Puerto Rico Could Supply America with Pharmaceuticals
- Posted: June 4, 2020
- Posted by: Travis Lynk
- Last Reviewed: January 15, 2021
Puerto Rico Used to Be a Manufacturing Hub
In the last quarter of the 20th century, Puerto Rico was a pharmaceutical powerhouse, producing a large portion of the pharmaceuticals used in the United States. Thanks to a piece of legislation introduced in 1976 granting tax exemptions on profits made in Puerto Rico to manufacturers, the island became a hotspot for manufacturing, with pharmaceutical companies accounting for a large portion. It was a golden age for the island, which enjoyed economic prosperity after a period as one of the poorest areas in the region.
But alas, that golden age has been lost to history. When Congress phased out the tax exemption program from 1996 to 2006, Puerto Rico was hit with a major recession that saw an exodus of companies from the island and a wave of newly unemployed Puerto Ricans plunged into poverty. Puerto Rico amassed major debts that have continued to today in 2020, when the island is experiencing a new wave of unemployment spurred on by the lockdown restrictions against the COVID-19 pandemic.
The US is Dependent on Foreign Countries for Pharmaceuticals
Today, the U.S. no longer relies on Puerto Rico, its own territory, for pharmaceuticals. Rather, it has turned to the manufacturing hub of the world, China, as have many other countries around the globe. Although exact figures are difficult to pin down, FDA data suggests as much as 85% of the facilities producing the ingredients for U.S. pharmaceuticals are abroad, with the vast majority in China and India. Both countries implement questionable safety standards that could put U.S. consumers in danger, and the COVID-19 pandemic has raised concerns of countries confiscating goods, including pharmaceutical ingredients, intended for foreign exports to use domestically.
Bring the Pharmaceutical Industry Back to Puerto Rico
A single solution could solve both of these problems: bringing manufacturers back to Puerto Rico. New tax exemptions similar to the many tax incentive programs already in Puerto Rico could entice manufacturers back to the U.S. territory, spurring much-needed economic growth and elevating the safety standards of U.S. pharmaceuticals. Such a move would enable the island to get back on its feet and pull its people out of poverty, allowing them to enjoy at home the U.S. prosperity that many Puerto Ricans have left the island in search of. At the same time, U.S. consumers could renew their confidence in the medicine they take, knowing that, having been produced on U.S. soil, the drugs meet the stringent safety standards of the United States. Bringing pharmaceutical manufacturing back to Puerto Rico would be a win for everyone in the country.
Disclaimer: PRelocate, LLC is not a law firm, and this is not legal advice. You should use common sense and rely on your own legal counsel for a formal legal opinion on Puerto Rico tax incentives, maintaining bona fide residence in Puerto Rico, and any other Puerto Rico tax or residency related issues.