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Drug Testing News
In your hair:
Start-up betting on new drug-test technology
Posted Saturday, August 16, 2003 - 4:33 pm
By Ben Szobody
Before the spring snow had melted outside Albany, N.Y., a
biotech start-up flew top executives and advisers to
Greenville to peddle a cloaked drug-testing invention to
Upstate corporate heavyweights.
Strands of human hair were central fixtures in the mission.
Decaf coffee served as a conceptual model.
The spirited group including former Michelin North America
managers and past R.J. Reynolds, Liggett Group and American
Brands executives mounted a challenge to what has become the
"gold standard" of employment drug testing: human urine.
To test hair instead and in a portable, suitcase-sized
appliance is what several of Greenville's corporate suits
heard from the Schuylerville-based DrugRisk Solutions LLC. CEO
David Brill, an M.D. with a tight smile, declines to name the
Upstate firms involved in the talks, though there will
"unquestionably" be major local partnerships announced this
year, he said.
What he does say is that DrugRisk's brainchild could help
health insurance firms peg smokers; give small contractors and
big-time casinos the means to vet new hires almost instantly;
and even alleviate the states' bath in red ink.
Drug testing experts say they've never heard of anything like
Brill's contraption, though it could face competition from
cheaper drug testing alternatives.
Already, shipbuilding giant Northrop Grumman is involved in
the technology. Global contractor Bechtel will get a first
look at the microwave-sized cube early next year.
The employment drug test circa 2003 has become more of an IQ
test, Brill says, with "any one of 30 ways to beat urine."
Only the stupid fail.
Still, the cost of a plastic cup and a dipstick has been hard
But DrugRisk will soon have its suitcase what Brill calls a
"clunker prototype" rolls out next month. So far, venture
capital pockets and private investors have anted up more than
$2 million without seeing the invention.
The firm currently operates from two New York trailers, with
plans to grow a business of nearly $100 million in revenues
within six years. It helps that federal regulations simply
don't exist for hair testing.
Brill's chemical technology isn't new: DrugRisk soaks trace
amounts of chemical substances from human hair the way
caffeine is extracted from coffee.
It's the suitcase application that's novel. Brill won't say
how much he plans to charge for the boxy invention, only that
he'll follow the strategy of razor companies Gillette Co. and
Schick- Wilkinson Sword, which hunt customers by distributing
razor handles for nearly nothing, then marking up the
disposable blades for a profit.
DrugRisk sales will depend on a disposable hair cylinder.
About 10 hairs compared with 50 to 100 required for major
laboratories are sealed inside the tube, then the chemicals
extracted without digesting the hair.
It's an InstaTest. A purging experience. "Microwave testing,"
Brill calls it.
His eventual aim is simple: sell out when the competition
arrives and profits are thick.
Unlike any other
Testing experts say convincing small businesses to use
portable drug tests or truly selling the product en masse
could take a long time, and competition could come from
alternative sweat and saliva testing methods, which are
But at a lower cost than lab hair tests and less than 30
minutes' turnaround on individual tests, Brill's invention is
unlike any other on the drug testing market, consultants and
trade groups say.
In a wire-bound printout of a PowerPoint presentation, he
outlines more than $900 million in potential product sales.
Actual estimates to investors are much more conservative,
though Brill said the numbers were intended to be beaten.
He plans to sell 4,000 of the devices by 2008 to the military,
life insurance companies and maybe McDonald's.
Investors' cumulative return on equity, though negative or
nonexistent in the first three years, could exceed 400 percent
by then, he projects.
Dan Rawls, president of a small Piedmont contractor and a
state representative for the National Association of Home
Builders, said once small businesses understand the cost
benefit of testing for drugs, they could buy into the DrugRisk
"Insurance is going crazy," Rawls said, and when combined with
the cost of worker's compensation is among the biggest
problems small construction outfits have faced over recent
Brill concedes DrugRisk doesn't have the marketing muscle to
deliver its product to the small- and midsized businesses that
are 80 percent of its potential market and where just 3
percent of firms test for drugs. So it plans to partner with
insurance providers that will charge companies lower premiums
in exchange for DrugRisk certification that employees are
That could work for all but the smallest contractors, Rawls
"The client will get you" if a contractor is using drugs, he
said. "It's automatic you go to court, and they'll burn you
to the bone right there."
Major corporations have long had the economies of scale to
send employee hair samples to a laboratory for the more
reliable testing method drug use shows up over the preceding
90 days with a hair test, instead of the two- or three-day
window for urine.
