Numerous countries around the world, as well as the European Union, have enacted laws to encourage or require that data generated in a particular place be stored within their jurisdiction, and place strict limits on how that data can be accessed. The ostensible rationale for such laws is that governments need to protect their citizens’ personal data from exploitation and--if possible--give a boost to their domestic economy.
However, these scant benefits come at an enormous cost by impeding all manner of global commerce, most notably the ability of scientists to do comprehensive drug testing. The restrictions significantly slow the developments of both drugs and medical devices, ultimately costing society billions of dollars a year along with thousands of lives lost prematurely.
When pharmaceutical companies test drugs under development it is important that they have as diverse a population as possible to help them discern whether there are possible differences in efficacy or side effects across ethnicities. Until the last few years establishing a diverse trial population that included people from Asia, Europe, Africa, and North America was relatively straightforward, but achieving this diversity is becoming more difficult as various jurisdictions put up more barriers to the movement of data.
For instance, the European Union’s General Data Protection Regulations have greatly impacted the ability of the National Institute of Health to collaborate with European entities, and the number of cross-border data trials has plummeted since it took effect. Unsurprisingly, China has also instituted a number of measures to restrict the ability of companies to access data in China, and the number of cross-border drug trials that include Chinese citizens has similarly dropped in the last few years.
The inability of researchers to do truly global drug trials translates into less diverse testing populations, which means that trials invariably take longer and the results are less reliable. Research I did with Chad Cotti at Michigan State University found that the number of drug trial collaborations between the U.S. and EU declined by nearly 50 percent after the implementation of the General Data Protection Regulations, which undoubtedly slowed the pace and scope of drugs that were ultimately approved.
We also surveyed 400 medical professionals to ask them their opinions on the impact of new data privacy laws across the globe: fully 80 percent of respondents reported that it will have a negative effect on the number of drug trials that would be done in the future. What’s more, the respondents also expressed a concern that limiting cross-border drug trials would diminish the diversity of those that participate in trials, further limiting their efficacy. The United States may have an exceptionally diverse population but constraining drug trials led by U.S. entities from using populations in other countries imposes a significant cost on doing them--primarily via worse health outcomes for their citizenry.
Part of the problem with getting policymakers across the globe to understand the problems with data localization rules is that the incremental impact of their own restrictions impose a cost that gets spread across prospective patients across the globe, but the burden on their own citizens, in terms of delayed drug development, might be minor.
However, the global costs of data localization laws are significant and clearly outweigh any benefits from these rules, which their proponents have difficulty articulating precisely what those would be.
The increasing prevalence of data localization laws may make for good politics but their benefits are scant and the long-term costs are clearly significant. Rather than trumpet these paeans to nationalism, politicians in the EU and those countries that have embraced them should begin examining them from the perspective of their impact on the health and welfare of their citizenry, which is significant.