Fixing Canada’s Health Data Rules Without Killing Innovation

And what we can learn from Asia

Cara Stern, Djeima Ramos, Sabrina Maddeaux, and Mike Moffatt

Dec 17, 2025

Is Canada’s life sciences and health tech sector heading toward a code red? In this episode, Sabrina Maddeaux and Mike Moffatt unpack how outdated and fragmented privacy laws are slowing innovation, and why aligning too closely with European regulations could make things even worse. They explore the “Brussels effect,” where the EU’s regulatory power shapes rules far beyond Europe, and how Canada may already be feeling its impact.

The conversation dives into why modern health innovation depends on large-scale data, how Canada’s patchwork of federal and provincial rules creates costly barriers, and what lessons we could learn from countries like Japan and Singapore instead.

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Below is an AI-generated transcript of the Missing Middle podcast, which has been lightly edited.

Mike Moffatt: Sabrina, I’ve got some bad news for you. Canada might become a victim to something called the “Brussels effect”. Does that worry you?

Sabrina Maddeaux: Well, this sounds slightly terrifying, but I’m going to be honest, Mike, I actually don’t know what this is, so I’m excited to learn something today. What exactly is the “Brussels effect”?

Mike Moffatt: So this term, the “Brussels effect” comes from a book by the same name by Columbia University law professor, Anu Bradford. The basic idea is that the EU is headquartered in the Belgian city of Brussels. So this isn’t about Brussels sprouts, it’s about the EU.

Sabrina Maddeaux: Yeah, I was a little bit concerned.

Mike Moffatt: Well, who wouldn’t be? I’m not a fan of Brussels sprouts, and if you are a fan, leave us a note in the comments. Anyhow, so the EU can use its economic clout to have other countries conform to its regulations for fear of losing access to this giant European market, causing the EU to become a global de facto regulator.

That could be a problem, as EU rules can stifle innovation both inside and outside of the EU. And we’re already starting to see it in Canadian health tech because of two forces. The first force is trade barriers. Since the election of President Trump, Canada has been looking to increase both internal and external trade, especially outside of the United States. One way you do that is through regulatory harmonization.

Sabrina Maddeaux: Absolutely. Since we’ve had issues with the US on trade, we’ve realized exactly how important it is to knock down those inter-provincial trade barriers.

They’ve been a topic of conversation for years, but the political will just hasn’t been there to actually get it done. Even now that we’ve seen the political well, it’s been slow going, especially in areas like alcohol, because there are just so many stakeholders and different interests at stake.

Mike Moffatt: Yeah, absolutely. A lot of the focus by the media has been on those inter-provincial trade barriers, for example, making it easier to get B.C. wines in Ontario. This same concept holds true internationally.

If we want to trade more with countries that aren’t the U.S., the two obvious markets are China and the EU, and we know that China comes with a host of challenges, so trading with European Union countries seems like a perfect fit.

One obvious way to get there is by harmonizing some of our rules with Europe to make it easier for Canadian businesses to export to Europe, as they’re already complying with Canadian standards. So we may start to see Canada’s regulations become a lot more like Europe’s.

Sabrina Maddeaux: Right. So trade barriers are the first factor. What’s the second?

Mike Moffatt: Well, the second is that our rules governing health tech and privacy are horribly outdated and need to be modernized anyway.

The Trudeau government tried to modernize them a few years ago. They had a bill, but it didn’t get through Parliament. There was a prorogation, so the bill died. We got a new prime minister, so we’re basically starting from scratch.

If you need to change the rules anyway and you’re already looking to trade more with Europe, you’re like, “Well, why don’t we just adopt their rules?”

That would allow us to trade more with Europe, and we don’t have to think about what our rules should be. We could just kind of blindly follow theirs.

Sabrina Maddeaux: Now, on the surface, that seems like a good idea, but you released a report this month looking at those two factors in terms of the health tech sector. In that report, you argued that Canada should be a global leader in space, but just like in housing, our rules are holding us back. Walk our audience through the issues with these rules.

Mike Moffatt: So Canada has some world-leading companies in a variety of life sciences, pharma, health tech, wearables, you name it. But we could be doing a lot better than we are.

To develop new products, these sectors rely on massive amounts of data from hospitals, labs, pharmacies, you name it, our smartphones. That fuels the use of AI, drug discovery, wearable tech, you name it.

Basically, you can’t invent any new life-size product without massive amounts of data. In theory, we have a ton of data that we could use to our benefit because we have a public health system. We have decades of records. We have a tech-savvy population. There are a lot of folks like me who have their smartwatch.

