The New Era of Biologic Regulation and Patenting Under the America Invents Act

I. Introduction II. THE REGULATORY HISTORY OF BIOLOGICS IN THE UNITED STATES A. The Biologic Control Act of 1902 B. The Pure Food and Drug Act and the Federal Food, Drug, and Cosmetic Act C. The Public Health Service Act D. Natural Source Biological Products and the Hatch-Waxman Act E. The Biologics Price Competition and Innovation Act (BPCIA) III. THE OLD AND NEW PATENT PROVISIONS RELEVANT TO THE BPCIA A. The First-To-Invent Filing System Under the Patent Act of 1952 B. The-First-To-File System Under the AIA C. Provisional Patents D. The Disclosure Requirement IV. THE ROLE OF MARKET EXCLUSIVITY IN PATENTS A. Market Exclusivity in the Biologic Industry B. The Defense for Market Exclusivity V. THE DANGER OF GRANTING MARKET EXCLUSIVITY FOR BIOLOGICS IN A FIRST-TO-INVENT SYSTEM AND THE NEED FOR MODIFICATION OF THE BPCIA A. The Rise of the Biomedical Industry B. Disincentives to Innovation in a Post-AIA Framework 1. Provisional Patent and Disclosure Disincentives 2. Market Exclusivity Disincentives C. Solutions to Protect Innovation in the Biologic Field 1. The Withdrawal of Market Exclusivity Upon Patent Invalidation 2. The Removal of Provisional Patents from Biologic Patent Applications VI. CONCLUSION I. INTRODUCTION In the pharmaceutical industry, regulation of biological drugs creates unprecedented challenges to the formulation of innovative patents in the intellectual property field. (1) Revenue once generated by these companies is now threatened by health care reform, increased competition, and government regulation in bringing new drugs to market. (2) Biological drugs are products manufactured "from living matter or manufactured in living cells using recombinant DNA biotechnologies." (3) They comprise a wide range of medical products including "vaccines, blood and blood components, allergenics, somatic cells, gene therapy, tissues, and recombinant therapeutic proteins." (4) Biologics are made of "sugars, proteins, or nucleic acids or complex combinations of these substances, or may be [from] living entities such as cells and tissues." (5) In the United States, these specialty drugs have become increasingly popular for their ability to treat medical conditions where conventional drugs fail. (6) Although drug sales are predicted to rise by more than four percent in 2014, (7) there still remains a looming threat to break-through innovations in the biomedical industry: the newly enacted Leahy-Smith America Invents Act (AIA). (8) The AIA makes extensive alterations to the U.S. patent framework by attempting to harmonize the U.S. system with international patent law. (9) It does this by changing the U.S. patent filing system from a first-to-invent standard to a first-to-file standard. (10) The new filing system provides "greater certainty for inventors that their patent will not be invalidated by someone [claiming] an earlier date of invention." (11) However, in the biopharmaceutical context, the AIA puts additional pressure on biomedical companies to patent biological inventions earlier in the research and development (R&D) process. The biotechnological industry is extremely competitive, and drug companies require a large amount of capital to research and develop innovative products. These funds are acquired from private investors, who prefer investing in companies with patent protected innovations. Without patent protection, venture capitalists are wary of providing capital because it might become too easy for competitors to undercut the biomedical company's market price with their own similar drugs. (12) Now that the U.S. patent filing system has changed from a first-to-invent standard to a first-to-file standard, biopharmaceutical companies will be forced to file provisional applications earlier in the R&D process, or risk pre-emption from competing firms, which could deter investors from providing capital to the business for future R&D of drugs. …