Curative
Once the US - sort of - came to grips with the fact we were in a global pandemic, it rushed to increase COVID-19 testing capacity. We’ve talked about how the Trump administration handled testing, and talked a little about the shady opportunists who ran testing scams. Now that the dust has settled and we’re mostly focused on vaccine rollout, the LA Times looks at one testing start-up that flourished over the last year, and its many problems:
Led by Fred Turner — a 25-year-old who dropped out of Oxford to pursue his entrepreneurial dreams — Curative had in a year gone from fewer than a dozen employees to servicing mass testing sites such as Dodger Stadium, conducting more than 17 million COVID-19 tests. It may have grossed $1 billion or more in taxpayer money and insurance premiums.
The privately held Los Angeles-area start-up had become California’s latest venture-capital-backed success story, a victor of the coronavirus economy that at one point said it was performing about 10% of all tests administered each week in the U.S. But questions have mounted about its test’s accuracy.
When your company goes from relative obscurity to one of the largest test providers in the country in a few months, accuracy seems pretty important! So, how did this happen?
It’s a story rooted in a debilitated public sector that in response to an overwhelming catastrophe opted to relax regulations and place its faith in companies large and small that were ready and able to profit from a once-in-a-century pandemic.
“We didn’t have the public health facilities set up to really take part in helping keep the populations in this country safe,” said Michael Mina, an epidemiologist at the Harvard T. H. Chan School of Public Health. “And so this led to a huge decision to lean heavily on private industry.”
That checks out. What set Curative apart and made the tests so popular with health officials was ease of use - it collected a sample from inside a patient’s mouth, and was self-administered. The FDA did say a “trained observer” should be present while a patient self-swabbed, but Curative played fast and loose with that definition. They hired temporary workers or volunteers to oversee testing, which allowed them to scale much faster than the traditional PCR tests, which used nasal swabs and had to be administered by medical professionals in PPE.
It really was a perfect solution for a country with a barely functional public health system and hundreds of localities clamoring for testing capacity. Easy to administer, and replicable at scale. Also, funded by VC - the company raised millions to increase capacity, and leveraged those investor contacts to secure deals with government agencies and a half dozen states.
Though, as it turned out, cost didn’t really matter, because the government was willing to spend whatever it took:
The federal government early in the pandemic poured billions into testing. In March, Congress passed the federal CARES Act, requiring health insurers to cover the cost of tests, with no out-of-pocket cost to the patients, which has allowed companies such as Curative to offer the service free.
[…]
In Los Angeles, the city paid Curative $115 to $150 upfront for each test kit as they were delivered by the thousands each day to Dodger Stadium and other sites across the city, according to invoices reviewed by The Times.
[…]
Currently, Curative bills health insurers $325 — $250 for the test and $75 to collect the specimen, according to the company’s website. The company said health insurers and states pay less than the published price, typically about $100 or the Medicare rate for a fast turnaround test.
That kind of pricing across the industry has drawn criticism from public health advocates. Mina figures that the actual costs of an average test run by high throughput labs — which perform hundreds of thousands of mostly automated tests per week — is perhaps $8 plus a “few extra” dollars for overhead.
$100 for an $8 test is a pretty good return on investment! Now, again, if Curative had really swept in and provided critical services to a health system strained to the breaking point, we might forgive them a little profiteering. But we’re reaching that part of the story, where the tests don’t work properly:
The FDA granted Curative an emergency use authorization for its oral fluids test in April but had concerns about the company’s test from the start.
Based on the company’s study data, the FDA required that its administration be closely observed by trained healthcare workers. It also barred Curative from promoting its use for asymptomatic people.
The FDA had concerns back in April, and put restrictions on how Curative could market its tests, which Curative ignored. Curative also claimed their tests were highly accurate, another lie:
Yet in promotional materials sent to potential customers, Curative describes the test’s “100% specificity” and “90% clinical sensitivity.” A promotional brochure described the test as “exact” and said it had “accuracy greater than peers.”