But hair tests have typically cost $60 to $80 per employee,
unless testing is done at high volumes. The lengthy turnaround
time also kept urine business flowing. Brill's DrugRisk
product is portable, works in under half an hour and costs an
average of $25 per test in the same ballpark as the urine
method, he said.
Rawls said that price tag is "probably a reasonable rate."
Laura Shelton, executive director of the Drug and Alcohol
Testing Industry Association, said on-site urine tests can
actually cost as little as $5 per test, and saliva versions
can cost less than DrugRisk's price, too.
Brill counters that he's selling 30 times more information.
Some question the premise to begin with.
Theodore Rosen, director of the Organizational Behavior and
Development program at George Washington University, said
improved drug testing methods pose greater ethical dilemmas.
The workplace test leaves interpretation of harmful substances
up to the employer, turns companies into enforcers and yields
more information on an employee than superiors are entitled to
know, Rosen said.
The issue, Rosen said, "is beyond ethical, it's emotional
"We certainly can measure much more accurately now a person
who has used drugs in the past," he said. "The question of
ethics is, when in the past, what is the relationship to
current performance, and is there really a cost?"
But Brill doesn't flinch when describing how his secret could
reshape hiring practices and health insurance plans at major
corporations, manual- labor businesses and even the federal
Brill has raised $2.2 million for his enterprise, more than
half from a single New York venture capital firm. He needs
another $6.5 million in two years.
Projections to potential investors show nearly $100 million in
fifth-year revenues, revised downward from earlier projections
to reflect the economic weather and ensure the goal is beaten,
Brill said. Net income in 2008 is projected at roughly $25
Shelton said without knowing about DrugRisk, she's skeptical
of the numbers.
"It's hard to think of a company coming out and having $100
million in revenue when the entire (employment drug testing)
industry is only doing $767 million," she said. "That's spread
out between a lot of companies."
Brill said he's targeting more than just employment drug
testing, and his is a conservative estimate already.
"That's the way that you manage expectations for investors,"
he said. "You clearly do not want to miss expectations, you
want to exceed them."
It's a look into Brill's method of wooing the deep pockets, a
significant portion of whom are in the Upstate and Charlotte
area, he said. Doug Cummins, a former executive with cigarette
makers R.J. Reynolds and The Liggett Group and global
carpet-maker Salem Carpet Mills, said Brill has a head full of
industry knowledge that sits well with venture capitalists.
"He's very credible," said Cummins, now a DrugRisk director.
"He comes across very well."
Brill talks of how to "capture investors' imaginations" with
drug testing scenarios.
Say a state drug rehabilitation program switched from urine
testing to the more reliable hair test. Where patients could
have used another person's urine, or ingested masking agents,
or simply abstained from illegal drugs for three days, the
hair test would unmask the previous 90 days of substance
"It puts the relationship on a relationship of truth instead
of unsubstantiated stories," Brill said. He believes state
prisons and drug programs could cut costs dramatically by
certifying drug-free inmates and workers and letting those who
passed periodic hair tests live in the community.
Per person, it would cost about $100 a year to keep tabs on
Affecting bottom lines
Despite some naysayers, federal drug testing studies say the
effects of employment drug testing are showing up on
companies' bottom lines. But hair testers are still trying to
bounce back from a series of damaging studies that showed
various hair colors and racial factors could skew test
The studies were not valid, Shelton said, but the stigma
remains for many employers.
Numbers abound to support workplace testing in general, but so
do claims that drug-abusers do little financial damage overall
to corporations and that government studies are biased.
A study of construction workers in 2000 and 2001 found an
estimated 13 percent, or 785,000 workers nationwide, used
illicit drugs according to the U.S. Substance Abuse & Mental
Health Services Administration.
Another study using 1997 figures reported nearly 8 percent of
all full-time employees use illicit drugs, with food
preparation workers the heaviest abusers at nearly 19 percent.
Terry Hommel has studied substance abuse policies locally at
Michelin, Fluor Corp. and Hartness International as a
contracted medical adviser and said that based on findings in
a 1992 National Institute on Drug Abuse study, a worker using
illicit drugs today costs his employer roughly $13,500 to
$18,000 per year in added worker's compensation, absenteeism,
sick time and other factors.
"Time is money," Hommel said, stating that DrugRisk's product
will likely be well received. She is on the medical advisory
board for the company but not financially involved, she said.
Rosen, the George Washington professor, said he doubts federal
drug agencies and their research interests can be trusted to
release accurate numbers. Since testing began during the
Reagan administration, the practice has crept further into the
workplace than the drug abuse warrants, he said.
