A Florida company is betting that people are so fed up with the country's medical records system that they'll opt to have an ID chip injected into their arm.

In October, Applied Digital Solutions received an FDA approval to implant its VeriChip™ device in humans as a way of giving medical personnel instant access to secure medical information. Among the initial targets: those with Alzheimer's disease, patients with diabetes and chronic heart disease, and individuals with pacemakers or other implants.

While Applied Digital CEO Scott Silverman heralded the FDA action as creating "significant growth opportunities" for his company, the news has triggered a swirl of controversy not just in the U.S, but around the world. Business consultants, bioethicists, and technical experts have raised issues ranging from privacy concerns to skepticism over the enormous infrastructure required to make the idea work.

"So what is the problem that this technology solves?" questioned computer expert Thomas Green in The Register, a UK publication. "We don't think there is one, unless doctor's offices are being flooded with people who can't recall their own medical histories."

Washington Futurist Joseph Coates is more sanguine. "There are very few things that are inevitable, but I think this is one of them," he told Design News. "The technology is there, and the applications won't just be for medical."

From Pets to People

The device in question measures just 11 mm × 2 mm—about the size of a grain of a rice—and consists of a memory chip, tuning capacitor, and an antenna coil, all housed within a glass-and-silicone structure. In a short, 20-min procedure, a medical practitioner uses a syringe to insert the VeriChip into the fatty tissue of the right triceps. As it emerges from the syringe, the chip gets coated with a substance called BioBond, which insulates the chip from the body and allows it to adhere to the fatty tissue of the right triceps.

In an emergency, a medical specialist would pass a handheld scanner, operating at a frequency of 135 kHz, over the implanted chip to activate the copper coil in the dormant device. The chip would then transmit a unique 16-digit identification number to the reader at the very low frequency of 4 kHz. This ID number provides access to a secure database, which gives authorized medical personnel details on the patient's medical history.

Applied Digital is investigating putting more memory on the chip, as well as building in read/write capabilities to allow for updating information stored on the device, but the real focus is on building the data base network. "Rather than storing your life's history on an implanted chip, it make a lot more sense to use the chip as a reference number that accesses a detailed outside database," says Kevin McGrath, CEO of Digital Angel Corp., a subsidiary of Applied Digital. "For example, each patient would fill out a three-page medical history, including information on their doctors and insurance companies. In addition, the system could also access supplementary databases, such as records at a hospital where a patient received treatment."

Application of this RFID technology to humans follows nearly a decade of experience with animals. McGrath notes that the number of pets that have received implanted ID chips has grown from 40,000 in 1995 to a million in 2004, with no serious problems reported. Each month, according to the company, these chips help reunite 6,000 lost dogs and cats with their owners. In addition, the company has chipped 4 million salmon in the Pacific Northwest for tracking by conservationists. Millions of cattle also wear the company's RFID tags on their ears.

With this track record, Applied Digital felt confident enough about the technology to submit a 510(k) application to the FDA in October 2003. By that time, several of the company's own employees had already received the implant, including surgeon Richard Seelig, the company's VP of medical application. Seelig inserted the chip shortly after the 9/11 attack, when he saw on TV how firemen were writing badge numbers on their arms so they could be identified in the event of a tragedy. In addition, Mexican Attorney General Macedo de la Concha announced last summer that he and about 20 other employees of a new anticrime computer center in Mexico City had been implanted with the chip as a security measure for gaining access to the facility.

"As part of our FDA submission, we included data on an initial 30-person user group, which showed no side effects from the implant," Seelig says. "You are talking about a device that weighs 0.002 gm and is made with materials that are known to be biocompatible."

Nevertheless, as part of its approval of VeriChip as a Class 2 medical device, FDA issued a guidance document that requires Applied Digital to show how it will mitigate health risks that could occur with the device, such as possible tissue damage or migration of the chip from its original implant site. In addition, makers of all implants must address problems that could occur during MRI exams. "If a company does not adhere to the mitigation guidelines, it can lose its exemption," says Anthony Watson, chief of FDA's General Hospital Branch.

