Professional Documents
Culture Documents
Saugat Adhikari
Saugat Adhikari
Islington College
CS5052NI
Group: L2N7
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Saugat Adhikari CS5052NI
Table of Contents
1. Introduction .........................................................................................................................1
2. Background..........................................................................................................................3
5.2 Utilitarianism.............................................................................................................. 12
7. Conclusion ......................................................................................................................... 17
8. References ......................................................................................................................... 18
9. Appendix ........................................................................................................................... 21
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Table of Figures
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1. Introduction
Theranos was founded with the intention of pioneering blood science by the nineteen-year-old
Stanford chemical and electrical engineering fall-out Elizabeth Holmes. (Tun, 2019)Using a
'nanotainer' (a portable instrument designed to capture, hold and test a droplet of blood from a
patient's fingertip) and its proprietary testing technology 'Edison,' Theranos announced that the
company could conduct a multitude of tests on the anatomy of a patient in moments and at a
fractions of the expense of existing technologies (Tun, 2019). Elizabeth Holmes (born in
Washington, D.C., on February 3, 1984) was a pioneering American businesswoman and CEO of
Theranos Inc., a medical diagnostics corporation from 2003 to 2018 A.D. (Tikkanen, 2020). The
company's aim has been to revolutionize health care. Then, the organization changed its emphasis
from the goal of making a drug delivery patch to designing a clear and efficient system for blood
diagnosis (McCombs School of Business, 2018). Holmes went down from Stanford and began
collecting millions of dollars in revenue. The company believed its technology could deliver more
than 240 tests from a simple finger prick (McCombs School of Business, 2018).
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In 2014, Holmes was listed on Forbes' list of the 400 wealthiest Americans, and that year she was
named the world's youngest self-made billionaire woman (Tikkanen, 2020). Some major events
that led to Elizabeth Holmes and Theranos’ rise to the top are listed here:
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2. Background
On October 15, 2015, The Wall Street Journal wrote a scathing report critical of Theranos (Tun,
2019)Based on interviews with ex-employees, the newspaper alleged systemic misconduct in
management and claimed that Theranos had massively exaggerated the proprietary technology's
capability (Tun, 2019). John Carreyrou, a journalist for The Wall Street Journal investigated
Theranos for a daunting article. He noted that the organization did not always use its own
technology in testing and rather focused on old equipment from other companies (McCombs
School of Business, 2018). Carreyrou also discovered that the company's own highly amped blood
sampling technology was not as accurate as Holmes and the company claimed (McCombs School
of Business, 2018). One retired senior employee claimed that only a small percentage of all the
experiments were performed on the "Edison devices," and despite Theranos' statements to the
contrary, the bulk of experiments were done on rival hardware (Tun, 2019).
Some major events that occurred after the report by The Wall Street Journal leading up to
the demise of Theranos can be found here.
Finally, on March 14, 2018, The SEC has sued Theranos, its founder and CEO Elizabeth Holmes
and former Chairman Ramesh "Sunny" Balwani with massive fraud (Tun, 2019). The litigation
alleged that the firm had received more than $700 million for the company's existence by
misleading investors for years (Tun, 2019).
After intense investigation and multiple complaints, a federal grand jury indicted both Holmes and
Balwani with nine counts of wire fraud and two counts of bribery in order to commit fraud on 15
June 2018 (Tun, 2019).
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3. Legal Issues
According to the ongoing investigation carried out by Food and Drug Administration (FDA) on
October 27, 2015, the reports were less than flattering, alleging that Theranos had "uncleared
medical device(s)," inadequate paperwork, was mishandling grievances, and had neglected to
perform investigations and obtain certificates for vendors (Tun, 2019). With regard to an
undisclosed medical device, an investigator observed that "the concept was not tested under real
or simulated conditions of use." However, Theranos neglected to "ensure that the product met
identified usage specifications and expected uses” (Tun, 2019).
Detailed findings from the inspections of the labs of Theranos by FDA can be found here.
FDA can entertain a spectrum of compliance actions including sending a letter notifying the
person or firm of a breach and demanding reparation, through the person or firm's criminal
prosecution.
