Corporate custodians of confidential medical data should be closely monitoring events connected to a nightmarish computer security breach in the St. Louis region.

Express Scripts is one of the nation’s largest pharmacy benefits managers. The company, with headquarters in St. Louis County, handles approximately 500 million prescriptions per year for 50 million workers at 1,600 American companies. Early in October, it received an extortion letter, the details of which it released on Nov. 6.

The letter included personal information on about 75 Express Scripts clients — Social Security numbers, dates of birth and, in some cases, information about prescription medications. Whoever sent the letter demanded money from the company — the amount has not been disclosed — and threatened to use the Internet to reveal personal and medical information about millions of people if the demands were not met.

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Beyond the scale of the problem for Express Scripts — and the potential impact on the company is enormous — the issue extends well beyond the mounting concerns about identity theft, a phenomenon with which most people have become at least somewhat familiar.

The greater problem is the unique nature of personal medical records, the importance of moving to computerization of such records to improve health safety and reduce costs and the irreversibility of the damage people can suffer if confidential medical information becomes public. The stakes are so high that a federal law establishes strict standards for maintaining the privacy of medical information and stiff fines for failing to do so.

Medical records of all kinds — paper and, especially, electronic — must be protected with the most sophisticated kinds of security systems available, including backup protections and automatic alerts of security violations. Yet Express Scripts learned of this breach in the “worst way,” as InformationWeek.com security correspondent George Hulme put it in an online report: “via an extortion letter.”

The Express Scripts breach raises many questions for all elements of the health industry: hospitals, clinics and doctors’ practices, benefits management firms, insurance companies, pharmacies, employers and government agencies:
Are they using the most advanced information security technology possible? Do they minimize the amount of data they collect and keep it only as long as necessary? Do they have strict protocols governing access to personal and medical data — and systems to enforce those protocols? If criminals were to hack into their systems, how would the companies know? How soon? And are the systems capable of instantly cutting off illegal access as soon as a breach is discovered?

Confronted with a grave breach of electronic security, Express Scripts has responded by contacting law enforcement, establishing an informational website, offering a substantial reward and hiring a private consulting firm to help clients who have privacy concerns and investigate situations that “appear to be tied to identity theft” and provide “identity restoration services.” There is no question that the company is taking the situation extremely seriously.
Given the ongoing criminal situation, information about how Express Scripts’ data systems were compromised — and whether it could have been avoided — has yet to be disclosed. But the American people have the right to expect that their sensitive personal and medical information is zealously protected and kept secure — not only by Express Scripts but also by every person or company entrusted with it.

"Customers and customer relationships...have tangible measurable value to businesses, and their value is much easier to communicate to those who fund projects. So in an enterprise risk management scenartio, their vlaue informs the risk management process...[For example, consider] a farmer deciding which crop to grow. A farmer interested in short term profits may grow the same high yield crop every year, but over time this would burn the fields out. The long term focused farmer would rotate the crops and invest in things that build the value of the farm and soil over time. Investing in security on behalf of your customers is like this. The investment made in securing your customer's data build current and future value for them. Measuring the value of the customer and relationships helps to target where to allocate security resources."

Hash functions are the most commonly used cryptographic primitive, and the most poorly understood. You can think of them as fingerprint functions: They take an arbitrary long data stream and return a fixed length, and effectively unique, string. The security comes from the fact that while it's easy to generate the fingerprint from a file, it's infeasible to go the other way and generate a file given a fingerprint.

Originally created to make digital signatures more efficient, hashes are now used to secure the very fundamentals of our information infrastructure: in password logins, secure web connections, encryption key management, virus and malware scanning, and almost every cryptographic protocol in current use. Without cryptographic hash functions, the internet would simply not work. At the same time, there isn't a good theory of hash functions. Unlike encryption algorithms, there are no secret keys involved; this makes it harder to mathematically define exactly what hash functions are.

The National Institute of Standards and Technology, NIST, is holding a competition to replace the SHA family of hash functions. "SHA" stands for "Secure Hash Algorithm." It was developed by the NSA in 1993 to replace the commercial MD4 and MD5 algorithms, and has been updated several times since then. All the SHA algorithms are very similar, and have been increasingly under attack, so NIST wants to replace them.

The competition is important because, unlike other technological standards, committee design — balancing the interests of diverse constituents — isn't conducive to good security. Security is best when it's designed by expert teams and then subjected to public review. And cryptography is best when it's chosen by competition.

In 1997, NIST held a competition for a block cipher to replace DES. Fifteen candidates and three-and-a-half years later, Rijndael became the new Advanced Encryption Standard — AES. NIST is doing the same thing for what it's calling SHA-3 (not, for some unexplained reason, the Advanced Hash Standard or AHS).

The deadline was October 31, and NIST received 64 submissions. This isn't surprising — I predicted 80 — as most of the 15 AES submitters were professors, whose students at the time have become professors themselves, with their own students. (If NIST does a stream cipher competition in another ten years, they should expect about 256 submissions.) These submissions came from academia, from industry, and from hobbyists. CIO magazine recently interviewed one of the submitters, who is 15. Twenty-eight submissions have been made public by the submitters, and six of those have been broken.

NIST is going through all the submissions right now, making sure they are complete and proper. Their goal is to publish all accepted submissions by the end of November, in advance of the First Hash Function Candidate Conference, to be held in Belgium right after the Fast Software Encryption workshop in February.