The Infrastructure Challenge

Perhaps the biggest hurdle facing the company is building a sufficient user base for VeriChip. McGrath notes that some 11 million Americans a year receive some sort of implant-pacemakers, artificial hips, arterial stents. He believes many would choose a system that would give medical personnel ready access to information on these implants in emergency situations.

To get the word out, the company is giving presentations at medical conferences and before patient groups, such as those with diabetes or heart disease, Seelig says. The company is also supplying the VeriChip reader, which costs $650, to some 200 trauma centers around the country. Last Spring, the Italian Ministry of Health approved a clinical study of the chip at a hospital in Rome.

Among other steps to market VeriChip to medical practitioners, Applied Digital recently signed an agreement with Henry Schein, a large healthcare products distributor. It also signed a letter of intent to buy eXI Wireless, a provider of wireless and RFID technologies to hospitals and nursing homes.

Despite Applied's view that both patients and medical personnel are growing increasingly dissatisfied with the current medical records system, many observers are skeptical that the VeriChip technology will gain enough support for widespread use.

"As a means of identifying lost pets, the device works fine," says David Engels, research director of MIT's Auto-ID Lab. "But I see no compelling reason why people would choose to be chipped en masse." He points to the huge challenge facing the company in building the infrastructure needed to make the technology practical, such as providing readers to medical personnel throughout the country, as well as developing the information database. "Unless everyone is chipped, how will the medical professional know when to pull out a scanner?" Engels asks.

Engels adds that effective medical identification efforts already exist. For example, the nonprofit MedicAlert Foundation, established in 1956, has grown to 2.4 million members worldwide and is endorsed by 100,000 medical professionals. Members typically wear a bracelet that lists an ID number, the person's primary medical condition, and a phone number that accesses a 24-hr response center, where authorized personnel can get information on the person's medical information.

Other observers raise privacy issues. "I'd be concerned that dozens of others, besides your doctor, could gain access to your medical information," notes Thomas Murray, president of the Hastings Center for Bioethics, Garrison, NY. "Once information is put on a chip, you start to lose control."

Privacy issues also concern Sara Shah, an analyst with Applied Business Intelligence, which tracks the RFID market. She questions the need for the Verichip and wonders who will pay for the implanted chip, which will cost about $150. "For this technology to catch on, you would need a major educational push for people to understand how this chip would help them," Shah says.

Finding New Applications

Despite such criticisms, Applied Digital and its subsidiaries are moving ahead—not just with the medical ID application of VeriChip, but with other technologies, including long-term research into an implantable device for locating people via the global positioning system.

Digital Angel has already added temperature sensing capability to the ID chip used in pets. It implanted this new device in 50,000 animals in the UK in 2004, with plans for a U.S. introduction this year. Zeke Mejia, chief technology officer for Digital Angel, says that the new device—slightly largely than the ID chip—has the temperature sensor and calibration programming embedded into an ASIC. The company has applied for a U.S. patent on the technology.

The temperature sensor is the first step in what the company sees as a natural progression toward adding more sophisticated biosensing capabilities to its chip, such as glucose monitoring, a technology that it eventually hopes to implant in humans. "This is still years away, but we don't want to rest on our laurels with just an ID chip," Seelig says.

Applied Digital officials insists that the company is making progress in gaining the medical field's interest in VeriChip. They point to the thousands of deaths that occur each year as a result of medical misinformation, as well as to the Department of Health and Human Services efforts to get $138 million in new funding to revamp the country's medical records system.

Some critics, however, doubt that Applied Digital's technical agenda for medical applications is very realistic, especially for a company with less than $100 million in annual sales—virtually all of it from its telecom and non-medical ID products. Said one skeptic: "It sounds like a narrowly niche company is trying to find some new revenue by creating a lot of buzz."