Scandal Watch: Elizabeth Holmes Appears in Court, Opioid Distributors on Trial and More

Theranos founder Elizabeth Holmes is back in the courtroom for the first time in 15 months for a three-day hearing ahead of her criminal fraud trial.

Krista Kennell / Shutterstock

Theranos founder Elizabeth Holmes is back in the courtroom for the first time in 15 months for a three-day hearing ahead of her criminal fraud trial. The hearings will determine what evidence the prosecution can present to a jury when the trial begins later this year.

During Tuesday’s proceedings, attorneys bantered back and forth for seven hours sparred over various points, including how Silicon Valley itself played a role in the alleged fraudulent activities committed by Holmes and Theranos, CNBC reported.

The defense wanted to present that Holmes had been singled out while other companies within Silicon Valley continued to operate in a similar manner. Additionally, the defense is planning to argue that much of the prosecution’s case is based on prejudicial, anecdotal evidence. Holmes’ attorneys will argue that the failings of the Theranos testing technology were not fraudulent.

“We have all become very familiar with testing this year. Testing involves many different variables. What the government offers is without scientific basis, they have to establish Theranos technology was responsible for erroneous results. Just because it happened doesn’t mean it was because of Theranos technology,” Amy Saharia, a lawyer for Holmes, argued Tuesday.

The defense also seeks to block arguments that Holmes was addicted to the wealth and attached lifestyle she garnered while helming CEO. At one time, her worth was valued in the billions of dollars.

Along with former Theranos President Ramesh “Sunny” Balwani, Holmes was initially charged with multiple counts of fraud in 2018 related to the blood-testing company, Theranos.

From 2013 to 2015, Holmes and Balwani amassed more than $700 million from investors through what the U.S. Securities and Exchange Commission called “years-long fraud” in which they exaggerated or lied about the effectiveness of the company’s proprietary technology and the state of its finances, according to the complaint.

The company also made misleading claims about its connection with the Department of Defense and its regulatory status with the U.S. Food and Drug Administration during that period. As a result of the alleged false promises made to investors, the valuation of Theranos swelled to $9 billion and made Holmes one of the youngest billionaires in the United States.

Holmes isn’t the only ongoing legal scandal in the biopharma industry.

Opioid Distributors on Trial

The opioid epidemic and the role pharmaceutical companies may have played continue to face off in court. This week, several of the largest drug distributors, McKesson Corp., Cardinal Health, and AmerisourceBergen Corp., are in a West Virginia court facing charges they wrongfully “sold a mountain of opioid pills into our community, fueling the opioid epidemic,” Bloomberg reported. Local governments in West Virginia are seeking financial retribution from the distributors to pay for expenses incurred from battling opioid addiction.

The West Virginia lawsuit is one of the thousands across the country. The West Virginia case is taking place in Cabell County, one of the hardest-hit areas in that state.

Cabell County’s overdose death rate was five-time higher than the national average during a period referenced by the lawsuit. The county, along with the city of Huntington, West Virginia, is seeking $2.6 billion from the distributors to pay for treatment and policing budgets impacted by opioid overdoses and addiction.

The West Virginia trial is taking place while the three distributors plus Johnson & Johnson, which is facing its legal challenges, are proposing a $26 billion global settlement of all opioid suits. The distributors would pay a combined $21 billion while J&J would put up $5 billion.

Kickback Resolution

This week, Incyte Corporation has agreed to pay $12.6 million to resolve kickback allegations. The U.S. Department of Justice said the company unlawfully used an independent foundation to make the copay payments of some people prescribed by the company’s cancer drug Jakafi.

The charges cover a period from November 2011 to December 2014. The government accused Incyte of being the dole donor to a fund established in 2011 to assist only patients with myelofibrosis, for which Jakafi has been approved.

Incyte denied the allegations but said it agreed to pay the settlement to “put the matter behind” and focus on developing therapies for patients with life-threatening conditions.

Disclosure Violation

Chinese COVID-19 researcher Nanshan Zhong, one of TIME’s 100 most influential people in 2020, failed to disclose financial interests in a pharmaceutical company after publishing research regarding a traditional Chinese medicine and its potential use in COVID-19.

The research assessed the use of Lianhuaqingwen against the virus. When the paper was published, Zhong failed to disclose ties to China-based Shijiazhuang Yiling Pharmaceutical. The pharmaceutical company provided the medicines and also paid for the clinical study, according to Retraction Watch.