Protecting personal data is at the core of every region’s data residency and localization laws. With the amount of sensitive personal information they handle, healthcare and life science industries face the burden of compliance with data residency laws by country. Healthcare data compliance requires a huge effort, and more so with the spreading use of cloud technology. Cloud computing has increased the possibilities of processing, transferring, and storing data. However, the nebulous cloud space makes it easier to breach data localization laws.
In recent years, China and many other countries have enacted regulations to protect the personal information of their citizens and residents. These laws compel companies in various industries, to maintain a high data security standard.
So, what does data protection entail for the pharmaceutical industry, and how can pharma data compliance be achieved? These are some of the questions we have answered in this article.
Why do pharmaceutical companies need to think about data protection?
As healthcare is a service-based industry companies within the sector are consumer-focused and data-driven. This means they inevitably collect and use their consumers’ personal information to offer personalized services according to individual needs.
Software technologies have enhanced the process of data collection and management. Pharma companies are now using software to identify and connect with customers, optimize their services, and increase competitive advantage. These digitally-driven companies must pay attention to healthcare data residency laws to ensure they align with pharmaceutical data compliance regulations.
There are risks for non-compliance with data residency laws for pharma. Defaulting companies may suffer significant revenue-derived fines. Also, the damage to reputation can affect the company’s goodwill and further cripple business development in the region.
Here are some cases in which pharmaceutical companies must comply with data protection:
- Medical research
Medical research is an essential part of healthcare. Pharmaceutical companies must, however, adhere to data protection laws during their research. Best practices recommend the use of anonymized data where possible. Otherwise, it is important to ensure that only the minimum amount of data required is processed and that it is processed for the original lawful purpose. Technical measures have been set up to maintain integrity.
- Clinical trials:
It is impossible in the case of clinical trials to use anonymized data. As a result, it is essential that pharmaceutical companies obtain the informed consent of trial subjects via due processes, subject to relevant data protection laws. An alternative legal basis may be required where such explicit consent is withheld.
- Data transfers
Many companies within the pharma industry operate in more than one jurisdiction. This means that sometimes, personal data gets to make its way across the borders of its original country. In such circumstances, Pharma companies must pay careful attention to ensure that data transfer laws are not breached in the process but are duly complied with.
- Third-party contracts
It is safe for controllers to enter a written agreement with their processors to keep sensitive data uncompromised. Pharmaceutical companies must be careful to ensure that vendors of data processing services are data compliant. The more data has to leave an organization, the higher the risk of a data breach. Companies, therefore, need to put in place proper measures, both internally and externally, to ensure that their processes are leak-proof. Any eventual breach will be detected early, and remedial measures will be provided.
Data privacy regulations pharma companies should comply with
Almost every country has its homegrown policies and regulations for data privacy. Pharma companies must seek to comply with laws guiding data residency for healthcare in the jurisdiction in which they operate. For better context, we will scan through these laws in brief detail:
The General Data Protection Regulation is Europe’s foremost law regulating the privacy and protection of personal information. It became applicable on 25th May 2018 and is binding on all the 27 member countries of the European Union. The GDPR deals comprehensively with the protection of natural persons with regard to the processing of personal data and the free movement of such data. It applies to organizations anywhere in the world, no matter where they are located, insofar as they process the data of individuals within the European Economic Area.
The provisions of the GDPR cover many areas, including the rights of the data subject and the obligations of data controllers or processors. It also covers areas of data transfer to third countries, remedies, and liabilities for non-compliance. Its seven core principles are:
- Lawfulness and transparency,
- Limitation to purpose
- Storage limitation
- Integrity and
The GDPR has dramatically influenced the data privacy legislation of other non-European nations. Even the United Kingdom, although no longer part of the European Union, still incorporates, to a large extent, the principles and provisions of the GDPR in their data privacy laws.
HIPAA is the relevant law for health companies either resident in the United States or involved with the residents thereof. HIPAA is the Health Insurance Portability and Accountability Act of 1996. It contains extensive provisions on pharma data integrity compliance. HIPAA provides guidelines for collecting, processing, using, and disclosing personal health information called PHI. It provides a framework that ensures the protection of personal health data while ensuring the proper flow of information to enhance efficient healthcare.
The provisions of HIPAA are binding on the following:
- healthcare providers,
- persons or organizations that offer health-related services (like health insurance, state-sponsored health plans, employee health allowance, etc.); and
- data processors and other third-party entities that offer services to healthcare companies.
GxP is a concept that refers to good practices within different fields of production. “G” refers to good, “P” refers to practices, while the “x” in between is a variable that can be replaced according to the relevant field. Thus there is GMP for good management practices, GCP for good clinical trials, and GLP for good laboratory practice. GxP affects regulated industries such as food, drugs (pharma), and cosmetics.
In the pharma industry, GxP stands for rules and guidelines that ensure pharmaceutical products and services’ safety, usefulness, and standardization. Three major regulation sets in GxP applications within the pharma industry can be are:
- GCP (Good Clinical Practice), to regulate clinical experiments, especially those involving the use of persons as test subjects.
- GLP (Good Laboratory Practice) to assess laboratory practices, procedures, and the safety of experiments.
- GMP: (Good Management Practice) to standardize food, drug, and pharmaceutical products.
- Chinese laws:
China has the world’s highest population, with more than 1.01 billion internet users. Thus, it offers a large market for global pharma companies. It is, therefore, very important to study the terrain of data protection in China to stay compliant. The major regulation for data protection in China is the Personal Information Protection Law (PIPL). This law came into force on the 1st of November 2021.
The PIPL regulates the processing of personal information in China. The processing of personal information involves all activities related to the collection, storage, usage, transmission, disclosure, and erasure of personal information. The provisions of the PIPL are binding on all companies with data or conducting business in China.
The Data Security Law of China is also a major legislation for data governance. The DSL sets up a framework for categorizing data according to their perceived effect on the Chinese national security and economy. The DSL provides rules for the localization and transfer of data. It requires that companies handling the personal information of Chinese residents improve their data security systems, repair security deficiencies and promptly notify the relevant bodies in the event of any breach.
The Cyber Security Law came into force on the 1st of January, 2017, with the primary aim of maintaining national security by guarding cyberspace. The CSL introduced the principle of cyberspace sovereignty, outlined the security obligations of internet service providers, and developed rules for protecting personal information. The CSL applies to network operators and all businesses involved in information services in cyberspace.
These are only a few examples of the major laws governing data residency for pharmaceutical companies. For Pharma companies to strictly comply with these laws, it is important to be acquainted with them.
How InCountry can help with pharmaceutical data compliance
As previously discussed, pharmaceutical companies are held to the highest data security standards. Compliance with these standards is an iterative process that requires enormous amounts of time, energy, and resources.
InCountry offers a simplified, tailored solution for pharma companies to achieve data compliance without breaking the bank. InCountry is synonymous with data compliance. At InCountry, we constantly work to keep pace with the latest compliance and regulatory standards worldwide and stay ahead of industry trends. We ensure that pharmaceutical companies that use our solutions stay data-compliant in real-time since InCountry offers data residency as a service in over 90+ countries of the world.