Walgreens didn't check out blood-testing firm Theranos' technology like it should have, the Wall Street Journal reports.
When Walgreens was first considering its partnership with Theranos in 2011 — a partnership that the Journal writes is now in "tatters" — the pharmacy chain enlisted researchers at Johns Hopkins University to test Theranos' Edison platform. However, the Journal notes that those tests never took place, as Theranos never sent a machine to the Hopkins lab. The lab did acquire a prototype, but was unable to compare its "low" or "high" results to the numbers testing generally provides.
Then in 2012, Walgreens sent two executives along with Paul Rust, a retired executive from Quest Diagnostics, to review quality control at Theranos. Rust tells the Journal that "it was a very strange situation." While the results he saw were good, he "was never allowed to go into the lab. I have no idea [whether] the results I saw were run on the Edison devices or not." He adds that he later learned that the Walgreens executives also didn't go in the lab.
Other efforts by Walgreens to check out Theranos' operations were similar, the WSJ adds. It moved forward, however, with the partnership as its worries were eased by Safeway's interest in Theranos as well as its CLIA certification.
The Wall Street Journal writes that Walgreens was interested in Theranos' technology because it envisioned its use right in their stores. Eventually, the two signed a deal allowing Theranos wellness centers in Walgreens stores. Forty such centers are in California and Arizona.
As the Journal notes, Walgreens has since threatened to terminate its agreement with Theranos as the blood-testing firm grapples with a federal inspection of its California lab that uncovered serious problems and as reports have surfaced indicating that the testing firm rarely uses its Edison device and have raised doubts about its testing process. In addition, the company is facing criminal and civil investigations, and a Theranos customer filed a lawsuit this week that seeks class-action status that alleges that the company defrauded him by claiming it could accurately conduct lab tests using a small amount of blood, the Verge reports. Theranos recently voided some of its results and issued tens of thousands of corrected reports.
Walgreens hasn't made good on its threat, the Journal says, because it is wary of being sued for breach of contract.
"We value our partnership with Walgreens and look forward to continuing to work together, " Theranos spokeswoman Brooke Buchanan tells the Journal. Walgreens declined to comment to the Journal.
The Journal adds that the most recent blow to the Walgreens-Theranos partnership came last month when the drugstore chain's executives learned from news reports that federal regulators had, a few weeks earlier, proposed banning Theranos CEO Elizabeth Holmes from owning or operating a lab. The Walgreens team also didn't learn that Theranos was voiding its Edison results until that too was reported in the media, according to the Journal.