Tag Archives: healthcare

Data Localisation: India’s policy framework

The Personal Data Protection Bill, 2018 (“Bill”) and the Data Protection Committee’s (“Committee”) Report (released on 27 July 2018) contains the framework and the policymakers’ insight on protection of personal data in India. The recent Draft e-commerce policy indicates Government’s thought process on storing data in India. The Reserve Bank of India (RBI) in April this year mandates that all data generated by the payment systems in India, is to be stored in India. The Ministry of Health and Welfare has published the draft legislation called Digital Information Security in Healthcare Act, to safeguard e-health records and patients’ privacy.  Thus, all these new rules/policies/regulations (collectively referred as “the Data Protection Framework”) indicate a very strong direction that the Government wishes to undertake on data localisation, which helps in enforcing data protection, secure nation’s security and protect its citizen’s data, better control on transmission of data outside the country and more.

We believe initial steps were taken when under the Companies Act, 2013, the maintenance of books of account in electronic form, required copies to be kept in servers physically located in India.

Many questions abound that the Government take fast paced measures in enabling the infrastructure to build data-centres, which in-turn requires land clearance, electricity etc., ability to keep the operational costs for SMEs low, jump-starting initiatives on artificial intelligence, delicate balance to be maintained on surveillance and protection.  On a positive note, this provides entrepreneurial opportunities in building data centres, alternative energy/ solar grids etc.

Data Localisation under the Data Protection Committee’s Report and the Bill

Chapter 6 of Committee’s Report provides compelling arguments on ‘Transfer of Personal Data Outside India’, where the Committee notes Laissez Faire economy of data, i.e. where free flow of data is the norm and to restrict as an exception. It also recognizes that an embargo on data crossing borders as curbing personal liberty of people. The Committee recommended that even if the intended destination is across borders, all data to which Indian laws would apply would need to be stored locally as well. The Central Government may decide that certain data may not be permitted to be taken out of the country and requiring its processing to be done locally. To highlight sections 40 and 41:

  • The Central Government shall determine categories of sensitive personal data which are ‘critical’ in nature having regard to strategic interests and enforcement, this personal data can only be processed in India.
  • Transfer of other non-critical personal data will be allowed subject to one serving copy of it being stored in India.
  • Cross border transfers of personal data, other than critical personal data will be through model contract clauses with the data transferor being directly liable to the data principal.

Mandatory Data Localisation being prescribed under different aspects

Localisation of Payment Systems Data mandated by RBI: Even before the release of the Committee’s Report and the Bill, data localisation was touched upon by RBI in its Notification of 9 April 2018, where it directed all payment system providers to ensure that all data relating to the payment systems are to be stored in systems situated only in India. Under the said notification, the RBI includes ‘full end-to-end transaction details’, ‘payment instructions’ and other information collected, processed, carried, etc. to be within the ambit of data which is required to be stored. The maintained are to be annually audited and reported to RBI.

Localisation of Data under the National E-Commerce PolicyThe Draft National Policy Framework (the “National e-commerce Policy”) concerning the ‘Digital Economy’ seeking to regulate the ‘e-commerce’ sector in India, proposes localisation of several categories of data involved in e-commerce. The intent stated is to create a ‘facilitative eco-system’ to promote India’s digital economy through measures such as, data generated by users in India from sources such as e-commerce platforms, social media, search engines, etc., and all community data collected by Internet of Things (IoT) devices in public spaces are to be stored exclusively in India and sharing of such data within the country is proposed to be regulated.

The localisation of data is not absolute and cross-border flow is allowed for a handful of cases, such as for software and cloud-computing services involving technology related data-flow (which are free of any personal or community implications) and other standard exceptions consistent with the views expressed in the Committee’s report.

Localisation under the draft amendment to Drugs and Cosmetics Rules, 1945

The recent draft amendment proposed to the Drugs and Cosmetics Rules, 1945, for regulating e-pharmacies, makes it clear that e-pharmacies web-portals have to be established in India for conducting its business in India and data generated to be stored locally. The draft rules states that under no means the data generated or mirrored through e-pharmacy portal shall be sent or stored by any means outside India.  