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By letter dated 25 January 2016, CMS published to Theranos a compilation of all the
insufficiencies noticed during the survey on Type CMS-2567, Notice of Shortcomings (Centers
for Medicare and Medicaid Services, 2016). The letter of January 25, 2016 further told the
laboratory of the severity of the defects alluded to in 42 C.F.R. § 493.1215 resulted in an imminent
danger to the health and welfare of patients and demanded that the laboratory take appropriate
measures to eliminate the threat and meet with all unmet conditions of the severity of the condition
(Centers for Medicare and Medicaid Services, 2016). On July 7, 2016, Centers for Medicare and
Medicaid Services (CMS) wrote a letter to Dr. Dhawan, Ms. Holmes and Mr. Balwani of Theranos
Inc., notifying that the laboratory of Theranos, Inc. located at 7333 Gateway Boulevard, Newark,
CA was not in compliance with Clinical Laboratory Improvement Amendments of 1998 (CLIA)
Condition-level requirements (Centers for Medicare and Medicaid Services, 2016). After these
investigations and a civil trial, finally on April 2017, Theranos settled with CMS by paying
$30,000. Furthermore, as part of the settlement, for the next two years the organization would not
be able to own or run a scientific facility (Ramsey, 2017). Io return, the CMS no longer revokes
Theranos' CLIA registration, which is required for operating a blood testing laboratory (Ramsey,
2017).
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Walgreens, which had poured a total of $140 million into Theranos, filed its own lawsuit against
the company in 2016, accusing it of failure to comply with the company's "most specific product
expectations and legal specifications” and asking for almost $140 in damages (Carreyrou, 2018).
"The underlying principle of the deal between the parties, like any public health activity, was to
benefit and not hurt customers," wrote the drugstore company in its lawsuit (Carreyrou, 2018).
Due to these allegations of breach of contract, Walgreens ended its partnership with Theranos, Inc.
in June 2016. Theranos agreed on April 18 to repay Arizona $4.65 million to compensate everyone
who has billed for taking one of the blood samples from Theranos, and to now spend $225,000 to
cover potential fines and legal costs (Ramsey, 2017). "Theranos sold about 1.5 million blood
samples to more than 175,000 Arizonans between 2013 and 2016," the attorney general said in a
press release. "Each patient must now be reimbursed the entire amount charged for the tests by the
company, irrespective of whether the findings have been voided or corrected” (Ramsey, 2017).
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On 14 March 2018, The Securities and Exchange Commission charged Theranos Inc., Silicon
Valley-based private firm, its chairman and CEO Elizabeth Holmes and former President
Ramesh "Sunny" Balwani with raising more than $700 million from investors in a deep, years-
long scheme in which they exaggerated or made false statements about the technologies,
activities and financial performance of the business (U.S. Securities and Exchange
Commission, 2018).
Detailed allegations made by SEC against Theranos, Inc. can be found here.
The SEC brought the fraudulent actions of Theranos, Inc. pursuant to Section 20(b), 20(d),
and 22(a) of the Securities Act of 1933 along with Sections 21(d), 21(e) and 27 of the
Securities Exchange Act of 1934 (Chan et al., 2018). As a result of suspected fraud by
Holmes, she is stripped of control of the business she founded, returns millions of shares to
Theranos and is prohibited to serve as an officer or director of a public company for 10 years
(U.S. Securities and Exchange Commission, 2018). Theranos and Holmes decided to dismiss
the allegations of theft levelled against them (U.S. Securities and Exchange Commission,
2018). Holmes agreed to incur a fine of $500,000, to reimburse the remaining 18.9 million
shares she obtained via the scam, and to forfeit Theranos' voting rights by transforming her
Theranos Class B Common supermajority shares into Class A Common shares. (U.S.
Securities and Exchange Commission, 2018).
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On June 15, 2018, two charges of conspiracy to commit wire fraud and nine charges of wire
fraud are charged against Elizabeth Holmes and Ramesh "Sunny" Balwani, in violation of 18
U.S.C. § 1349 and 18 U.S.C. § 1343 (United States Department of Jutice, 2020).
If charged, the defendants will receive a potential sentence of twenty (20) years in jail on each
instance of wire fraud for each count of conspiracy, and a penalty of $250,000 plus
reimbursement (United States Department of Jutice, 2020).