But outdated rules are holding us back. The federal regulation that governs health data is over 25 years old. So it’s older than the iPod. It’s older than you name it. It dates back to when Netflix came out on DVDs and not over the Internet. It’s really old.

There are more than two dozen provincial rules that govern how health data can be used, how it can be transferred from one hospital to another, or from a hospital to a pharmacy, and so on.

So we basically have all of this red tape holding us back and making it very difficult for — let’s say you’re a researcher at the University of Manitoba, and you want to work with somebody at Western or the University of Ottawa, all those different rules can make it very difficult to share data back and forth.

Sabrina Maddeaux: So obviously our rules on this are ancient, to put it lightly, but if our rules are so terrible, then why would adopting Europe’s be so bad?

Mike Moffatt: Well, there’s a lot to like when it comes to European regulation. So I’m not trying to jump on Europe completely, but Europe’s rules tend to prioritize safety over innovation.

EU regulation is largely based on something called the precautionary principle, and the idea behind the precautionary principle is that any innovation must be proven absolutely safe, with minimal side effects, before it’s allowed to be used.

There are two basic ways you can regulate. You can say, “You have to show harm first, and then the government will step in and address those harms.” Or you can take a proactive approach and say, “No, you’ve got to prove something is absolutely safe with no side effects before we will allow you to engage in that activity.”

That sounds great, and in many ways it is. It can keep people safe, but what it means in practice is that European innovators get so wrapped up in red tape that Europe is falling behind many other developed countries when it comes to innovation. You see a lot of innovators in the EU leave for other countries like the United States, and some actually come here to Canada.

Now, Mario Draghi, the former European Central Bank president, wrote a landmark report on Europe’s lack of innovation and competitiveness and how to fix it. He’s basically saying that they need to move away from these rules.

So, for Canada to start to adopt rules that the EU itself is starting to identify as problematic, that probably isn’t a great approach.

Sabrina Maddeaux: Yeah. You were showing me some data from the Draghi report, and it’s pretty dire. Only four of the world’s top 50 tech firms are European. Of 147 startups that grew to unicorn status, 40 fled to the US to escape regulations. With over 100 tech laws and 270 regulators, approvals drag on and scaling across countries is a complete nightmare.

Our listeners get this. We talk all the time about how regulatory layers choke home building innovation. So Mike, what’s your big worry for Canada here?

Mike Moffatt: Well, I’m worried that we’re sleepwalking into a trap in that we’re about to copy the EU’s homework, even though the EU is failing at innovation in health tech and other areas. If we simply align our health tech regulations with the EU, that could simply move our best and most innovative companies to the US. But it will also mean that Canadian middle-class people will get access to that technology last.

We still have issues where our hospitals don’t talk well with our pharmacies and so on. This costs the Canadian health care system billions of dollars a year because of our systems are so inoperable with each other.

We’re already starting to adopt EU regulations. So the province of Quebec created something called Law 25, which largely adopted the EU standards when it comes to data sharing. So this Brussels effect is real, and it’s already happening in Canada.

Sabrina Maddeaux: What should Canada do instead, then?

Mike Moffatt: Well, we absolutely need to update our rules number one. So I don’t think that’s under dispute. We should be looking at best practices in other countries.

I don’t want to suggest that we go, “OK, our every other country in the world is doing this wrong, and we can’t learn from them, and we can’t harmonize our regulations.” But a lot of the best practices we see come out of Asia; Japan, South Korea, Malaysia, Singapore, have all created programs that allow for easier data sharing.

So, for instance, Japan lets most people’s health data be used for research unless you specifically opt out. If you’re saying, “I’m not comfortable with this, take me off the list.” They absolutely will, but otherwise, your health data can be used to develop new pharmaceutical products and what have you.

Now they have trusted organizations that handle the data. It removes personal details so researchers can study it safely. So this system makes it easier for companies to run big studies, develop new medicines, and new products without compromising privacy.

Singapore, for example, has a kind of national data registry where all the data is put there and kind of in an anonymized form. Health innovators can access that. They have to go through some steps to ensure compliance and safety, and so on.

What that does is it creates a level playing field where this data isn’t just getting accessed and hoarded by the largest companies, but instead small health tech innovators can access it as well. That makes the whole system more innovative, and it creates competition.

Anyone can use it, again, under certain conditions, in order to develop the next great smartwatch or something like that.

Sabrina Maddeaux: And as we know, competition is key to innovation. It’s an area that Canada lags behind on, so this is a big area of opportunity.

Thank you so much, everyone, for watching and listening, and to our amazing producer, Meredith Martin.

Mike Moffatt: And if you have any thoughts or questions about Brussels sprouts or other vegetables your mom made you eat, please send us an email to [email protected]

Sabrina Maddeaux: We’ll see you next time!