The ‘Theranos Blood Testing” Scandal Case Analysis Report

The ‘Theranos Blood Testing” Scandal Case Analysis Report

Facts Underpinned the Ethical Dilemma in the Case

Theranos, a US-based biotechnology company, was founded in 2003 by Elizabeth Holmes. The company’s innovative blood testing technology garnered significant attention and investment from investors, who were drawn to the promise of Theranos’ quick, accurate blood test results (Winship, 2020). However, as the company began to grow and expand its operations, questions arose about the accuracy of Theranos’ blood testing technology. In particular, former employees raised concerns that the company was using unlicensed medical equipment and that its tests were not as accurate as advertised.

In 2014, Theranos founder Elizabeth Holmes was lauded as a visionary for her company’s innovative blood testing technology, which promised to revolutionize the healthcare industry. In 2015, investigative journalist John Carreyrou wrote an article for The Wall Street Journal detailing these allegations, which ultimately led to the downfall of Theranos. As a result of the ensuing public backlash and regulatory investigations, Holmes was charged with multiple counts of fraud in early 2018 (Winship, 2020). She is currently awaiting trial and has been sentenced to 20 years in prison. However, it was later revealed that the technology was not as effective as claimed and that patients had been misled about its accuracy. This resulted in a criminal investigation into Theranos, and Holmes was ultimately convicted and jailed for her role in the scandal. The ethical dilemma, in this case, arose from some key factors. First, Theranos misrepresented its technology to investors and customers, concealing critical information about its accuracy and effectiveness. Additionally, Holmes had engaged in fraudulent activities, including doctoring test results to represent that the technology was working as intended falsely. Finally, patients had been put at risk by using the faulty technology, which in some cases led to misdiagnoses and mistreatment.

In light of these facts, it is clear that the ethical dilemma, in this case, revolves around issues of honesty, integrity, and responsibility. Theranos founder Elizabeth Holmes was dishonest in her representations of the company’s technology, and she failed to act with integrity in carrying out her business practices (Winship, 2020). Furthermore, she was irresponsible in her actions, putting patients at risk by using faulty technology. The ‘Theranos Blood Testing” Scandal highlights the importance of ethical values in business. This case demonstrates the potential consequences of dishonesty and irresponsible behavior in the workplace and underscores the need for companies to act with integrity and responsibility. Furthermore, it warns that fraudulent activities can have serious legal and professional implications. Ultimately, businesses must be prepared to uphold high ethical standards to avoid scandals like this one.

The Decision-Maker in the Case, And What Conflicting Demands Did They Have To Accommodate

The decision-maker in the Theranos Blood Testing Scandal case was Elizabeth Holmes, the founder, and CEO of Theranos. At the time, Theranos was one of the most promising healthcare startups in the US, having successfully raised hundreds of millions of dollars in funding from investors (Abebe, Li, Acharya, and Daspit, 2020). However, behind the scenes, Holmes faced numerous conflicting demands that ultimately led to the company’s downfall. On one hand, Holmes was under immense pressure to deliver on the company’s promise of providing rapid and accurate blood tests. She had to ensure that the Theranos technology lived up to its hype. On the other hand, she also had to keep investors happy and maintain a strong relationship with them, ensuring that the technology was commercially viable. Ultimately, these competing demands proved to be too much for Holmes, as she and other senior executives at Theranos were found guilty of misleading investors and violating numerous industry regulations. The conflicting demands faced by Holmes played a key role in the ‘Theranos Blood Testing’ Scandal.

The Initial Ethical Dilemma Faced By the Decision-Maker In This Case

At the heart of the Theranos scandal was an initial ethical dilemma faced by Elizabeth Holmes, the founder, and CEO of Theranos. This dilemma centered on the fact that, while the company’s blood-testing technology purported to perform complex tests on small sample sizes, there was a lack of evidence supporting this claim. This led Holmes to face difficult questions regarding the ethics of marketing potentially inaccurate and misleading claims about her company’s products and the ethics of potentially putting patients at risk by disseminating unreliable medical information. Ultimately, Holmes chose to prioritize short-term business interests over patient safety and ethical principles, which ultimately led to the downfall of Theranos and her conviction for fraud.

Approaches to Ethical Decision-Making

Utilitarianism

The main goal of the utilitarianism theory is to promote the greatest good for the greatest number of people. In the case of the ‘Theranos Blood Testing” Scandal, it can be said that the actions of Elizabeth Holmes (the founder of Theranos) were not ethical according to this theory (Audi, 2007). This is because, by lying to investors and marketing the company’s technology as being able to provide rapid blood tests, she was essentially promoting a false product. As a result, people may have invested in the company based on false information, which would not have been in their best interests. On the other hand, it could be argued that Elizabeth Holmes did act in a way that promoted the greatest good for the greatest number of people, as she raised significant amounts of money for her company. This money was then used to develop the technology further, which may have helped many people in the long run. However, it is also important to consider the potential harm her actions could have caused. For example, suppose people had relied on the company’s technology to make important healthcare decisions based on inaccurate results. In that case, it could have had serious consequences for their health and well-being. 