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4. Social Issues
Corporate Social Responsibility is at its heart in the way’s businesses handle their relationships
with community (Moon, 2014). Howard Bowen, a leading CSR researcher, described it as
'obligations ... to follow such strategies, make such choices, or undertake acts that are beneficial
in terms of our society's interests and values' (Moon, 2014). Theranos, Inc. has left little to be
desired on the field of fulfilling their Corporate Social Responsibility towards their employees,
stakeholders and society as a whole.
Due to the shortcomings of the company’s technical innovations and failing to meet the FDA/SEC
guidelines, the company came under scrutiny and was brought before the court. Any company has
a responsibility towards its stakeholders and investors to provide a genuine business plan and
possibly a profit/yield to the investors. But, in this case, the web of lies served to the investors via
false hope of revolutionizing the blood testing procedure by Elizabeth Holmes clearly shows her
lack of respect and responsibility towards the investors of the company. These decisions and
scandals that brought the company down to its knees has clearly harmed the investors and
stakeholders and resulted in loss of money on both ends.
Similarly, Theranos, Inc. assured the Department of Justice that the deployment of their company’s
technologies in Afghanistan’s battlefield and on medical army helicopters will bring almost $100
million in revenue for the Department of Justice in 2014. However, those technologies were never
deployed by the government; which clearly harmed the reputation of the government. This venture
or business proposition between Department of Justice and Theranos, Inc. showed the public the
incompetency of some of the government officials while making far-sighted decisions and not
knowing the intentions of Elizabeth Holmes. Hence, Thernos, Inc. and Elizabeth Holmes were at
fault as she deceived the government with false claims about their company’s innovations.
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Theranos had many cooperative partners such as, Safeway, Walgreen Co, Cleveland Clinic and so
on throughout its business life. But most of these partners pulled out of the deal later after
discovering unethical practices of the company and questionable results from their blood trials.
Furthermore, on June 2017, Walgreen, Co. filed a lawsuit against Thernos, Inc. for breach of
contract. These scandals and failure to meet the proposed business plan by the company clearly
harmed those cooperative partners of the company.
One lady, known as D.L., stated that the incorrect tests of Theranos suggested that she had screened
positively for an autoimmune disorder, Sjogren’s syndrome, which caused her to visit a
psychiatrist and be examined for allergies to food (Alltucker, 2018). When another research firm
examined her, her doctor concluded she didn't have the autoimmune disease (Alltucker, 2018).
The case mentioned another woman who had been identified as L.M. The thyroid syndrome known
as Hashimoto's disease was detected based on incorrect findings of the Theranos test (Alltucker,
2018). Her doctor recommended tests from some other laboratory company that showed she was
not in that circumstance (Alltucker, 2018). The initial evaluation based on flawed laboratory tests
by Theranos, Inc. was "disastrous" because it led her to change her way of living, make pointless
medical appointments and take medicines she did not need (Alltucker, 2018). Thus, the practices
of the company harmed the patients of the company and their wellbeing in the community.
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5. Ethical Issues
Theranos, Inc. was supposed to revolutionize the health and medicine industry by the blood
sampling technology which was too good to be true. Everything was on the rise for the company
and its CEO Elizabeth Holmes until, an investigation and article by John Carreyrou of The Wall
Street Journal sparked a fire that tumbled down the empire build by her.
5.1 Individualism
Ethical Individualism. In this particular scenario, there were two main points that leads toward
Individualism perspective - maximizing the profits of the company and staying on the right side
of law. Before the company was flagged down by the FDA and CLIA (Clinical Labs Improvement
Amendments), it seems as though the company and its CEO were acting with the constraints of
the law and in the eye of an individualist, it might seem as Elizabeth Holmes did the ethical thing
as she also build a massive-company that was valued at around $9 billion. However, after the
allegations of failure to meet the FDA standards, the profits started declining and the company was
valued at $0 after the scandal by Forbes. Hence, the company not only botched in maximizing
yield for the owners but also could not stay with the constraints of the law and thus, rendering their
practices unethical.