Late last year, the FDA dropped another bomb:
An FDA reviewer told the company a few days before Christmas that it found the test did not even appear to be accurate on symptomatic people, much less those without any symptoms, according to BullDog.
[…]
The FDA statement did not further restrict the test, but reiterated that it should be given only to individuals who have had symptoms within 14 days and under the direct observation of trained healthcare providers. It also repeated that any negative Curative test does not rule out a coranavirus infection and that providers should consider giving their patients a different test to confirm results.
“We are warning against false results if these procedures are not followed,” Timothy Stenzel, an FDA official, said during a national conference call soon after the advisory.
That’s…uh…bad? When the FDA is saying your tests should only be used under certain circumstances and that you should get a second opinion if it tests negative? What is the point of taking a Curative test? Curative denied it was a problem, but public health officials started dropping the company.
Then, there were the false positives:
Administrators at Columbine Health Systems, which operates nursing homes and other care facilities for older adults in northern Colorado, were surprised when 27 employees at one location tested positive using Curative in a single day. Then a week later, 17 more employees at another facility tested positive.
“We felt in our gut this doesn’t feel right,” said Myers, the director. So the next day, 16 employees were retested by Colorado State University. Fifteen were negative, she said.
False positive results are extremely dangerous in a nursing home, she said, because uninfected residents and employees could be wrongly placed in a unit that cares only for those stricken by the virus.
Yeah, not good. How did this all go so wrong? Well, the young founder of Curative had dropped out of Oxford at age 17 because he’d received money from a Silicon Valley incubator to go “disrupt” genetic testing. He raised $10 million to test cows, and when that failed he tried to test human infections, but that also failed. Then COVID-19 happened and Turner was able to spin his new venture, Curative, into a disruptor by claiming - with little to no evidence - they could create a test to detect viral load in oral fluids.
This excited investors, because why wouldn’t a random 25-year-old with no infectious disease experience be able to prototype an entirely new form of testing? Curative may have made hundreds of millions of dollars of the pandemic, and while they’ve likely administered many millions of questionable COVID-19 tests - remember when they maybe caused an outbreak in Congress? - they’re still popular with the people who matter:
Turner’s investors continue to stand by him, with one calling him a “lab rat” who is a “no brainer” to financially back. Turner, himself, still holds out hope that the government determines that it was inappropriate to compare his company’s test against the nasopharyngeal swab.
I don’t know how many examples of this sort of reckless behavior we need before investors stop throwing money at children who think they can will ideas into existence, but the people with money don’t appear to be learning any lessons.
uBiome
Some headlines are designed to appeal to me, and this piece in SF Gate is most certainly one of them. How’d this poop fraud go down?
Apte, 36, and Richman, 46, founded uBiome in 2012 as a direct-to-consumer service called “Gut Explorer.” Customers would submit a fecal sample that the company analyzed in a laboratory, comparing the consumer's microbiome to others' microbiomes, prosecutors said. The service cost less than $100 initially.
The company grew to include “clinical” tests of gut and vaginal microbiomes, which were aimed to be used by medical providers so uBiome could seek up to $3,000 in reimbursements from health insurance companies. The federal indictment states that uBiome sought upwards of $300 million in reimbursement claims from private and public health insurers between 2015 and 2019. The company was ultimately paid more than $35 million for tests that “were not validated and not medically necessary."
Ah, very cool! It is the dream of any biomedical start-up to be able to bill insurance companies or the government for their products. That’s the real gravy train. uBiome took a more…aggressive approach to billing, which got it into trouble with the Feds:
In the months before the FBI search, the company would often bill insurance multiple times for its tests without patient consent, insiders told CNBC. In an interview, one customer, Marc Harris, told CNBC that he sent in two samples, but the $2,970 test was billed to his insurance five times.
I am not entirely sure why uBiome needed to do this when they had VC money to burn:
Apte and Richman met in San Francisco in 2012 through the California Institute for Quantitative Biosciences Garage, an incubator used by UCSF. Together, they founded uBiome and received funding from Silicon Valley investors like 8VC in San Francisco and Andreessen Horowitz in Menlo Park, which hold 22% and 10% stakes in uBiome, respectively, according to court documents.
