Puerto Rico is back in the federal agenda, but this time, the island appears as a possible solution to the high U.S. dependence on Chinese-made pharmaceutical products, a fact that has been exposed amid the COVID-19 pandemic.
Specifically, the editorial teams of the New York Post and Forbes recently advocated for the U.S. Congress to restore the Section 939 tax break that led dozens of pharmaceutical companies to base their operations in Puerto Rico in the 1970s which kept growing over the next two decades until President Bill Clinton repealed it in 1996.
And although Puerto Ricans are now used to living with the ghost of Section 936 of the U.S. Internal Revenue Code, which exempted Puerto Rican subsidiaries of these big pharma companies from paying corporate taxes, both U.S. news outlets believe that similar measures could help Puerto Rico regain a greater share of the drugs consumed in the United States as a national security measure, not just as economic relief for the island.
Currently, "90 percent of the chemical ingredients for generics in the U.S. to care for people with serious coronavirus infections and [those that] are hospitalized are sourced from China," said economist Rosemary Gibson on March 12 before the U.S. Senate on her testimony about the American dependence regarding the pharmaceutical industry.
According to Gibson, sedatives, antibiotics, anti-inflammatory drugs, and blood pressure medications are just some of the drugs necessary to fight COVID-19 and could be in short supply if the pandemic continues to affect the supply chain that starts in China.
In Puerto Rico, the Manufacturers Association has been advocating to restore Section 936 for decades. Now, the Association executive vice president, Yandia Pérez, believes that the change in the national narrative could open a door for Puerto Rico again.
"We have large American medical product companies, not just biopharmaceuticals and we have a workforce with decades of experience in advanced manufacturing," said Pérez, who noted that Puerto Rico is already one of the main exporters of biomedical products.
Economist José Caraballo Cueto also welcomes that Puerto Rico becomes a pharmaceutical hub again since it would be beneficial for the island and also for the United States, however, he urged to avoid past mistakes.
"We have to learn from the past, and this time, connect local companies with pharmaceutical companies," he said.
And although he acknowledges that the pandemic could lead Congress members to take drastic measures to strengthen national security, some of the measures proposed by Forbes, such as exempting generic drug manufacturers from paying corporate taxes and giving preferential tax relief to pharmaceutical companies that generate intellectual property, could equally apply to any U.S. jurisdiction, according to the Private Sector Coalition in Puerto Rico.
For Francisco Montalvo, coordinator of the Coalition, this break in the medical supply chain fits perfectly with Donald Trump's nationalist public policies, so he thinks the President may take action on this issue. However, he has doubts about Puerto Rico being at the top on Trump's list or that of Congress members.