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5.2 Utilitarianism
Utilitarianism. A Utilitarian point of view reflects on the stakeholders' total satisfaction-an optimal
utilitarian organization should optimize their satisfaction. Looking at the situation in Theranos, it
is clear that the organization did not optimize any stakeholder's satisfaction. Theranos lost nearly
all of its interest, including much of the capital from the lender. We are still disappointed with their
employers, Walgreen's, Safeway, and Capital Blue Cross, because they had plans to use their apps.
Now they need to return to the old technologies that worked, which takes time. The unhappiness
persists as you remember the patients and their physicians, who had to make treatment choices
dependent on the incorrect readings of defective instruments. It's quite clear that from a utilitarian
standpoint, Theranos was hypocritical, as it seems like the company simply maximized
unhappiness.
Figure 3:Theranos claimed that small quantity of sample would make everyone happy
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5.3 Kantianism
Kantianism. In accordance to the Kantianism Theory, the business should value its own rationality,
and other people's reasoning. Often, Kantianism suggests you can do something because it is for
the right reason. Did Theranos' acts derive from Good Will? Was Theranos developed primarily
to support people, because it's the right thing to do? It seems the business started out as a failed
scheme to rapidly get rich. Theranos has been lying to the public from the very beginning, and
particularly to the patients who used their medication. Holmes had little regard for the patients.
She had not granted them the ability to test their blood correctly. From a Kantian point of view,
Theranos obviously acted in an unethical manner.
Virtue Theory. Many of the noble qualities one would strive to demonstrate include Authenticity,
Dignity, Generosity and Honor. Elizabeth Holmes and her Theranos business did not exhibit any
of these virtues — in addition, the very reverse was portrayed. The entire business of Holmes was
built upon lies and deception. When she wanted to cheat her way out of the situation, the Holmes
had little integrity, instead of coming forward and showing the world the truth and trying to resolve
it. Instead of being willing to test blood samples and delivering a pain-free operation, Theranos
threw away medical judgments because it was not reliable.
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Holmes had immense passion, but no moral code to lead her in producing an authentic product
that could actually benefit people (Jackson, 2019). Instead of someone who could have years of
medical and scientific expertise to combat the lack of practical experience, she surrounded herself
with "yeah" men. Nobody was there to keep her from damaging her own existence before she was
revealed by the media (Jackson, 2019). Holmes had no standards, however, to get to their point
the experienced experts with decades of experience sure as hell needed to have a sort of integrity
and morals. Just if all those involved are practicing fair corporate activities will a company
succeed. If not, this would go down softer than a ton of bricks (Jackson, 2019). In my opinion,
from an ethical point of view Holmes was not the only person at fault but, were the board of
members, high-level employees of the company and the high-ranking personnel with whom the
company dealt with.
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6. Professional Issues
Many standards and code of conduct are in place throughout the world in order to monitor the
conduct and professionality of all the employees and board of members within an organization.
Many organizations have implemented their own code of conduct in order to cope with
unprofessional that may arise in the workplace. Whereas, other companies abide by the standards
set by Institute for Electrical and Electronics Engineers (IEEE), Association for Computing
Machinery (ACM), and so on.
Tyler Schultz who was an employee of the company form 2013 stated in an interview that Ramesh
Balwani, who is the COO of Theranos, Inc; berated him in a meeting by calling him vain and
incompetent while even adding that he would have already been sacked if his last name was not
“Shultz” (Kurczy, 2019). According to IEEE code of conduct, all employees of the company must
treat each other fairly and not do or say something that might harm the reputation of another
employee. In this case, Ramesh Balwani comments and anger towards Tyler Schultz is extremely
unprofessional and might have harmed the reputation of Tyler in front of all the employees present
in that meeting.
Many ex-employees of the company came forward with allegations that the practice inside the
company was that any dissent was muffled thorough intimidation and fear by Elizabeth Holmes
and Ramesh Balwani. This is another scenario where the acts and culture with Theranos has
violated a professional code of ethics. No employee of the company should be silenced in such
manner as everyone one has freedom of speak and must not be threatened with their employment
status.