The group expects to quickly make a first cut of algorithms — hopefully to about a dozen — and give the community a year of cryptanalysis before making a second cut in 2010. After another year of cryptanalysis, NIST will choose a winner in 2011. Expect a final standard by 2012.

My advice for software developers is to let the process run its course. While it's tempting to use the new cool algorithms in your designs, it's far too soon to trust any of them. This process is likely to result in all sorts of new research results in hash function security, and some real cryptanalytic surprises. Give the community a few years to figure out which ones are good and which aren't.

I've previously called this sort of thing a cryptographic demolition derby: The last one left standing wins. But that's only partially true. Certainly all the groups will spend the next few years trying to cryptanalyze each other, but in the end there will be a bunch of unbroken algorithms. NIST will select one based on performance and features.

NIST has stated that the goal of this process is not to choose the best standard but to choose a good standard. I think that's smart; in this process, the best is the enemy of the good. While there's no rush to choose a new standard — the SHA-2 algorithms will remain secure for the foreseeable future — we don't want to analyze the candidates forever.

Personally, I was part of a group of eight cryptographers that submitted Skein to the competition. A decade ago, writing Twofish and participating in the AES process was the most fun I had ever had in cryptography. These next few years promise to be even more fun.

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Bruce Schneier is chief security technology officer of BT. His new book is Schneier on Security.

He makes the argument that the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 is very much unconstitutional, in that its hefty fines for copyright infringement (misleadingly called "theft" in the title of the bill) show that the bill is effectively a criminal statute, yet for a civil crime. That's because it really focuses on punitive damages, rather than making private parties whole again. Even worse, it puts the act of enforcing the criminal statute in the hands of a private body (the RIAA) who uses it for profit motive in being able to get hefty fines.

Imagine a statute which, in the name of deterrence, provides for a $750 fine for each mile-per-hour that a driver exceeds the speed limit, with the fine escalating to $150,000 per mile over the limit if the driver knew he or she was speeding. Imagine that the fines are not publicized, and most drivers do not know they exist. Imagine that enforcement of the fines is put in the hands of a private, self-interested police force, that has no political accountability, that can pursue any defendant it chooses at its own whim, that can accept or reject payoffs in exchange for not prosecuting the tickets, and that pockets for itself all payoffs and fines. Imagine that a significant percentage of these fines were never contested, regardless of whether they had merit, because the individuals being fined have limited financial resources and little idea of whether they can prevail in front of an objective judicial body.

Another news story.

For one thing, the House Judiciary’s Subcommittee on the Internet, Courts and IP will be losing its control over IP Law, which will be handled at the full House level in the future:

According to a committee aide who spoke with Ars on background, the decision was driven by simple numbers: as interest in IP issues has grown in recent years, so has the SCIIP. Handling them at the full committee level allows all the members to get their fingers in the pie. The swap also recognizes the complexity of legislation affecting IP, and avoids the need to get half the Judiciary Committee caught up with the subcommittee’s discussions.

Instead the Subcommittee will reign over anti-trust issues–some fear that this will be a victory for content holders, while other experts argue the fears are unfounded.

What other changes are in the works, and who will play the largest role in determining the future of technology law? Well, if you have some ideas, you can nominate yourself or other people for Ars Technica’s “People to Watch” list.

Errata: Version 1.1 of the paper, reference, and optimized code corrects an error in which the length of the configuration string was passed in as the size of the internal block (256 bits for Skein-256, 512 for Skein-512, and 1024 for Skein-1024), instead of a constant 256 bits for all three sizes. This error has no cryptographic significance, but affected the test vectors and the initialization values. The revised code also fixes a bug in the MAC mode key processing. This bug does not affect the NIST submission in any way.

NIST has received 64 submissions. (This article interviews one of the submitters, who is fifteen.) Of those, 28 are public and six have been broken. NIST is going through the submissions right now, making sure they are complete and proper. Their goal is to publish the accepted submissions by the end of the month, in advance of the Third Cryptographic Hash Workshop to be held in Belgium right after FSE in February. They expect to quickly make a first cut of algorithms -- hopefully to about a dozen -- and then give the community about a year of cryptanalysis before making a second cut in 2010.

Lastly, this is a really nice article on Skein.

These submissions make some accommodation to the Core 2 processor. They operate in "little-endian" mode (a quirk of the Intel-like processors that reads some bytes in reverse order). They also allow a large file to be broken into chunks to split the work across multiple processors.

However, virtually all of the contest submissions share the performance problem mentioned above. The logic they use won't optimally fit within the constraints of a Intel Core 2 processor. Most will perform as bad or worse than the existing SHA-1 algorithm.

One exception to this is Skein, created by several well-known cryptographers and noted pundit Bruce Schneier. It was designed specifically to exploit all three of the Core 2 execution units and to run at a full 64-bits. This gives it roughly four to 10 times the logic density of competing submissions.

This is what I meant by the Matrix quote above. They didn't bend the spoon; they bent the crypto algorithm. They moved the logic operations around in a way that wouldn't weaken the crypto, but would strengthen its speed on the Intel Core 2.

In their paper (PDF), the authors of Skein express surprise that a custom silicon ASIC implementation is not any faster than the software implementation. They shouldn't be surprised. Every time you can redefine a problem to run optimally in software, you will reach the same speeds you get with optimized ASIC hardware. The reason software has a reputation of being slow is because people don't redefine the original problem.

That's exactly what we were trying to do.