5 Key Contracting Considerations for Digital Health Companies Working wiht AI Vendors
Artificial Intelligence (AI) is rapidly transforming digital health — from patient engagement to clinical decision-making, the changes are revolutionary. Contracting with AI vendors presents new legal, operational, and compliance risks.Digital health CEOs and legal teams must adapt traditional contracting playbooks to address the realities of AI systems handling sensitive and highly regulated health care data. To assure optimal results, here are five critical areas for digital health companies to address in the contract negotiation process with potential AI vendors:
1. Data Privacy and Security
When working with AI vendors, it is crucial to ensure that they have robust systems in place to protect sensitive health data. This includes compliance with regulations such as the Health Insurance Portability and Accountability Act (HIPAA) in the United States and the General Data Protection Regulation (GDPR) in the European Union. These regulations mandate strict standards for data privacy and security, and non-compliance can result in hefty fines.
AI vendors should implement strong encryption protocols and access controls to prevent unauthorized access to data. Additionally, they should have a thorough data breach response plan in place. This plan should outline the steps the vendor will take to mitigate the impact of a data breach and notify affected individuals and regulatory bodies.
2. Intellectual Property Rights
Another key consideration when contracting with AI vendors is the ownership of intellectual property rights. This includes the rights to any AI algorithms or technology developed as part of the collaboration. The contract should clearly state who owns these rights to prevent disputes down the line.
Typically, the party that develops the AI technology retains the intellectual property rights. However,in some cases,the digital health company may want to negotiate for ownership or licensing rights,especially if the AI technology is integral to their business operations. In such cases, the contract should provide for fair compensation to the AI vendor for their contributions.
3. Performance Metrics and Benchmarks
Defining clear performance metrics and benchmarks in the contract is crucial to evaluate the effectiveness of the AI solution being implemented. These metrics should be aligned with the digital health company’s business objectives and should provide a clear measure of the AI vendor’s performance.
For example, if the AI solution is designed to improve patient engagement, the performance metrics could include the number of patient interactions, the advancement in patient satisfaction scores, or the reduction in patient wait times.These metrics should be reviewed regularly, and the contract should provide for adjustments based on the AI vendor’s performance.
4. Data Sharing and Access
Data sharing and access is another critical area to address in the contract. The contract should outline how data will be shared and accessed between the digital health company and the AI vendor. This includes understanding how data will be stored, transferred, and analyzed, as well as who will have access to it.
It is important to establish clear protocols to safeguard patient privacy and ensure compliance with regulatory requirements. such as, the contract could specify that the AI vendor can only access anonymized data and cannot use the data for any purposes other than those specified in the contract.
5. Termination Clauses and Exit Strategy
the contract should include specific provisions detailing the process for terminating the agreement and transitioning to a new vendor if necesary. This should include provisions for data migration, intellectual property transfer, and any other logistical considerations that may arise in the event of contract termination.
Having a clear exit strategy in place can definitely help minimize disruption and ensure a smooth transition if the collaboration needs to be ended. For example, the contract could specify that the AI vendor must provide assistance with data migration and must transfer any intellectual property rights to the digital health company upon termination of the contract.
Conclusion
Contracting with AI vendors presents unique challenges for digital health companies. By addressing these five key areas in the contract negotiation process, digital health companies can mitigate risks and ensure a prosperous collaboration. As AI continues to revolutionize digital health, it is crucial for companies to stay informed about the latest developments in AI regulatory compliance and adapt their contracting strategies accordingly.