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The findings of Edison were horribly unreliable, the system itself was badly misappropriated and,
in fact, commercial machines were doing all the work rather than the Edison (Jackson, 2019). What
helped pave the way for the popularity of Holmes was early investment of millions of dollars,
removing some cynics inside the organization who doubted the credibility of the product, holding
the boardroom with military officials and political high-flyers instead of medical practitioners, and
maintaining a small footprint with no media releases and only premiering a website in 2013
(Jackson, 2019). This is clear violation of any professional ethics that are morally applicable within
any company.
Tyler Schultz who was a famous Theranos whistle-blower and ex-employee of the company
recalled in an interview that words such as, ‘biology’, ‘pipette’, ‘research’ were not allowed to be
said within the workplace and employees with the same workplace were prohibited from
discussing about the work they were doing (Eldred, 2019). Any company with proper code of
ethics and conduct in place would not have such unethical and unprofessional rules prevalent
within the organization. But, Theranos, Inc was no such company, it was full of deceit and fraud
conducted by Elizabeth Holmes and Ramesh Balwani.
The staff, without fiduciary duty, became advisors. They had contacts in the fast-growing, nearly
$9 billion valuation business but little specific experience (O'Brien, 2018). A former staff member
told Carreyrou that when he met at Theranos in 2011 and asked about the board's position, Holmes
responded that the board's position was as a replacement (O'Brien, 2018). He recalled her saying,
"I make all the choices here." In 2013, Carreyrou wrote, "she pushed through a bill that allocated
one hundred votes to every share she possessed, granting her 99.7 percent voting rights” (O'Brien,
2018). “The board could not meet a qualified majority without her going ahead”, he said (O'Brien,
2018). This instance shows that unprofessionalism was not only shown by Holmes but also by the
board of directors who should have devised a plan/scheme where no one member of the board can
completely decide any proposition that is passed within the company.
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7. Conclusion
This scandal of Theranos, Inc. has shaken the whole Silicon-Valley community to its core. The
major questions that have been raised from this whole scandal is how this could have been
prevented and what we can stem from the Theranos case. If the stakeholders and partners of the
company had possibly looked closer and had specialists in laboratory medicine involved, they
would possibly have formed concerns about the process. History, though, is full of citizens who
pass money to impostors in the promise of immense revenues. This case is no different where a
young entrepreneur that provided hopes of high profits clearly took advantage of the investors,
who did not want the deal to go to someone else and took some rash decisions. Clinical Chemistry
and Laboratory Medicine (CCLM) agreed to publish a series of papers on the Theranos saga in
order to lead to an informed debate on potential innovations which would have a significant impact
on laboratory medicine (Lackner & Plebani, 2018). Laboratory facilities should provide the basis
for a reliable, efficient and fair provision of health care not only to ensure correct clinical accuracy,
but also to cover all process phases beginning with reasonable inquiries and finishing with correct
interpretation / use of laboratory knowledge (Lackner & Plebani, 2018). In any scenario, we should
be sensitized by the Theranos scandal for the obvious risks and intensify the continuing discussion
on this issue.
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8. References
Alltucker, K. (2018) As Theranos drama unwinds, former patients claim inaccurate tests changed
their lives [Online]. Available from:
https://www.usatoday.com/story/news/nation/2018/07/05/theranos-elizabeth-holmes-lawsuits-
patients-harm-arizona/742008002/ [Accessed 26 April 2020].
Carreyrou, J. (2018) Bad Blood | Secret and Lies in a Silicon Valley Startup |. 1st ed. New york:
Alfred A. Knopf.
Centers for Medicare and Medicaid Services. (2016) [Online]. Available at:
http://online.wsj.com/public/resources/documents/r_Theranos_Inc_CMS_07-07-
2016_Letter.pdf?mod=article_ [Accessed 22 April 2020].
Chan, J., Kolhatkar, R., Winkler, M. & Katz, M. (2018) Securities and Exchange Commission vs.
Elizabeth Holmes and Theranos,Inc. [Document]. California Available at:
https://www.sec.gov/litigation/complaints/2018/comp-pr2018-41-theranos-holmes.pdf [Accessed
23 April 2020].
Cureton , A. & Johnson, R. (2019) Kant’s Moral Philosophy. In E.N. Zalta, ed. The Stanford
Encyclopedia of Philosophy. 2019th ed. Metaphysics Research Lab, Stanford University.
