Animal Tags for People?

Two cousin companies bet the fast-expanding market for animal RFID chips will extend to humans before long

by David E. Gumpert

Under the federally supported National Animal Identification System (NAIS), digital tags are expected to be affixed to the U.S.'s 40 million farm animals to enable regulators to track and respond quickly to disease, bioterrorism, and other calamities. Opponents have many fears about this plan, among them that it could be the forerunner of a similar system for humans. The theory, circulated in blogs, goes like this: You test it on the animals first, demonstrating the viability of the radio frequency identification devices (RFIDs) to monitor each and every animal's movements and health history from birth to death, and then move on to people.

Well, all you conspiracy buffs, let me introduce you to Kevin McGrath and Scott Silverman.

McGrath heads a small, growing company that makes RFID chips for animals…and people.

Silverman heads a second company that sells the rice-size people chips, which are the only ones with Food & Drug Administration (FDA) approval, for implantation in an individual's right biceps. They carry an identity marker that would be linked to medical records. His goal is to create "the first RFID company for people."

Human-Chip Company Plans IPO

While the NAIS remains voluntary on a federal level, and there is no formal people identification system as yet, both executives are moving aggressively to position their companies for the day when chips in animals and people are the norm rather than the exception. Mary Zanoni, a lawyer and critic of NAIS who has written extensively about the system, says that "the microchipping of livestock and pet animals is intended to make tagging more acceptable in helping these companies market their devices for people."

McGrath's company, Digital Angel (DOC), does nearly $60 million in annual sales and has sold several million chips for attachment to livestock, mostly in the U.S. and Canada.

Silverman's company, VeriChip Corp., is preparing for widespread marketing of its people chips with an initial public offering that it expects to complete within the next 60 days. It has begun building what he refers to as "the infrastructure" by signing up more than 400 hospitals to adopt system scanners and databases and about 1,200 physicians to make chips available to patients likeliest to benefit from them, such as diabetics.

While McGrath and Silverman aren't related, their companies are. Digital Angel and VeriChip have the same majority owner. Applied Digital Solutions (ADSX), the parent of seven smaller companies, owns 55% of Digital Angel and all of VeriChip.

Larger Farms Join the RFID Program

Digital Angel has a big head start in marketing, thanks in part to the Agriculture Dept.-sponsored NAIS program, which, while it is billed as voluntary, is expected by various opponents of NAIS, including Zanoni as well as blogs such as nonais.org, to be imposed on farmers by growing numbers of states. Michigan begins requiring RFID tags for cattle on Mar. 1 in the first such effort (see BusinessWeek.com, 12/19/06, "Farmers Say No to Animal Tags").

Farmers running midsize and large operations are signing up for NAIS in growing numbers. The USDA says 343,186 farms have registered, which translates into millions of animals, driven by what McGrath says are significant economic incentives.

One is inventory control. He points to a pig farm as an example. The farmer can use RFID tags "to monitor the amount fed to the sows, the medications they receive, when they get pregnant, the length of pregnancies, the number born to each sow, and the number of days to weaning."

As another example, he cites a farm with about 5,000 pigs that had an outbreak of disease, where some of the pigs got fever and several died.