Pharma Industry of Puerto Rico
The pharmaceutical industry of Puerto Rico is, well, huge. In 2016, nearly three-quarters of the island’s exports were pharmaceuticals, with a total value of $14.5 billion USD.
A special guest post by Megan Ray Nichols.
Additionally, half of the world’s pharmaceutical companies operate in Puerto Rico. That means the devastation from Hurricane Maria had a catastrophic impact on an important industry.
Historical Importance
Pharmaceutical production in Puerto Rico has been and remains one of the most crucial industries on the island. In the past, specifically the late 1960’s and 1970’s, the Puerto Rican area received pharmaceutical companies that wanted to take advantage of the now-expired federal tax incentive known as Section 936. This incentive paved the way for manufacturers to send their profits from Puerto Rican plants to their stateside branches without a requirement to pay any federal taxes.
Challenges began to appear within the market as several developments surfaced at once. Some of these included expired patents, cheaper manufactures, a rise in generic drug manufacturing and usage, and high production costs. As of 2014, the market share in Puerto Rico produced sixteen of the top twenty selling drugs in the mainland of the United States.
The Hurricane Season’s Effect
We talk about Puerto Rico because of the massive hurricane that has struck the region in September 2017. Hurricane Maria completely wiped out the island’s power grid, and experts say it could be anywhere from four to six months for power to be completely restored. While a lack of electricity no doubt affects millions of citizens, the negative impact on Puerto Rico’s infrastructure extends into other areas as well, including its pharmaceutical capabilities and facilities.
The extensive damage, despite occurring in September, has affected drug production in October 2017 and will possibly extend further down the year as the situation remains far from resolved. FDA commissioner Scott Gottlieb said in a statement: “Even the facilities that sustained relatively minor damage are running on generator power. They could be without commercial power for months while crews work to restore stable power to the island.”
He then goes on to report on the state of the generators in a majority of the facilities and how only partial operational capacity has been restored. He adds that the pre-existing shortages and disruptions will potentially extend due to the severity of Hurricane Maria. Producers are trying to get their production facilities online, but the entire island faces a continual uncertain power supply, while the availability of materials is becoming scarcer.
This means Puerto Rico’s economic recovery will slow overall while their manufacturing works at half capacity or less. Drug shortages will include treatments for cancer, rheumatoid arthritis and HIV, but the FDA has not named specific medicines. These shortages will also have an impact on U.S. hospitals and pharmacies in the weeks and months to come.
Puerto Rico’s Global Distribution Impact
It’s not only supply within Puerto Rico that’s a concern. The drug supply to the U.S. is threatened as well. Over half of all pharmaceutical products manufactured on the island are purchased and consumed by U.S. citizens, making the damage to the island's infrastructure a serious concern to U.S. health care. While the U.K. has not seen a direct reduction in their drug supply chains, officials of various organizations are monitoring the situation closely, confirming Puerto Rico’s position as a global drug supplier.
Potential Safeguards
The vital role that Puerto Rico plays as a drug manufacturer and distributor has inspired various ideas for safeguards against supply loss and delivery interruptions. Some of these solutions include more portable generators for power distribution, sealed storage options for extra drug supplies and products, and off-shore branches capable of picking up the production needs of certain pharmaceutical drugs in an emergency.
Due to the immediate effects and chaos hurricanes create where they hit, we tend to dismiss or overlook less prominent issues that surface during or after the storm. Beyond the flooding waters and displaced citizenry comes an interruption to everyday infrastructure and manufacturing. As a vital concern for citizens of all ages, the availability of medication prescriptions and production cannot afford weeks or months of interruption — something that has occurred in Puerto Rico ever since Hurricane Maria made landfall in September.
