I just noticed that 23andMe was shut down by the Federales. http://en.wikipedia.org/wiki/23andMe says that over $100 million was invested in the company ($52.6 million plus an additional $50 million in 2012). The New York Times reports that the FDA has made it illegal for them to sell their only product (story). This is a great example of regulatory risk that ordinary investors might not have budgeted for.
Question: would it be illegal for 23andme to relocate to Singapore, for example, and have people mail DNA samples to Singapore and then email them the results? The company’s web site indicates that customers in Singapore (and a bunch of other countries) can send their DNA to have it tested. Would the FDA have jurisdiction to prevent a Singapore-based company from accepting packages from consumers in the U.S.?
We’re not allowed to buy/receive prescription drugs from Singapore, so we’re probably not allowed to buy FDA-unapproved “medical devices” from Singapore either.
They could even do it on the sly. Just tell prospective clients all they have to do is lick the envelope and include their purchase number and they will get an email with the results in two to three weeks. 🙂
They’ve been pushing the envelope on this for years. The FDA has been hounding them for a while. 3 years ago, the FDA rattled their sabers in the general direction of the consumer genetic testing market. Other companies withdrew, but 23andMe seems to have decided they liked having the market to themselves, for a while, at least.
If any investors were surprised then either they failed to do their due diligence, or the officers in 23andMe were derelict in their duties.
23ANDME has been operating for more than five years, but have not complete and submit to FDA valid studies to back up what can be the most comprehensive health examination you can ever have. 23 were dancing around with FDA for the past five years and FDA let them dance, until now. If you are an investor in this company, you should know what kind of risk you are buying into. They’ve been tangling with FDA for years.
We know how this will play out, right? 23andme will hire lobbyists to get their way like Big Pharma and Big Food. (example).
Your post is basically a giant red flag for dubious medical tests, so a quick perusal of QuackWatch.com brings up a pretty thorough article on genetic testing and why it’s probably a sham. No specific mention of 23AndMe, but that’ll probably change soon.
http://www.quackwatch.org/01QuackeryRelatedTopics/genomics.html
Considering the government’s had their eye on companies like this since 2005, it shouldn’t be a surprise to investors. But then again, they probably don’t care. You invest millions into a scam company, they sell a useless product, and everyone makes a shit tons of money, it’s great. These kinds of things are bad enough when normal laboratories run standard tests against completely unrelated diseases and make diagnoses from that, let alone a new technology no one yet knows works or does what people or companies claim.
Also, moving your company to Singapore is an awesome red flag in the same way a cancer quack sets up shop in Tijuana. Sure, they can make millions of dollars, but then they also kill people by performing invalid procedures or selling useless products and tests for tens of thousands of dollars to desperate people that are claimed to do something when in fact they don’t do anything.
http://www.quackwatch.com/01QuackeryRelatedTopics/Cancer/clark.html
(It should be lastly noted, they could probably sell whatever they wanted to, so long as they made no specific health claims. Go to your local supermarket and see how many homeopathic “drugs” rake in millions but claim, and do, nothing.)
The bad news: On top of all the other warnings in the comments, you must remember that this is a major federal felony. Sale of adulterated products (like anti-freeze in heparin) carries a long prison term. Getting cute or persistent refusal to cooperate leads to men with guns and handcuffs taking you away. Setting up in Singapore might also mean never crossing the US border again. There is no corporate shield against organized crime laws. The crime is personal and the management team can go to prison.
Good news: The FDA is rewarded for helping you to succeed. They don’t advance their career with arrests or convictions. But they are somewhat schizoid. They want you to succeed but won’t risk their career by accepting any claim without solid scientific evidence. Marketing hype is not scientific evidence. If you claim “this test diagnoses disease X”, then you must have scientific evidence that it does that.
The other low cost players went looking for such evidence, couldn’t find any, and pulled out of the market. I’m not sure whether 23andMe suffers from Silicon Valley hubris or routine criminality. But it has neither withdrawn its claims nor stop selling.
A claim that “this is a fun game”, with no hidden medical claims, would satisfy the FDA. But my dealings with medical product newbies from the software world has been that they can’t avoid ridiculous hype. It’s part of the culture to make absurd claims with no scientific basis. Everyone ignores the hype, looks at the tech, and figures out what the reality must be. The FDA will not tolerate that. If you make a claim, you must have scientific evidence.
An alternative claim of “here’s your sequence data, enjoy” would also be acceptable. This is what the full price sequencing companies offer. The FDA will ask for evidence that the sequencing equipment works, but in that market everyone has extensive evidence because their customers also demand that the sequencing equipment work. Unfortunately for 23andMe, full sequencing costs around $1K, although that cost is steadily falling. The typical consumer also has no idea what to do with sequencing data.
What I want to know is, how did the Wojcicki family happen to spawn two billionaires within a span of a few years? Has any one family ever come into so much money without even starting a business?
Or killing anybody.
Singapore? Have you heard of TPP – the secret trade deal for the Pacific countries excluding China.
Every Trade deal US has signed has more US Laws
exporter to the rest of the World.
Don’t you know that every export factory of drug manufacturer
that want to sell to US has FDA inspectors sitting in the factory.
and has to get a clearance.
Not sure the regulations killed it as much as their product being a piece of shit. Testing saliva for genetic abnormalities is like testing a pile of bacteria. At least someone somewhere made $100 million on it.
I know that people from New York were not allowed to submit samples, since State of New York had some law that prohibited mailing of samples, all you had to do was to mail from a non new york state address.
I got my 23andme results back a couple of days ago. Some parts, especially about my Ashkenazi heritage and likelihood for Atrial fibrillation were precise. It said that I have a slightly elevated risk for bladder cancer that my 11 yr older ex-smoker brother has indeed already had. It missed that I have RLS. Overall, I’d grade the experience as a B, maybe B+. interesting experiment worth $99 for me. There are already plenty of disclaimers on the site. Some results like Alzheimer’s and breast cancer are locked cannot be viewed unless extra paragraphs and waivers are read and acknowledged. So I think the FDA is just saber-rattling. Only a fool and a corrupt doctor would actually treat the results as anything than more a speculation about family history.
Ron, you give a good example of the culture clash between internet/software experience and FDA law.
You’re quite right that only a fool would treat based on this. Internet/software users expect that advertising and marketing is full of hype and lies. Similarly, only a fool would use snake oil to treat TB. But here, the law is different. For medicine, medical devices, and medical tests, hype and lies are considered criminal fraudulent acts.
The law, enforced by FDA, is that all claims must be based on reasonable scientific evidence. 23andme claimed that based on your sample you have an elevated risk for bladder cancer. The FDA demand is for the reasonable scientific evidence to support that claim, and all their other claims. 23andme has been unable or unwilling to provide that scientific evidence. That’s the core problem.
Note, the reasonable scientific evidence need not be error free. Science advances. Mistakes get made. The FDA only demands reasonable efforts and reasonable efforts to correct mistakes. The definition of reasonable is an area where the FDA is subject to deserved criticism. Delays in HIV treatment approval and cancellation of day-after contraception devices, are examples of serious procedural problems. The 23andme situation is not one where they disagree over “reasonable”. 23andme has not provided evidence.