Eldred, M.S. (2019) What the Theranos whistleblowers learned about ethics in health startups
[Online]. Available from: https://medcitynews.com/2019/10/what-the-theranos-whistleblowers-
learned-about-ethics-in-health-startups/ [Accessed 27 April 2020].
Food and Drug Administration (FDA). (2015) Form 483 Reports [Online]. Department of Health
and Human Services Available at: https://www.fda.gov/media/94721/download [Accessed 22
April 2020].
Jackson, L. (2019) What the Theranos Scandal Can Teach About Business Ethics [Online].
Available from: https://ourcommunitynow.com/community/what-the-theranos-scandal-can-
teach-about-business-ethics [Accessed 24 April 2020].
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Kurczy, S. (2019) Lessons from the Theranos Whistleblower [Online]. Available from:
https://www8.gsb.columbia.edu/articles/ideas-work/lessons-theranos-whistleblower [Accessed
27 April 2020].
Lackner, K.J. & Plebani, M., 2018. The Theranos saga and the consequences. Clinical Chemistry
and Laboratory Medicine, May. pp.1395-96.
Lazari-Radek, K.d. & Singer, P. (2017) Utilitarianism A very short introduction. 3rd ed. Oxford:
Oxford Press.
McCombs School of Business. (2018) Theranos' Bad Blood. Case Study. The University of Texas
at Austin.
Moon, J. (2014) Corporate Social Responsibility A Very Short Introduction. 1st ed. New York:
Oxoford University Press.
O'Brien, G. (2018) Understanding the Theranos Scandal: ‘I Make All the Decisions Here.’
[Online]. Available from: https://business-ethics.com/2018/11/04/1425-understanding-the-
theranos-scandal-i-make-all-the-decisions-here/ [Accessed 28 April 2020].
Ramsey, L. (2017) Theranos just agreed to refund 175,000 people in Arizona who took its tests
[Online]. Available from: https://www.businessinsider.com/theranos-reaches-465-million-
settlement-with-arizona-attorney-general-2017-4 [Accessed 23 April 2020].
Ramsey, L. (2017) Theranos will be able to operate a blood testing lab again in 2019 [Online].
Available from: https://www.businessinsider.com/theranos-settles-with-cms-for-30000-2017-4
[Accessed 22 April 2020].
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U.S. Securities and Exchange Commission. (2018) Theranos, CEO Holmes, and Former President
Balwani Charged With Massive Fraud [Online]. Available from: https://www.sec.gov/news/press-
release/2018-41 [Accessed 23 April 2020].
United States Department of Jutice. (2020) U.S. v. Elizabeth Holmes, et al. [Online]. Available
from: https://www.justice.gov/usao-ndca/us-v-elizabeth-holmes-et-al [Accessed 24 April 2020].
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9. Appendix
2004: After the founding of Theranos in 2003, it raised $6.9 million in early investment and earned
a valuation of $30 million (Tun, 2019).
2007: The company's investment rose to $197 million, despite receiving another $43.2 million in
early-round financing. (Tun, 2019).
2010: Theranos had been estimated at $1 billion following further funding rounds (Tun, 2019).
2013: Holmes unveiled Theranos to the public through press interviews following ten years of
working "in the woods" and opened a website. (Tun, 2019).
2014: Theranos was estimated at about $9 billion, with more than $400 million in support (Tun,
2019). Due to her 50 per cent stake, Holmes quickly became a multibillionaire (Tun, 2019).
July 8, 2015: Capital BlueCross, a 725,000-customer Pennsylvania insurer, has selected Theranos
as the main research provider (Tun, 2019). Theranos was now worth $10 billion.
Introduction
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On October 26, 2015, A follow-up article in the Wall Street Journal revealed that Theranos had
been pressured to restrict the use of its illegal nanotainer for all but one type of blood check. (Tun,
2019).
On October 27, 2015, The FDA released two slightly revised files of the Form 483 from an
ongoing Theranos investigation (Tun, 2019). The findings were less than flattering, alleging that
Theranos had "uncleared medical device(s)," inadequate paperwork, was mishandling grievances,
and had neglected to perform investigations and obtain certificates for vendors (Tun, 2019).
