Puerto Rico has been a hub of drug manufacturing for decades — companies were lured to the island because of tax breaks and its access to the U.S. market, along with skilled employees who worked for lower wages.
Federal officials and major drugmakers are scrambling to prevent national shortages of critical drugs for treating cancer, diabetes and heart disease, as well as medical devices and supplies, that are manufactured at 80 plants in hurricane-ravaged Puerto Rico.
Pharmaceuticals and medical devices are the island’s leading exports, and Puerto Rico has become one of the world’s biggest centers for pharmaceutical manufacturing. Its factories make 13 of the world’s top-selling brand-name drugs, from Humira, the rheumatoid-arthritis treatment, to Xarelto, a blood thinner used to prevent stroke, according to a report released last year.
With business worth nearly $15 billion a year at stake in Puerto Rico, drug companies and device makers are confronting a range of obstacles on the island: locating enough diesel fuel for generators to run their factories and helping their employees get to work from areas where roads are damaged and blocked, electricity is down and phones don’t work. Companies have taken out radio ads pleading with workers to check in. The pharmaceutical and device industries contribute to the employment of nearly 100,000 people on the island, according to trade groups.
Puerto Rico has been a hub of drug manufacturing for decades. Companies were lured to the island because of tax breaks and its access to the U.S. market, along with skilled employees who worked for lower wages. About a decade ago, expiring tax incentives led to a wave of factory closings, stoking fears that the industry was in jeopardy.
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Today, the drug and device industries remain a mainstay of the Puerto Rican economy. Pharmaceutical and medical manufacturing accounted for nearly three-quarters of Puerto Rico’s exports in 2016, of $14.5 billion, according to the federal Bureau of Labor Statistics.
“Some of these products are critical to Americans,” Scott Gottlieb, the commissioner of the Food and Drug Administration (FDA), told a congressional panel this week. “A loss of access could have significant public-health consequences.”
Gottlieb, who visited FDA staff in Puerto Rico last week, told the House Energy and Commerce Committee’s subcommittee on health: “We have a list of about 40 drugs that we’re very concerned about. It reflects maybe about 10 firms.”
Thirteen of the drugs, Gottlieb said, are “sole-source,” meaning the product is only made by one company. Those include HIV medications, injectable drugs and sophisticated medical devices, although he did not name the products. The biggest problem, he said, was not damage to the factories, but the instability of the electric supply.
Manufacturers are worried that a long-term lack of connection to a major power grid could jeopardize their products, and are wary of relying on the more limited electrical grids that the territory is likely to activate as a first step to restoring power.
One of the drugs FDA officials said they were concerned about was methotrexate, which treats childhood leukemia and other diseases. It has been scarce, off and on, for several years. Mylan makes the product in Puerto Rico, and all five manufacturers of the injectable form of the drug have reported shortages of the product, according to a list maintained by the American Society of Health-System Pharmacists.
In a statement, Mylan did not address the methotrexate shortage but said it was “working closely with FDA to help address drug shortage concerns.” Its plant has sources of water, electricity and communication, and the company said it is “working on ways to make them sustainable for manufacturing purposes.” Like other companies, it said it was focusing on helping employees and other residents of the island with basic needs, including chartering a cargo plane carrying essential goods to be delivered to them.
Several pharmaceutical and medical-device companies said their factories were coming back on line with the assistance of generators and they did not anticipate supply shortfalls.
But others said the situation was precarious. Drug companies depend on consistent refrigeration to avoid shortages. And device makers are wondering when the power grid would be back up, which some officials have predicted could take months.
“Everybody is struggling to get diesel fuel — that’s just widespread,” said Antonio Medina, an independent consultant who until last year was executive director of the Puerto Rico Industrial Development Company, a government-run group that promotes manufacturing.
Wilberto Maldonado, a pharmaceutical consultant in Puerto Rico, said drug and device makers are navigating a logistical “nightmare,” especially when trying to get access to fuel for their generators.
With phone lines down, “many employers have people still unaccounted for,” Maldonado said in a message through LinkedIn. “This may not improve, as telecom service providers are also depending on backup generators.”
Industry officials have sought to strike a delicate balance in making their case for help without appearing to divert precious resources from hospital and other emergency services. Returning the drug and device industry to its feet, however, is crucial for ensuring the island’s economic recovery and for safeguarding the supply of medicines and devices to the rest of the United States.
If the manufacturing plants are slow to fully recover, some companies could shift their production elsewhere, said Deepak Lamba-Nieves, research director at the Center for a New Economy, a nonpartisan economic think tank in Puerto Rico. “That may have medium- and long-term consequences for an island that is going to be hugely and severely impacted by this hurricane for many years to come,” he said.
Several drug companies said that while their plants lost power and were forced to shut down, they were not anticipating a disruption in supply. “We have a strong local team working through incredible logistical challenges, and we’re seeing progress each day,” said Ernie Knewitz, a spokesman for Johnson & Johnson. Tylenol and Prezista, an HIV drug, are among the products that the company manufactures in Puerto Rico. “We are also closely monitoring our product inventory levels and will work to ensure all critical needs are met.”