 0 and tarhanas was dissolved in September2018. This incident demotivated the investor and made them to think 100 times before investing in company or organization.
2.5 False advertisement
Theranos technology used false advertisement to attract the user and the investor. Founder and CEO of company has lied many things to seek the attraction of people, doctor and investor. She has said that this Theranos device is used in military field but actually it was not used in the military field. Theranos device can only perform 12, it was claimed that it will perform more than 240 types of blood test. All they collect lots of funds and investment with the help of false advertisement.
3. Ethical Issues
A problem or situation that requires a person or organization to choose between alternatives that must be evaluated as ethical or unethical. It occurs when a given decision, scenario or activity creates a conflict with a society’s moral principal.
3.1 Deontological
Deontological is an ethical theory that uses rules to distinguish right and wrong. Immanuel Kant has founded this theory. He argued it is always to lie. In any condition you should not lie, Kant believed that ethical actions follow universal moral laws, such as “Don’t lie. Don’t steal. Don’t cheat.”. But Elizabeth Holmes does not follow this theory or approach because she has lied to the patient, doctor, board member and investor. She goes against the law of the country an her owns ethics.
3.2 Utilitarianism
John Stuart Mill is founder of utilitarianism, utilitarianism explain that “the choice that yields the greatest benefit to the most people is the one that is ethically correct”. The key purpose is to increases happiness or utility. There are two types of utilitarianism, 1). Act utilitarianism 2). Rule utilitarianism. Elizabeth Holmes activities are found against this utilitarianism approach because she only wants to be rich, what she need is to be happy. She does not care about others. She lied to the investor, board of member, and consumer and collected the fund to be rich.
3.3 Moral-Rights Approach
The moral-rights approach asserts that Person or human-being have fundamental rights and liberties that cannot be taken away by an individual’s decision.Right to health and Right to health care service is the fundamental right of the person, which cannot be taken away by the individual if he/she tries to take away he/she will be punished according to law. Elizabeth violated the fundamental right of human. The machine claimed to perform 240 tests was fake and only could perform and the result of 12 tests also not perfect as expected. We can say that she is against the Moral-rights approach.
3.4 Fairness or Justice Approach
The fairness or justice approach assumes that people should be treated equally regardless of their station in life, they should not be subject to discrimination. Elizabeth Holmes was against this approach because she has fired many employees who raise a small question against her, she has fired many employees in a small reason which is not fair and ethical according to this approach.
3.5 Common Good Approach
The common good approach suggest that ethical actions are those that benefit all member of the community .She is found against this approach also because ger intension was not to work for the favor of the society and community. She has a hunger of being rich, she wants to be reach and has guts to do anu thing for being successful. She has fraud her own company board members, investors and the user of the machine. She even do not care about the bad impacts that will cause to the human health.
4. Professionals issues
Profession is a type of a job or work that requires advanced education or training. A topic or problem for discussion arises due to professional practice is known as professional issues. We are going to discuss on different professional issue arise due to scandal of Theranos and they are as follows: -
A professional Ethics includes Relationships with and responsibilities toward Customers, client, co-workers, Employees, Employers, other who use one’s product and services, and other whom they affect.
4.1 Professional Ethics violate:
A professional Ethics includes Relationships with and responsibilities toward Customers, client, co-workers, Employees, Employers, other who use one’s product and services, and other whom they affect. But Elizabeth did not follow the professional ethics and go against the professional ethics.
4.2. Violation of Code of Conducts:
American Medical Association have formulated the code of conducts, which are in the favor of the doctor, patient and citizen. But the Elizabeth and her company has violated the code of conduct regulated by the American Medical Association (AMA). There is no any evidence that they have followed the code of conduct of the American Medical Association. They have fraud patient, doctor by claiming that their device Theranos perform 240 blood test, but later found that their device only could perform 12 tests. Theranos also violated the IT professional Code of Conduct.
4.3. Action against the employees.
Theranos was one of the most popular company in the Silicon Valley, the company have about 800 workers in their world class office, but if they raise voice against the company and the product of the company they will be fired from the office. Elizabeth force employees to Sign confidentiality contract before and after leaving the company. So they could not take action against the company and CEO. Such activities of Elizabeth were no legal and ethical, but she doesn’t care about ethics she all wanted to be popular and rich.
4.4. Duty to the profession
If you do or perform profession, you should be obedient and work for the shake of the company and other employee member. You should perform good activities that will promote positivity among the employee and the company. You should encourage and support fellow members in their professionals, you should accept your personal duty to uphold the reputation of the profession and not take any action which could bring the profession into disrepute. But the Elizabeth never work for the shake of employee she forced other employee to go against the ethics and code of conduct if the employee raise question in anything, she will remove employee from the company. Many employees were forced to violate the ethics and code of conduct.
4.5. Ethical obligation
Ethical obligation are a set of “ought to” standards that define a moral course of action and draw a line between right and wrong . As we know that Elizabeth Holmes is against the law, ethics and code of conduct. Being the citizen of country using the right and service provided by the country citizen should work for the shake of the country and people. But Elizabeth Holmes intentionally faked the board of member, employees and citizen of the country. She could even distinguish between the wright and wrong but selfishness and hunger of being rich bring her to this stage.