Framed in his office, Eric Olson displays what he calls a “unique piece of history.” It’s a letter informing him of a $44 million settlement in a class action lawsuit involving Theranos, the infamous company based in Palo Alto, California, that claimed it could run hundreds of diagnostic medical tests with just a few drops of a patient’s blood. Below the letter is a check for $46.65—Olson’s cut as a former customer.
The lawsuit, filed in 2016, took long enough to conclude that the check was sent this spring to the New York home Olson sold when he moved to Austin seven years ago. The timing of the settlement’s arrival felt serendipitous because he had since built a company that promises to do something Theranos never accomplished: provide accurate diagnostic results from the prick of a finger.
Patients can now have their blood tested by Olson’s technology at a small number of Texas pharmacies, with more soon to come. Meanwhile, about a hundred miles northeast of his start-up’s headquarters, Theranos founder and CEO Elizabeth Holmes is serving an eleven-year sentence for fraud at a federal prison camp in Bryan.
As Theranos garnered hundreds of millions of investment dollars starting in the early aughts, Olson worked for Siemens, the German engineering conglomerate. His job involved managing product lines that included blood-testing equipment used by hospitals and labs throughout the world. He recalls thinking then that Theranos could shake up what had been a “pretty sleepy” industry—one that “historically hadn’t paid a lot of attention to customers.” Blood-testing methods hadn’t changed significantly in decades. If Theranos’s claims were true, the implications were huge for a multibillion-dollar field that helps guide much medical decision-making.
In typical blood testing, a needle is inserted into a vein in the crook of the elbow to collect one or more small vials of blood. This is generally done at clinics or hospitals, which may conduct tests in-house or send the samples to large labs run by companies such as Labcorp and Quest Diagnostics. Theranos was saying it could simplify the process—needing only a few drops of blood to run tests through a small machine that could sit on a counter in a doctor’s office or pharmacy or, one day, a home.
Olson, who knew the limitations of testing tiny amounts of blood, was skeptical. After Theranos opened clinics inside Walgreens pharmacies in Arizona and California in 2013, he flew across the country several times to try it for himself. “It’s part of my job to understand what was going on there, and whether it’s real. And I understood why it wasn’t real, despite some of the smoke screens,” he says. A Wall Street Journal investigation later revealed that Theranos was secretly diluting samples and running them on standard Siemens machines because its much-hyped proprietary equipment wasn’t producing reliable results.
Even after Theranos began collapsing in the wake of the Journal’s 2015 report, the idea of making blood tests quicker and more convenient for patients excited Olson. Siemens had technology that he thought might be able to test small amounts of blood if it could be successfully modified. He quietly incubated his concept within Siemens for two years before launching Babson Diagnostics in 2017, with his old employer eventually signing on as an investor. Babson chose to set up shop in Austin, Olson says, because of the city’s strong economy, entrepreneurial climate, and growing health-care industry.
Babson partnered with BD, a New Jersey–based global medical-
equipment company, to develop a device for carefully collecting a small amount of capillary blood from a fingertip—about one tenth of the amount of blood typically drawn in venous collection. Late last year the BD device received critical clearance from the U.S. Food and Drug Administration, and in July Babson launched its blood-testing service, called BetterWay, at select pharmacies in Austin, expecting to add locations in San Antonio by the end of the year.
Babson makes far less grandiose promises than Theranos. While its model calls for drawing samples at a host of retail pharmacies, Babson plans to conduct its tests at a centralized laboratory, on machines made by Siemens and other manufacturers. Olson’s goal is to make blood collection faster and more readily available—at stores patients are already visiting to buy groceries or pick up prescriptions.
The company’s technology is designed to be simple enough that a pharmacist without specialized phlebotomy training can easily learn it. Patients first place their palms for one to five minutes (depending on the type of blood test to be run) on a warming device that was designed with help from biomedical engineering students at the University of Texas at Austin, under the guidance of Professor Kenneth Diller. The warming increases blood flow and makes capillary blood collection more effective. The pharmacist then puts the BD device on the patient to lance a finger and draw what the company calls “a pea-size amount” of blood—as much as twelve drops across two tubes. “A Texas-size pea,” says Roy Barr, Babson’s head of research and development.
