Privacy Dangers Lurking in Clinical Trial Mergers

Darshan Kulkarni and Edye Edens discuss the critical role of data privacy in clinical trial site acquisitions. While privacy concerns can seem daunting, they don’t have to be a dealbreaker if managed correctly. The key is understanding whether privacy laws like HIPAA apply, ensuring the site is already handling data compliance well, and putting safeguards in place to mitigate risks. Investors should conduct thorough due diligence to assess the site's current privacy practices before the merger or acquisition.

One major misconception is that HIPAA always applies to clinical trial data. In reality, properly anonymized trial data often falls outside its scope, though certain patient records may still be regulated. Beyond HIPAA, state-specific laws such as the California Consumer Privacy Act (CCPA) and disease-specific privacy regulations (e.g., HIV, weight loss treatments) add layers of complexity. Additionally, compliance risks arise when acquiring companies use AI-driven tools, as AI itself is facing lawsuits over privacy violations.

A smart approach to privacy in M&A involves firewalling sensitive data whenever possible—if an acquiring company doesn’t need direct access to regulated data, it should avoid handling it altogether. Investors should also consider risks tied to telemedicine regulations, patient communications (TCPA, CAN-SPAM), and wiretapping laws in certain states. The goal is to minimize exposure while maintaining operational efficiency.

Ultimately, data privacy in clinical trial acquisitions is about proactive risk management. Understanding the regulatory landscape, setting clear boundaries around data access, and ensuring compliance with both federal and state laws can help investors navigate these challenges. If you’re considering acquiring a clinical trial site and want to safeguard your investment, reach out to us to discuss your privacy strategy.

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