Tech company Theranos pushes consumer lab-testing bill

• House Bill 2645 lets consumers order tests directly from a licensed lab without a physician's order.
• Rep. Heather Carter%2C R-Cave Creek%2C is sponsoring the legislation.
• The bill is pushed by Theranos%2C a Silicon Valley company aiming to expand consumer testing options.

Arizona residents could get expanded access to laboratory testing without a doctor's orders under a bill that is making its way through the Legislature.

House Bill 2645, sponsored by Rep. Heather Carter, R-Cave Creek, would allow consumers to get a blood test directly from a licensed clinical laboratory without a doctor's orders.

Arizona law now allows consumers to get a limited number of tests such as cholesterol and blood glucose checks from a licensed lab. This legislation would allow consumers to access any test a lab sells.

The bill is being pushed by a Silicon Valley company, Theranos, that aims to rapidly expand testing options for consumers through retail clinics.

Theranos already sells tests at clinics located in 40 Walgreens stores in Arizona, most in metro Phoenix. The company touts its automated technology as a more rapid, less-expensive method to test blood samples compared with labs used by hospitals and large doctors' practices.

The company also publishes a list of prices, unlike traditional labs that set prices based on negotiated rates with insurance companies. Consumers who don't have insurance typically have no easy way to find out how much a lab charges, and costs vary widely.

Theranos CEO Elizabeth Holmes, who left Stanford University after starting the company when she was 19, believes that expanded testing options would allow more people to take charge of their health care — to order tests and make health decisions before chronic disease starts, not after.

"It's a basic human right for people to get access to laboratory data in a time that matters," Holmes said of myriad tests used to diagnose or predict disease.

Holmes' view is that the medical industry is geared toward treating people after they have been diagnosed with — or show symptoms of — a chronic condition. If a consumer with a family history of a particular disease wants to order a test before symptoms appear, an insurance company may not pay for it.

"Inherently, we've got a system which is by law saying you can only get these tests done at a cost that is affordable once you already have the disease," Holmes said. "And if they are not symptomatic, insurance won't pay for it. So people have to pay out of pocket, and paying out of pocket is insanely expensive."

Holmes' message has resonated with the Arizona Legislature. She testified last week in support of HB 2645, which sailed through the Arizona House without a single "no" vote. The bill has been assigned to the Arizona Senate Health and Human Services and Rules committees.

Arizona law allows consumers to directly access 11 categories of testing, such as lipid profiles for cholesterol checks, glucose, urine tests, prostate-specific antigen, urine pregnancy tests and others.

An Arizona Department of Health Services advisory committee decides, as needed, which tests consumers can access directly without orders from a doctor or other licensed medical professional. The committee hasn't met since 2007 because there's been no effort to expand access, a state Health Department representative said.

Carter said she doesn't think state regulators should be gatekeepers for consumer testing.

"Because technology advances so rapidly, as these tests become available, people should be able to go and get these tests so they can get early detection," Carter said. "Why should I have to wait for permission from a physician, or in this case, the government, to go and be proactive about my wellness?"

Arizona and nine other states allow consumers limited access testing without a doctor or other health practitioner's authorization. Another 27 states and the District of Columbia allow consumers to order tests directly, and 13 states prohibit such testing without a doctor's authorization, according to Theranos.

Still, some question whether allowing consumers to take any test will necessarily translate to better medical care.

Chic Older, executive vice president of the Arizona Medical Association, said doctors are trained to interpret test results and gauge other clinical signs and symptoms such as age and family history.

Consumers who attempt to analyze their own test results may worry needlessly or ignore test results that warrant further medical attention.

The legislation would not require a doctor or other licensed medical professional to review or act on medical tests that a consumer orders directly from a lab. Insurance companies and the state's Medicaid program, the Arizona Health Care Cost Containment System, would not be required to pay for direct-to-consumer tests.

In November 2013, Theranos opened its first two retail stores in metro Phoenix, the company's first expansion beyond its first retail clinic at a Walgreens in Palo Alto.

Theranos said that its automated and miniaturized technology allows it to complete a blood draw using a few drops of blood in a small tube, unlike multiple vials often required by a traditional lab.

The company views Arizona as a test market to expand its idea nationally. Investors who have valued the company at more than $9 billion are betting on the company's potential.

"We are investing here because we see this as a model for what we do nationally," Holmes said of Arizona.

That means Theranos is reaching out to doctors, health insurers and others to spread the word about its technology. It has reached an agreement to provide lab services with Tempe-based Commonwealth Primary Care, an accountable-care organization with more than 200 doctors and other practitioners.

Holmes said that Theranos also has announced an agreement with Dignity Health, a San Francisco-based hospital group that owns St. Joseph's Hospital, Chandler Regional, Mercy Gilbert and other medical facilities. A Dignity Health spokeswoman in San Francisco on Tuesday could not provide details about the type of lab testing it orders from Theranos.

Theranos declined to disclose revenue from Arizona clinics. So it is not clear whether the company has made an appreciable dent in Sonora Quest, the region's main lab that has established relationships with area doctors, hospitals and health insurers.

Joyce Sanchez, chief operating officer of Sonora Quest, the major lab in metro Phoenix, said that Theranos' entry in Arizona has not yet made a big impact on her company's business.

"They may have some wonderful technology. They may have something groundbreaking," Sanchez said. But she added that it is difficult to gauge because the company has published little information in medical journals explaining how its technology works.

"I have to worry about my own patients and my own laboratory," Sanchez said.

Holmes said Theranos typically charges 50 to 90 percent less than what Medicare pays for similar tests. She said that could save "hundreds of millions of dollars" in Arizona health costs.