RFID chips headed for hospitals?

VeriChip, the company that makes RFID tags for humans, has moved one step closer to getting its technology into hospitals.

The Federal Drug Administration issued a ruling on Tuesday that essentially begins a final review process that will determine whether hospitals can use RFID systems from the Palm Beach, Fla.-based company to identify patients and/or permit relevant hospital staff to access medical records, said Angela Fulcher, vice president of marketing and sales at VeriChip.

VeriChip sells 11-millimeter RFID tags that get implanted in the fatty tissue below the right tricep. When near one of Verichip's scanners, the chip wakes up and radios an ID number to the scanner. If the number matches an ID number in a database, a person with the chip under his or her skin can enter a secured room or complete a financial transaction.

"It is used instead of other biometric applications," such as fingerprints, Fulcher said.

The approval process does not center on health risks or implications, Fulcher said. VeriChip can already sell implantable RFID chips in the United States for standard security applications and the financial market. The company's basic technology has also been used in animals for years.

Instead, the FDA may mostly examine privacy issues, Fulcher indicated. In other words, the agency will look at whether the technology will lead to situations where confidential information can get improperly disclosed.

Technically, the FDA on Tuesday issued a letter stating that there were no equivalent products on the market. This allowed VeriChip to then seek a de novo, or additional, review. The application process started in October 2003.

The Italian Ministry of Health kicked off a six-month trial of the chips for hospitals in April.

VeriChip, a division of Applied Digital Solutions, generated headlines worldwide recently with the announcement that the Attorney General of Mexico implanted one of the small company's RFID tags in his arm.

Fulcher said the basic technology has been around for a while. For 15 years, Digital Angel, a sister company under the Applied corporate umbrella, has sold thousands of tags for identifying animals. The US Department of Energy employs Digital Angel's technology to monitor salmon migration. Several implants have been placed in household pets and livestock.

"We believe the tags can last 20 years," Fulcher said.

The idea for employing the tags to identify humans came after the horror of the Sept. 11, 2001, attacks on the World Trade Center and the Pentagon, Fulcher said. Richard Seelig, vice president of medical applications at Applied, saw on TV how firemen were writing their badge numbers on their arm with pen so they could be identified in the event of a disaster.

He inserted Digital Angel tags in his body and told the CEO that they worked. VeriChip was born. In June, the company hired Next Level and Motorola alum Kevin Wiley as CEO.

About 7,000 VeriChip tags have been sold, and approximately 1,000 have been inserted in humans. The chips only work with VeriChip's scanners. Along with scanners, VeriChip also sells complementary security systems for opening or shutting doors after the identification process.

So far, most of the sales have been outside the United States. Along with its attorney general's implant, Mexico has evaluated the chips as a way to better identify children in the event of a kidnapping. The Baja Beach Club in Spain has used them as electronic wallets to buy drinks. Sales have also taken place in Russia, Switzerland, Venezuela and Colombia.

"The applications that have taken hold at this point have been international so far," Fulcher said.

Michael Kanellos writes for CNET News.com