Data Centres in India

For the data to be stored locally, data centres need to be established, regulated and function under the law. The demand for companies to host their data in India stemmed from  security perspective. The major issues with data localisation is not only of cyber security but also jurisdiction. Cloud computing softwares have taken advantage of the economies of scale and an infrastructural architecture across the world. Thus when there is a threat presumed in one part of the world, the algorithm would move the data to another location or even in multiple locations. In addition to this the Cyber Security Report, 2017 released by Telstra have reported that businesses in India were most at risk to cyber security attacks. Further the organisation in India have experienced the highest number of weekly security incidents of all Asian countries surveyed.

The Privacy Bill provides that the Central Government to notify categories of personal data for which the data centres have to be established in India and the Authority to be established under the legislation to be responsible for the compliances.  Further for achieving its goal of facilitating India’s ‘Digital Economy’, the National e-Commerce Policy purports to grant “infrastructure status” to data centres and server farms in India. An infrastructure status by getting listed under the Harmonized Master List of Infrastructure Sub-sectors by the Department of Industrial Policy and Promotion (DIPP) entails that it’ll be easier to get credit to enter into these operations. This would be accompanied by tax-benefits, custom duties rebates and also 2-year sunset period before localisation becomes mandatory. However, these incentives are only being considered and not promised as of yet.

Cost-Benefit Analysis on Data Localisation

In Chapter 6 of its report, the Committee takes up a detailed analysis of the benefits and repercussions of adopting mandatory data localisation in India. Benefits as stated in the report include:

  • Reduction in the costs of enforcement of India’s own laws because of easier availability of data within its jurisdiction, the cost and time spent on co-ordinating with foreign agencies for access to requisite data being reduced.
  • Overseas transactions of data involve reliance on fibre optic cable networks spread around the world, which are vulnerable to attacks and perhaps localisation of data may reduce this security risk.
  • Having copies of all data collected in India will be a huge boost to the digital infrastructure as the domestic industry will now be able to harness a lot of data. For instance, the report points out that developments in Artificial Intelligence will see a great boost from this.
  • As a matter of national security, the complete localisation of critical data prevents any foreign surveillance of India’s internal affairs.

The report also states that the localisation of data can have its costs too, however it severely downplays them. The report recognizes that to make storing of data mandatory in India, will result in a burden on the domestic enterprises which use foreign infrastructure like cloud computing for running their businesses. The implications include the increased costs of doing business for small and medium businesses, also there may be the danger of monopolization in the digital infrastructure because only a few firms would have the expertise and capital to invest in creating huge data centres in India. However, the Committee states that they are not persuaded by this argument and are confident that the potential of the Indian market will adequately trump the additional cost of setting up the infrastructure.

 Our observations

Digital India and building a thriving Digital Economy in India, building strong competencies in artificial intelligence, protecting nation’s security and data of its citizens are very critical and is now becoming mandatory for India. Establishing a strong domestic infrastructure is a big commitment for the Government, which includes making available vast tracts of land, uninterrupted power supply to the data centres and such other pre-requisites. It is to be seen how India can harvest the long term benefits.

Important reading material:

https://economictimes.indiatimes.com/news/economy/policy/draft-ecommerce-policy-champions-india-first/articleshow/65206404.cms

https://economictimes.indiatimes.com/news/economy/policy/as-ministries-argue-draft-ecommerce-policy-lands-with-pmo/articleshow/65495585.cms

https://inc42.com/features/draft-indian-ecommerce-bill-favouring-domestic-players-at-the-cost-of-the-ecosystem/

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DISHA: Data Ownership, Security, Consent for health data.

Acting on its vision for a National eHealth Authority (“NeHA”), the Ministry of Health and Welfare had introduced a draft bill for Digital Information Security in Healthcare Act (“DISHA” or “Draft Bill”).

DISHA’s main purpose, as per its preamble is to (i) establish NeHA, State eHealth Authorities (“SeHA”) and Health Information Exchanges; (ii) standardise and regulate the process related to collection, storing, transmission and use of digital health data; (iii) and to ensure reliability, data privacy, confidentiality and security of digital health data”. Our previous note on the overview of DISHA can be read here https://novojuris.com/2018/08/12/disha-the-future-direction-of-digital-health-information-in-india/). In this blog, we are covering aspects of data ownership, security, consent and others that DISHA proposes.