For a time, they were the latest up-and-coming business determined to disrupt the medical testing industry. In 2018, Richman was even named an "innovator" winner in Goop's "The Greater goop Awards" and at its peak, uBiome was valued at $600 million.
They were Goop Award Winners, for Pete’s sake! Anyhow, I look forward to future in-depth reporting about the poop couple and uBiome’s demise.
Griddy
We have talked about Griddy, the energy company that found itself in the middle of a big mess when Texas had a bad storm and electricity prices spiked, leaving its customers with massive bills. Griddy has filed for bankruptcy and proposed a rather unique solution for its customers:
Griddy Energy LLC has one final deal for Texans before the power seller shuts down for good: if its 29,000 former customers agree not to sue, the company will cancel electric bills that were about 300 times normal amid last month’s winter storm.
I…don’t hate this? It’s creative! The bankruptcy judge, as of last week, had agreed to allow the plan to go forward if Griddy could negotiate with its customers. They would become creditors and have a right to vote on its liquidation plan, which seems like a reasonable outcome. Also, they get their bills cancelled, which is good for them. I am not sure if it helps the people who had their payments debited already, but hopefully they are able to get some relief as well.
Embattled attorney general Ken Paxton has somehow claimed credit for this, because of course he has.
Twitter Hack
The Florida teen who hacked twitter and took over a bunch of high profile accounts to promote a Bitcoin scam has pleaded guilty and will serve three years for his crimes:
Prosecutors tried Mr. Clark as a youthful offender, meaning he could be eligible to serve some of his sentence via boot camp. He has already served 229 days of his sentence in Hillsborough County jail since his arrest last July, and his probation will include strict surveillance of his email accounts, digital devices and social media profiles, Judge Christine Marlewski said.
I mean, it’s probably about as good of a deal as he could have negotiated with the Feds, given the high profile nature of his hijinx. When he was first caught, I wrote about a curious settlement he’d made with authorities the year before:
The authorities seized over $3 million dollars in bitcoin in a 16-year-old’s accounts, then let him pay them a million worth to drop the charges? The fuck?
Sadly, his Bitcoin riches were not a subject of this case either, though there was this quote from one of the prosecutors:
“No bitcoin currency was returned as promised to these victims,” Mr. Dirks said.
Graham, when you get out of jail, please consider using your digital wealth to pursue a different career path. Hell, in 2 years your Bitcoin may be worth a lot more. Maybe just retire!
Bamboozled
Ja Rule is getting into the NFT space. The rapper plans to sell a piece of art that once hung at Fyre Media's headquarters in New York City.
Ja Rule has stored the artwork, by painter Tripp Derrick Barnes, since the epic collapse of Fyre Media in 2017. He told Insider he was originally going to sell the oil painting — which has a black background and a colorful flame with the word "fyre" below it — on eBay.
"I just wanted the bad energy gone," he said in an interview Monday.
I think Ja speaks for all of us. It’s 2021, we’re ready for the bad energy to be gone.
Short Cons
NY Post - “A Florida teen bent on winning the homecoming crown didn’t waste time with silly speeches and pep rallies — instead conspiring with her vice principal mom to rig the whole thing through old-fashioned hacking, authorities said.”
Bloomberg - “A man who was previously convicted of fraudulently selling pre-initial public offering shares in Google Inc. is facing new charges that he conducted a similar scam while posing as representatives of a billionaire family office.”
Yahoo! News - “The Federal Trade Commission (FTC) is sending checks totaling nearly $50 million to 147,000 former students of the University of Phoenix as part of a settlement over the school's use of deceptive ads.”
CBC - “An "unrepentant" fraudster who fled to Canada before he could be sentenced in Utah has been charged alongside his wife in a multimillion-dollar Ponzi scheme involving several Calgary-based companies.”
Tips, thoughts, gut analysis to scammerdarkly@gmail.com