Finding this ad for "Wormee" by Imperial Toys made me realize that this toy concept has been around non stop for 40 years, under multiple names. My dad sold these as "Squirmles" back in the day, to the best of my knowledge this was the brand everybody ripped off:
You can see a display box of Squirmles in the top right corner of the photo above. I still see (and occasionally been conned into buying) Squirmles at those touristy gift shop/traps/vaccum cleaner for a wallets places I stumble into every vacation.
Remco AHI launched their own brand called Frizzlies in the early 1980s.
BTW, I'm really good at these things, you'd swear it was alive!