When did Walgreen’s Know about the Theranos Fraud?

Walgreens advertises its address as “the corner of Happy and Healthy” and established its first Theranos Wellness Center Location in September 2013 in Palo Alto, CA. On November 13, 2013 Walgreens (WAG) announced the expansion of Theranos Wellness Centers in Phoenix, AZ. In short order, Theranos’s footprint in Walgreens expanded from one location to over 40 locations. On April 6, 2015 Arizona Governor, Doug Ducey, signed a bill, “that gives consumers there the most robust and explicit rights in the country to order any lab tests they want, without having to go through a doctor.” The April 2015 bill signing appears to be an ideal time to launch additional Theranos Wellness Centers in Walgreens locations, in Arizona as well as other States. But there was no of Theranos Wellness Centers in other Walgreens locations. Considering the lack of new Theranos locations in Walgreens, and growing skepticism by clinical laboratory scientists, I went from a Theranos believer, to a skeptic on June 28, 2015.

Theranos and its founder, Elizabeth Holmes, received gushing cover stories on Forbes, Fortune, and other magazines throughout late 2013, 2014, and up until the John Carreyrou Wall Street Journal October 23, 2015. In the middle of the Holmes “love fest” and all of this publicity and fanfare, Walgreens put the brakes on any Theranos expansions into other locations sometime in the first quarter of 2015.

In July 2007 Purdue Pharma and executives were punished for mislabeling OxyContin. Volkswagen misled consumers about emissions standards in its cars. Takata has been implicated in 10 deaths regarding malfunctioning airbags. Theranos has voided 2 years of tests and at least one patient has been sent to the ER due to false test results at a Theranos Wellness Center located in a Walgreens. Curiously, Theranos has not offered to pay for retests at another CLIA authorized laboratory, such as Quest or LabCorp. Furthermore, Walgreens has continued to stand by Theranos and its contract instead of tossing the company to the curb.

It is very possible that Walgreens hands are tied from a contractual standpoint. Theranos and Walgreens may have agreed that the contract cannot be voided unless Theranos loses its CLIA certification or a court determines that there has been fraudulent behavior. It would seem that Theranos’s own action to disregard 2 years of test results would argue in favor of Walgreens voiding the agreement. It still leaves a few open questions, especially regarding why Walgreens stopped opening Theranos Wellness Centers at the corner of “happy and healthy.”

What did Walgreens know that prevented expansion of Theranos Wellness Centers? When did Walgreen’s suspect problems with Theranos’ testing methods? Did Walgreens have an obligation to publically report concerns about Theranos to the public? Is Walgreens subject to any liability regarding Theranos?

Edward Bukstel

@ebukstel