New OTC availability for hearing aids sparks innovation in industry

The hearing aid industry is making its voice heard. 

As of Monday morning, retailers like Walgreens, Best Buy and Walmart will sell hearing aids over the counter thanks to an August ruling from the U.S. Food and Drug Administration. The ruling was finalized as part of the Over-the-Counter Hearing Aid Act of 2017. In July, the Biden administration ordered the law to be fully implemented after a COVID-related delay.  

The move has companies in both consumer electronics and digital health excited about the potential of using technology to aid moderate to mild hearing loss. But while innovation is on the minds of many, some industry stakeholders are more measured about the effect of the FDA ruling. 

“There is already innovation that happens on a regular basis,” said Kate Carr, president of the Hearing Aid Association, an industry group that represents many of the biggest companies in the industry. “The technology is constantly improving. Will there be more companies that are coming into the space? We've already seen that.”

Carr said that while five companies — Sonova, GN ReSound, Starkey, Demant and WS Audiology — control the majority of market share, around 80 have registered hearing devices with the FDA. She added that it’s a misconception that hearing aids are a one-sized-fits all device. 

Still, executives at some of the upstart companies say the ruling is a game changer for innovation and the cost of devices. 

“It’s comparable to how streaming completely upended the recording industry or to the iPhone coming out in 2007,” said Danny Aronson, CEO of Tuned, a digital hearing company based in New York City. “It’s a fundamental game changing shift in an industry that for decades has been completely dominated by an oligopoly of five hearing aid manufacturers.” 

While technology within hearing devices has caught up, Aronson said it’s been a slow process. For instance, he said it took those bigger companies too long to add Bluetooth capabilities. The technology in wireless headphone devices from consumer electronics companies has helped push along innovation, he said. 

Femtosense, a San Bruno, California-based company, develops chips that can bring AI capabilities to small-state battery-powered devices such as hearing aids. Sam Fok, the company’s CEO, said the last hearing aid revolution in terms of technology was in the 1990s when audio switched from analog to digital. Since then, it’s been incremental change, he said. 

Fok said that an over-the-counter market will lead to more competition and better advancements in devices, such as the implementation of AI.

“With AI, I think you can be more selective about the sounds that come through—or don’t come through—the hearing aid,” Fok said. “There are two trends converging—the technology is developing and the market is being forced open. This should lead to potentially better outcomes for consumers.”

Aronson said companies like Tuned have begun working with software companies to adapt and personalize hearing aids for users’ needs. 

The established hearing aid companies are not ignoring the over-the-counter hearing aid movement. Some are even working with large consumer electronics companies to launch products. WS Audiology, a multi-billion-dollar Danish hearing aid manufacturer, is partnering with Sony to launch devices that will be sold through Amazon and Best Buy. Switzerland-based Sonova bought the hearing aid division of consumer electronics company Sennheiser for $241 million in May 2021. 
 

There is a perception built in consumers’ minds that hearing loss equals hearing aids equals old people. That perception is completely mistaken.
Danny Aronson, Tuned

Mild to moderate hearing loss 

Historically, hearing aids are primarily marketed and made for people over the age of 65 who have significant hearing problems. Experts say that those with mild to moderate hearing loss have been ignored and will benefit from increased access to over-the-counter hearing devices. 

“If you have a perceived mild to moderate hearing loss, you’ll be able to buy a hearing aid in retail without a licensed professional physically there. That’s been a huge constraint everywhere from Walmart to a mom-and-pop pharmacy,” said Christian Gormsen, CEO of Eargo, a San Jose, California-based hearing aid manufacturer. 

According to researchers at Johns Hopkins Medicine, 27 million Americans over the age of 50 have hearing loss but only one in seven uses a hearing aid. Mild hearing loss can even affect children. One study, published in Internal Archives of Otorhinolaryngology, found that up to 15% of school-aged children have mild hearing loss. 

“There is a perception built in consumers’ minds that hearing loss equals hearing aids equals old people. That perception is completely mistaken. Most people don't have severe hearing loss,” Aronson said. 

Gormsen, a long-time hearing aid industry veteran who spent a decade at GN ReSound, joined Eargo in 2014. He said he was initially hesitant because it’s been hard for any startup to gain share in the hearing aid world, but he saw potential in Eargo’s design and technological capabilities, which he said looks and sounds more like a wireless headphone piece than a traditional behind-the-ear hearing aid. 

Eargo has found ways to sell directly to consumers through the old regulatory structure, but it has not been smooth sailing. Eargo has struggled to gain market share and the company’s stock has gone from a high of trading at $71.83 per share in February 2021 to $0.67 at the close of market Friday. The company lost $32 million in the second quarter of 2022 and it also settled for $34.37 million with the Department of Justice over False Claims Acts allegations in April. 

Gormsen said the increased exposure through retail partners can be a boon for the company’s finances. 

“We’ve been around five years, but people don’t really know if they can trust the company, but if we’re in a trusted retailer, it will help,” Gormsen said.  

Along with increased exposure and improved design and technology, companies like Eargo and Tuned are betting that the lowered costs of over-the-counter hearing aids will attract more potential users. The cost of prescription hearing aids can be up to $12,000 for a pair, although they tend to average around $5,000, according to research from the American Associated of Retired Persons. 

Carr at the Hearing Aid Association said that costs often include seeing a hearing professional, return visits and getting the devices adjusted and batteries. 

“That all goes away with over the counter,” Carr said. “You’re simply going online or to a brick-and-mortar store and making a decision on your own. You may or may not know the degree of your hearing loss.”