Those small tubes are then placed into an approximately three-foot-tall white-and-blue Babson machine that resembles a desktop computer tower. It automatically prepares the samples and stores them at the proper temperature until they are picked up later the same day and driven to the company’s lab in North Austin. Patients can expect to receive test results within a day or two, along with an explanation from the company of what the results mean. These are intended to supplement, not replace, input from a physician.
Babson runs only the sorts of tests you’d expect as part of a typical annual physical exam, such as those that measure blood cell counts, hormone levels, and lipids. These can be ordered by a doctor and covered by insurance, or a patient can request tests directly and pay out of pocket. Prices on the company’s online “a la carte” menu range from $10 to $69, comparable to, and in some cases lower than, some self-pay blood tests offered by larger labs. Tests might be requested ahead of doctor’s appointments, with the results to be discussed with the family physician, or used to monitor chronic conditions such as diabetes or thyroid disorders.
“All of these things could be doable with a finger stick of blood,” says Catherine Klapperich, a biomedical engineering professor at Boston University who has no affiliation with Babson. “I would hope, given what happened with Theranos, that soon they will want to show that their data is just as good as people doing this stuff with venous samples. And if it’s not quite the same, how is it not the same?”
Theranos was famously opaque with its data, refusing to share details about how the technology worked—or didn’t. Like all labs that process clinical samples, it was overseen by the federal Centers for Medicare and Medicaid Services. But even though the agency’s inspections include some assessment of the validity of tests, companies haven’t had to prove that their proprietary processes yield results clinically equivalent to those of other standard tests. Now more regulation is on the way for such labs, including Babson’s.
In April the FDA announced that it would phase in its own oversight over four years, closing what has been dubbed the Theranos loophole, which allowed tests developed by and used solely within a specific lab to evade regulation by the agency. The FDA cited concern about the growing number of these tests, including some cancer and prenatal screenings, that have demonstrated questionable accuracy. Opponents of the FDA’s decision worry that the change and its associated costs could stifle innovation and make it more difficult for labs to quickly respond to public-health emergencies.
Babson says it has conducted more than forty clinical trials, comparing patient results through its testing with traditional venous blood tests. It has shared some examples of its findings online to demonstrate clinical equivalence but has not yet published peer-reviewed data. Kristie Stanton, the company’s head of marketing, says Babson hopes to submit its findings for publication by the end of the year.
After launching in Austin and San Antonio, Babson expects a slow rollout to other Texas cities and eventually across the country and around the world. These cautious expansion plans are a logistical necessity. Unlike what Theranos aimed to do, Babson isn’t creating a miniature testing machine that could eventually live in every home or pharmacy. Its system requires proximity to a Babson lab, and right now there is only one, in Austin.
The company plans to conduct a broader array of tests in the future, but screening for some conditions simply requires much more blood—a fact that Theranos failed to acknowledge. For example, HIV or sepsis may never be detectable in a tiny sample until a patient is already extremely sick. To Klapperich and other diagnostics experts, the idea that Theranos could run so many kinds of tests from one tiny sample was always fantastical.
Bradley Brimhall, a professor of pathology and laboratory medicine at UT Health San Antonio, says the sheer number of tests Theranos claimed it could run—from screening for cancer to genetic analyses—made him immediately doubtful at a meeting with company leaders in 2011. “I’m throwing out names of tests, and the answer is always yes. ‘Yes of course, absolutely, sure,’ ” he recalls. Innovation in blood testing certainly isn’t inconceivable, but, Brimhall says, the Theranos fraud heightened skepticism and “poisoned the water for a while.”
When I ask Olson if comparisons of Babson to Theranos bother him, he hesitates, then says no. Though it couldn’t ultimately deliver, he credits Holmes’s company with pushing the diagnostics field forward. “It’s a fully commoditized industry. You don’t really actively think about ‘where am I going to get the better blood test?’ It’s like choosing between two gas stations,” he says. “The idea that people could get their blood tested from their finger at a pharmacy and get high-quality results at low cost—that’s a big idea.”
This article will appear in the September 2024 issue of Texas Monthly with the headline “Blood Tests From a Finger Prick—For Real?” Subscribe today.