The Draft Bill defines digital health data as electronic data of an individual containing information about the individual’s medical records and health information and such individual would be considered as the owner of the digital health data. DISHA grants rights to owners of digital health data such as:

  1. The right to privacy, confidentiality and security of their digital health data.
  2. The right to refuse or give consent for generation and collection of digital health data by Clinical Establishments (a defined term which you can read in our previous blog here…).
  3. The right to refuse, give or withdraw consent for storage and transmission of digital health data.
  4. The right to refuse consent thereby restricting access to or disclosure of digital health data. However, it is not clear if the Clinical Establishment can still transmit under “reasonable use”, despite refusal by the data owner. It may be noted that reasonable use is used as a wide term.
  5. The right to ensure that the data collected is specific, relevant and not excessive in relation to the purpose sought.
  6. The right to know about the Clinical Establishments or entities which may have access to the data, the recipients to whom data has been transmitted or disclosed.
  7. The right to access the health data including their consent details and access of their data by any Clinical Establishment or any other entity.
  8. The right to possess the right to seek rectification of data by a Clinical Establishment in the form prescribed by NeHA.
  9. The right to necessarily mandate express prior permission before transmission or use of data in an identifiable form.
  10. The right to be notified each time their data is accessed by a Clinical Establishment.
  11. The right to ensure sharing of data with family members in case of health emergency.
  12. The right to prevent transmission or disclosure of sensitive data that may cause distress to the owner.
  13. The right to not be refused health services in case of refusal to give consent for any of the activities or data generation, collection, storage, transmission or disclosure.
  14. The right to seek compensation for damages cause as a result of breach of data.

DISHA lists down the purposes for which data is to be collected, stored, used which are:

  1. Advancement of delivery of patient centred medical care.
  2. Appropriate information for guiding sound medical decisions at time and place of treatment
  3. Improvement of coordination of care and information among hospitals, laboratories, medical professionals through an effective infrastructure for secure and authorised exchange of data.
  4. Improvement of public health activities and facilitation of early identification and rapid response to public health threats, such as disease outbreaks and bioterrorism.
  5. Facilitation of health and clinical research and health care quality
  6. Promotion of early detection, prevention and management of chronic diseases.
  7. Carrying out public health research, policy formulation, review and analysis.
  8. Undertaking of academic research and related purposes.

Under the Draft Bill the usage of personally identifiable information can be undertaken only for advancement of delivery of patient centred medical care, appropriate information for guiding sound medical decisions at time and place of treatment and improvement of coordination of care and information among hospitals, laboratories, medical professionals through an effective infrastructure for secure and authorised exchange of data to extent of ownership rights and in the best interest of the owner. The usage of data for public health related purposes shall be undertaken only after anonymisation and de-identification of data.

No data collected shall be used for any purpose other than what has been prescribed, be provided access to or disclosure of personally identifiable information without express consent of the owner or a statutory or legal requirement. The data collected shall not be used for commercial purpose or disclosed to insurance companies, employers, human resource consultants and pharmaceutical companies, irrespective of such data being identifiable or anonymised. However, the insurance companies may seek consent of the data owner to access such data for the purpose of processing insurance claims.

A Clinical Establishment may, by consent of the owner, collect the health data after informing the owner about the ownership rights, purpose of data collection, identity of data recipients to whom data may be transmitted or disclosed or who may have access to data on a need-to-know basis. A copy of the consent form is to be provided to the owner. Moreover, an entity that engages in collection of health data would be regarded as the custodian of such data and would be responsible for protection of such data. In case the owner is incapacitated or incompetent to provide consent, the same shall be obtained from a nominated representative, one having legal capacity to give consent. In the event the person becomes competent to give consent, the owner would have the right to seek withdrawal of consent given by nominated representative and seek consent of owner for collection of health data as prescribed by NeHA. This option to consent through a nominated representative extends in the case of collection of health data of a minor as well with the minor having the option to seek withdrawal of consent of the nominated representative to give own consent.

DISHA prescribes that the storage of digital health data so collected would be held in trust for the owner and the holder of such data would be considered as the custodian of data thereby making such holder responsible to protect privacy, confidentiality and security of data. The holder of data could be a Clinical Establishment or a Health Information Exchange.