The utilitarianism theory is based on maximizing pleasure and minimizing pain. In the case of the ‘Theranos Blood Testing” Scandal, it can be said that Elizabeth Holmes caused more pain than pleasure. This is because her actions led to people being misled about the capabilities of the company’s technology. While her actions may have helped raise money for the company, they also caused potential harm to people’s health and well-being. For instance, if people had made important healthcare decisions based on the inaccurate results provided by the company’s technology, it could have had serious consequences (Udoudom, 2021). Therefore, it can be said that Elizabeth Holmes’ actions were not ethical according to the utilitarianism theory. 

The utilitarianism theory is based on maximizing pleasure and minimizing pain. In the case of the ‘Theranos Blood Testing” Scandal, it can be said that Elizabeth Holmes caused more pain than pleasure. This is because her actions led to people being misled about the capabilities of the company’s technology. Also, it can be argued that she did not act in a way that promoted the greatest good for the greatest number of people since her actions may have caused more harm than good. The case of the ‘Theranos Blood Testing” Scandal highlights the importance of considering the potential consequences of one’s actions. While it is important to promote the greatest good for the greatest number of people, it is also important to consider the potential harm that could be caused. In this case, Elizabeth Holmes’ actions led to potential harm being caused to people’s health and well-being, which is why they can be considered unethical according to the utilitarianism theory. Elizabeth Holmes’ actions may have benefited some people (namely investors) at the expense of others (the general public). This highlights a potential problem with utilitarianism in that it does not always consider fairness and equity. For example, while lying to investors may have enabled Theranos to raise a lot of money, it was not an equitable or fair way to do business. In other words, Elizabeth Holmes’ actions may have benefited some people, but they were not done in a way that was fair to everyone involved. 

Kantianism

The Kantian ethical theory is based on the principle that individuals should always act according to their moral duties and principles, regardless of the consequences. In the case of the ‘Theranos Blood Testing” Scandal, it could be said that Elizabeth Holmes did not act following this theory (Pavlova, Zarutska, Pavlov, and Kolomoichenko, 2019). This is because she knowingly misled investors and marketed the company’s technology as being able to provide rapid blood tests, even though she was aware that this was not the case. For example, if she had known that the technology was not yet able to provide accurate results, she should have been honest about this to investors.

It could be argued that Elizabeth Holmes’ actions were morally permissible, as she aimed to promote the good of her company and its products. However, it is also important to consider the potential negative consequences of her actions. For example, if people had relied on inaccurate results from Theranos’ technology to make important healthcare decisions, this could have been harmful to their health and well-being. For example, inaccurate results could have led to misdiagnoses and the delayed treatment of serious conditions. In light of these potential consequences, it can be argued that Elizabeth Holmes’ actions were not in line with what a Kantian would expect from an individual in her position. Hence, according to this theory, she acted in an unethical manner.

Elizabeth Holmes may have had good intentions when she misled investors, as she was trying to raise money for her company to develop the technology further. In other words, her actions were based on a belief that this would ultimately lead to the greatest good for the greatest number of people. While this is a possible interpretation of her actions, it is also important to consider the potential harm her actions could have caused. For example, suppose people had relied on inaccurate results from Theranos’ technology to make important healthcare decisions based on these results. In that case, this could have been harmful to their health and well-being. Ultimately, it seems that a Kantian approach would view Elizabeth Holmes’ actions as unethical, as she did not act according to her moral duties and principles.

The ‘Theranos Blood Testing” Scandal case raises some important ethical issues. Some of these issues include honesty, transparency, and responsibility. When considering the Kantian approach to ethics, it is clear that Elizabeth Holmes acted in an unethical manner by misleading investors and marketing the company’s technology as being able to provide rapid blood tests, even though she was aware that this was not the case (Constantinescu, and Kaptein, 2020). Her actions went against the Kantian principle that individuals should always act according to their moral duties and principles, regardless of the consequences. In light of the potential harm her actions could have caused, it is clear that Elizabeth Holmes acted in an irresponsible and unethical manner.

Also, the case highlights the importance of transparency in business. One of the key problems with Theranos was that it was not transparent about its technology and how it worked. This lack of transparency led to investors being misled, as they were not given accurate information about its products. In addition, the lack of transparency also made it difficult for people to make informed decisions about whether or not to use Theranos’ technology. This highlights the importance of businesses being transparent about their products and services to avoid such problems.

Rights Approach

The rights approach is an ethical theory that focuses on the individual rights of individuals and the protection of these rights. In the case of the ‘Theranos Blood Testing” Scandal, it could be said that Elizabeth Holmes did not act following the rights approach (Bhardwaj, 2020). This is because she knowingly misled investors and marketing Theranos’ technology as being able to provide rapid blood tests, even though she was aware that this was not the case. For example, if she had known that the technology was not yet able to provide accurate results, she should have been honest about this to investors. It could be argued that Elizabeth Holmes’ actions were morally permissible, as she aimed to promote the good of her company and its products. However, it is also important to consider the potential negative consequences of her actions. For example, if people had relied on inaccurate results from Theranos’ technology to make important healthcare decisions, this could have been harmful to their health and well-being. For example, inaccurate results could have led to misdiagnoses and the delayed treatment of serious conditions. In light of these potential consequences, it can be argued that Elizabeth Holmes’ actions were not in line with what the rights approach would expect from an individual in her position.