Where some occupations take heavy machine operators
obviously need to be clean, "in a lot of other jobs is where
the rub came, when you're a file clerk and they have you go
for random testing," he said. "And then random testing turned
out to be not so random all the time."
Accuracy spawns lawsuits
The simple accuracy of a hair test has already spawned
invasion-of-privacy lawsuits, Hommel said, since the tests can
expose other substances in a person's body, including
prescription drugs and harmless chemicals.
The tests can show second-hand smoke, legal prescription drugs
or recreational drugs that could be used away from the
workplace, Rosen said.
"If I'm clean when I come in to work ... then what business is
that of yours?" he said. "How far do we want to go with this?"
But Rosen said that if companies believe they'll save money by
testing employees, they'll follow the green.
Hommel said hair testers have won court cases because they
could prove scientifically that their methods were closely
modeled after the federal government's testing guidelines.
"Hair," she said, "can do nothing but help employers."
Brill said DrugRisk is getting ready to roll out software
policy wizards that will prevent abuses of its system. Initial
models will be set up to detect only illegal drugs, although
later stages will be able to highlight legal substances that
could affect work performance.
Lee Cato, director of the state Department of Alcohol and Drug
Abuse Services, said DrugRisk could benefit from the
well-known beatability of urine tests, though he doesn't think
hair testing is as fool-proof as advocates claim.
"It's just like anything else, if it's out there long enough
people will figure out a way to get around it," Cato said.
Still, "I can understand how a hair follicle testing program
can be a lot more secure."
Needs FDA clearance to fly
Brill said DrugRisk can reach into the "hundreds of millions"
in revenues within a few years, after which he'll entertain
offers from interested behemoths.
That makes the firm a sort of high-dollar venture capital
In the biotech sector, however, the gratification is delayed.
Roughly half of his investors have no biotech investing
experience, Brill said.
To crack the medical and drug rehabilitation markets, DrugRisk
needs the Food and Drug Administration's 510(k) clearance that
approves the product's competence. Brill doesn't plan to apply
for the clearance before 2005 the FDA requires 90 days
before market distribution and he said other markets could
be tapped without the FDA stamp.
To explain the purported unlimited sales potential, he points
to the government's 8 million-plus Department of
Transportation employees who must be drug tested regularly. Or
the sea of municipal police departments who do officer checks.
Brill also believes he can help McDonald's, which recently
announced it would stop selling meat from antibiotic-enhanced
animals, as well as state governments saddled with high costs
from non-violent drug offenders.
Enter drug-free certification administered by DrugRisk.
"When you start looking at small employers and medium-sized
employers, it's a little bit more of a sell," Hommel said.
Brill said once he partners with insurance firms, a win-win
could be constructed: the insurer might be able to reduce
premiums by a $1 increment, for example, but give the client
75 cents back and pocket 25 cents for itself, he said.
Greg Crowe, director of business health services at Bon
Secours St. Francis Health System, said the roadmap is simple:
show small businesses the money.
His St. Francis department sees 85 percent to 88 percent of
all employment drug tests being done with urine.
"I still scratch my head and wonder, ÔWhy are we still doing
this?' " when there's better technology, Crowe said.
If DrugRisk offers foolproof certification that employees are
drug free, that could give some certified companies a bidding
advantage on various projects, or put them a step ahead to nab
"It's going to be pure and simple a matter of education," he
That could take awhile.
Marie Sitter, human resources manager for Span-America Medical
Systems Inc. and past president of the Greenville Area
Personnel Association, said drug testing "hasn't been one of
the big topics" among local HR professionals.
It's also the kind of corporate decision that can gobble a lot
"It would be one of the things a company would typically have
some legal review on," Sitter said. "It takes a lot of
thought, and it's not something where you can say, ÔOK,
tomorrow we're going to start something.' "
Cato, the state drug services official, and Shelton, of the
testing industry association, said many firms will likely wait
Brill is ready to break out.
He has a corps of big-business advisers and employees who have
peddled their way into major glass offices like the ones at
Bechtel and Northrop Grumman and unnamed local heavyweights.
He has one patent issued, two pending and two more coming.
Another venture capital firm is mulling an investment.
He plans to ship prototypes to select firms in the first
quarter of next year, then roll out the product in the
Southeastern corridor from Birmingham to Raleigh-Durham with
Greenville at the nexus. It's the same place Brill's idea for
the company was born, while he was corporate medical director
"In some ways we never left the Upstate," he said. His
accountant, attorney and PR rep are still here. "We've been
running dark for years now. Now we're going to come out into