Storage of digital health data shall be stored only by a Clinical Establishment or a Health Information Exchange and shall be held on behalf of NeHA and shall be subjected to such usage as has been prescribed without compromising on the privacy or confidentiality of such data or owner.

The transmission of digital health data is required to be transmitted by a Clinical Establishment to a health information exchange in an encrypted form for reasonable use as per standards prescribed by NeHA keeping in mind the privacy and confidentiality of the owner. A Clinical Establishment or health information exchange would be allowed to transmit the digital health data only after obtaining the prior consent of the owner and giving information to the owner about their ownership rights and the purpose of collection of data. Moreover, a health information exchange is also under an obligation to maintain registers containing information regarding any and all transmissions of digital health data between Clinical Establishments and health information exchanges and between health exchanges.

The digital data collected, stored or transmitted by a Clinical Establishment or a health information exchange may be accessed by a Clinical Establishment on a need-to-know basis. Access to digital health data may be sought by the governmental departments by their secretaries in de-identified or anonymised form by submitting a request to NeHA in furtherance of public usage of health records. Moreover, access may be granted to digital health data for purpose of investigation into cognizable offences or for administration of justice subsequent to order of a competent court. In the case of emergencies, the Clinical Establishments may be granted access to the digital health data of the patient and the relatives of the owner may also be given access to the data for correct treatment of the owner. Moreover, all Clinical Establishments and health information exchanges are required to maintain registers to record purpose and usage of digital health data so accessed in a manner prescribed by NeHA.

Under DISHA, the Clinical Establishments, health information exchanges, SeHA, NeHA are duty bound to protect the privacy, confidentiality and security of digital health data of the owner. Such duty also extends to an entity which has generated and collected digital health data. Such duty is to be given effect to by undertaking necessary measures to ensure that data collected, stored, transmitted is secured and protected against unauthorised access, use or disclosure and against accidental or intentional destruction, loss or damage.

The Clinical Establishments or health information exchanges are required to notify the owners of data in cases of breach or serious breach of digital health data within 3 (three) working days. The Draft Bill does not clarify if the 3 days is to be calculated from the date of breach or from the date of becoming aware of a breach.

Some observations:

  1. The Draft Bill must identify a competent court that is authorised to pass an order for usage of data.
  2. The Draft Bill fails to provide for a penalty on Clinical Establishments and health information exchanges for storage of incorrect digital health data.
  3. The time of 3 working days for intimation of breach, may have to be 3 days and not necessarily “working” days.
  4. Although the entities have a duty to protect the data of the owner, the duty to notify the owners in cases of breach of information doesn’t extend to entities and has been limited only to Clinical Establishments and health information exchanges.
  5. The Draft Bill must provide for Right to be Forgotten.
  6. The Draft Bill must provide for a cohesive reading with (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules 2011, under the Information Technology Act.
  7. We hope that there will be sufficient Rules under the Draft Bill which can provide for specific consent specifically to certain acts and not a blanket consent.
  8. The Draft Bill should provide for specific time period for record maintenance.

Author : Mr. Spandan Saxena

InnoHealth 2017

Innovation in healthcare, medical technology, bio technology, pharmaceuticals, diagnostics, hospital management and many other sectors in health care are seeing tremendous innovations across the world.

India is drawing attention from such innovators who are viewing India as a large market, co-creation, collaborations, joint ventures etc.

In our humble way, we are enabling some of those entrepreneurial ambitions.

NovoJuris Legal along with InnovatioCuris is organizing InnoHealth 2017 at Bangalore. Many interesting companies from Finland, Sweden, Estonia, Latvia and other European countries are gathering to understand the healthcare industry landscape, how distribution works in India, the investment scene, regulatory framework for doing business in healthcare and many others.

Our amazing supporters are Honorary Consul of The Republic of Estonia, Bengaluru Chamber of Industry and Commerce, Karnataka Drugs and Pharmaceuticals Manufacturer’s Association.

This is on 21 September 2017. It is an exclusive, closed door discussion. If you are in distribution of healthcare products and wish to be part of this august gathering, do ping us – relationships@novojuris.com

You can read more here http://innohealth.in/innohealth-2017-bengaluru-session/