While the rights approach provides important guidelines for individuals, it is also important to consider that Elizabeth Holmes’ actions were likely driven by a desire to promote her company and its products. For example, she might have believed that misleading investors was necessary to achieve this goal. As a result, the rights approach does not provide a clear answer as to whether or not Elizabeth Holmes acted ethically in the ‘Theranos Blood Testing” Scandal (Ho, 2021). This is because it can be argued that her actions were morally permissible, given her desire to promote her company and its products. However, it is also important to consider the potential negative consequences of her actions, which could have been harmful to individuals who relied on the technological results provided by Theranos. Ultimately, it seems that a rights-based approach to ethics would not be able to provide a definitive answer as to whether or not Elizabeth Holmes’ actions were ethical in this case.

Distributive Justice Approach

The distributive justice approach is an ethical theory that focuses on allocating resources in a fair and just manner. In the case of the ‘Theranos Blood Testing” Scandal, it could be said that Elizabeth Holmes did not act following the distributive justice approach. This is because she knowingly misled investors and marketing Theranos’ technology as being able to provide rapid blood tests, even though she was aware that this was not the case (Nandedkar and Brown, 2018). For example, if she had known that the technology was not yet able to provide accurate results, she should have been honest about this to investors. It could be argued that Elizabeth Holmes’ actions were morally permissible, as she aimed to promote the good of her company and its products. However, it is also important to consider the potential negative consequences of her actions. For example, if people had relied on inaccurate results from Theranos’ technology to make important healthcare decisions, this could have been harmful to their health and well-being. For example, inaccurate results could have led to misdiagnoses and the delayed treatment of serious conditions. In light of these potential consequences, it can be argued that Elizabeth Holmes’ actions were not in line with what the distributive justice approach would expect from an individual in her position.

While the distributive justice approach provides important guidelines for individuals, it is also important to consider that Elizabeth Holmes’ actions were likely driven by a desire to promote her company and its products (Williams, 2022). For example, she might have believed that misleading investors was necessary to achieve this goal. As a result, the distributive justice approach does not provide a clear answer as to whether or not Elizabeth Holmes acted ethically in the ‘Theranos Blood Testing” Scandal. This is because it can be argued that her actions were morally permissible, given her desire to promote her company and its products. However, it is also important to consider the potential negative consequences of her actions, which could have been harmful to individuals who relied on the technological results provided by Theranos (Williams, 2022). Ultimately, it seems that a distributive justice approach to ethics would not be able to provide a definitive answer as to whether or not Elizabeth Holmes’ actions were ethical in this case.

Recommendation to The Decision-Maker

If I were advising the decision-maker in this case, I would have recommended that they pursue a utilitarian approach to resolving the dilemma. This would involve weighing the costs and benefits of different courses of action and choosing the option that results in the greatest overall utility. In this particular case, I believe that the best course of action would be to halt the development and marketing of Theranos’ rapid blood testing technology. This is because the company’s claims about its capabilities were not substantiated by scientific evidence. This would likely result in negative impacts for investors and other stakeholders involved with the company. Still, it would also help to prevent further harm to patients who might have otherwise been misled into trusting the technology and relying on it for medical decision-making.

The Theranos scandal highlights the importance of carefully evaluating the scientific evidence and clinical data behind new medical technologies and treatments to ensure that they are truly effective and safe for use. At the same time, it is also important to consider the ethical implications of restricting access to potentially promising innovations, particularly when there may be significant health or financial implications for patients and other stakeholders. I believe that a utilitarian approach to resolving this ethical dilemma would be the most appropriate one in this case, given these considerations.

The Theranos scandal is a cautionary tale for medical professionals, regulators, and policymakers alike. It is essential to prioritize patient safety and well-being above all else when making decisions about innovative medical technologies. We must hold companies accountable when they make false or misleading claims about their products. Ultimately, we must work together to ensure that patients have access to safe and effective treatments and can make informed decisions about their care. 

Bibliography

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Audi, R., 2007. Can utilitarianism be distributive? Maximization and distribution as criteria in managerial decisions. Business Ethics Quarterly, 17(4), pp.593-611.

Bhardwaj, T., 2020. Evaluating a human rights approach to health in the Indian context: Emerging needs and challenges. Journal of Human Rights and Social Work, 5(1), pp.3-11.

Constantinescu, M. and Kaptein, M., 2020. Ethics management and ethical management: Mapping criteria and interventions to support responsible management practice. In Research handbook of responsible management. Edward Elgar Publishing.

Ho, J., 2021. Purposeful life or sugar-coated lies: How Elizabeth Holmes legitimised her fraud. Language & Communication, 77, pp.106-120.

Nandedkar, A. and Brown, R.S., 2018. Transformational leadership and positive work outcomes: A framework exploring the role of LMX and distributive justice. International Journal of Organization Theory & Behavior.

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