On January 27, 2016, A letter (dated 25 January) from the Centers for Medicare & Medicaid
Services (CMS) indicated that the California-based laboratory contracted by Theranos posed a
"immediate threat to patient safety and health." (Tun, 2019).
On May 1, 2017, Theranos dismissed a case against Partner Fund Management, one of the primary
creditors, after the hedge fund suspected the firm of committing global security fraud. (Tun, 2019).
Prior to this, Theranos had settled proceedings with the Medicare & Medicaid Services Centers
and the Attorney General of Arizona (Tun, 2019).
Background
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In investment forums, product demonstrations, and newspaper interviews, the plaintiffs alleged
that Theranos, Holmes, and Balwani made numerous misleading and dishonest statements that
consumers were tricked into believing that their key device – a handheld blood analyser – could
do robust blood monitoring from blood finger drops, pioneering the blood testing market. (U.S.
Securities and Exchange Commission, 2018). The lawsuits also argue that Theranos, Holmes, and
Balwani asserted U.S. distribution of Theranos' goods. Theranos proposed that The Défense
department will receive more than $100 million in revenue on the Afghan battlefield and on
medevac helicopters in 2014 (U.S. Securities and Exchange Commission, 2018). In reality, the
U.S. has never deployed Theranos' technologies. Department of Défense and created slightly more
than $100,000 in operating revenue in 2014 (U.S. Securities and Exchange Commission, 2018).
During the two lab inspections done by FDA, the design validation plan provided by the company
didn’t demonstrate that TSCD (Sterile Tubing Welder) was produced using same specifications,
production, procedures and equipment that were used for routine production (Food and Drug
Administration (FDA), 2015). Similarly, DOC-0069 Revision A, provided as hazard analysis for
the TSCD devices, was utilized from February-April 2014 and the document didn’t have an
effective date and was not released in the company’s document control system until October 26,
2015 (during the inspection) (Food and Drug Administration (FDA), 2015).
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According to the lawsuit, the accusations emerge from claims that Holmes and Balwani
conducted a multi-million dollar plot to deceive investors, and a related plan to deceive doctors
and patients (United States Department of Jutice, 2020).According to allegations, Holmes and
Balwani used advertisements and solicitations to convince and allow doctors and patients to
use Theranos' blood testing laboratory facilities, although the defendants knew Theranos did
not have reliable and sufficient reports for these blood tests (United States Department of
Jutice, 2020). According to the complaint, the defendants had also reportedly made several
misrepresentations about the financial position of Theranos and its future outlook to
prospective creditors (United States Department of Jutice, 2020). For instance, the defendants
represented to investors that Theranos performed patient trials using Theranos-manufactured
analysers, whereas Holmes and Balwani knew that Theranos bought and used third-party,
publicly accessible patient testing analysers (United States Department of Jutice, 2020).
Ethical individualism maintains that the main focus of morality is the egalitarian, not society as a
whole, and that morality mainly concerns the wellbeing of people, rather than the relationships
with others (Sandefur, 2008).
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9.6 Utilitarianism
The fundamental principle of utilitarianism is to make the universe the best way we can (Lazari-
Radek & Singer, 2017). That means we should be building a planet where every human has the
highest possible level of well-being, as much as it is within our control (Lazari-Radek & Singer,
2017).
9.7 Kantianism
Immanuel Kant (1724–1804) argued that a norm of reason he called the "Categorical Imperative"
(CI) is the fundamental principle of morality (Cureton & Johnson, 2019). Kant defined the CI as
an integral, rationally necessary and absolute principle that we should always uphold, ignoring any
ingrained instincts or tendencies to the opposite that we may have (Cureton & Johnson, 2019).
Virtue ethics is a philosophy which Aristotle and other ancient Greeks established (McCombs
School of Business, 2018). It is a search to grasp a life of good character and to live it. This
character-based approach to morality presumes that by experience, we learn virtue (McCombs
School of Business, 2018). An individual builds an ethical and moral character by practicing being
honest, courageous, fair, compassionate and so forth (McCombs School of Business, 2018).
According to Aristotle, when faced with ethical obstacles people would generally make the right
decision by honing moral behaviours (McCombs School of Business, 2018).
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