Shortages of Key Drugs Have Alarmed U.S. Medical Officials. Could Puerto Rico Offer an Answer?

For a brief stretch in the summer of 2023, Madison, Wisconsin-based UW Health ran so low on the chemotherapy drug carboplatin, doctors were told to provide it only to patients receiving curative treatment and not palliative care. Green Bay’s Bellin Health reached a similar point. 

The shortage reflected a larger, ongoing problem that predated the COVID-19 pandemic, but became more visible during and after it. In the first three months of this year, for example, there were 323 active drug shortages, surpassing the previous record of 320 in 2014, according to the American Society of Health-System Pharmacists.

“We routinely manage drug shortages,” Justin Konkol, director of pharmacy at the Froedtert Hospital and Oncology Service Line, told the Milwaukee Journal Sentinel.

---

As a nonprofit journalism organization, we depend on your support to fund more than 170 reporting projects every year on critical global and local issues. Donate any amount today to become a Pulitzer Center Champion and receive exclusive benefits!

---

At UW Health, operational leaders meet twice a week to consider drug shortages, and there's an additional meeting specific to oncology, said Jason Bergsbaken, interim manager of oncology pharmacy.

The urgency of these issues, nationwide, could mark a turning point for Puerto Rico, a tropical island in the Caribbean that's been called the medicine cabinet of America. If so, it would reflect a larger trend in American manufacturing called "reshoring," in which production moves back to the U.S. from overseas.

Puerto Rico's pharmaceutical industry isn't nearly what it was 20 years ago, but the island wouldn't be starting from scratch in addressing drug shortages. It still produces hundreds of medicinal products and some of the world's top-selling drugs, and it has 11 of the world's largest drug manufacturers.

For 30 years, Puerto Rico's industry flourished under a federal tax code that exempted corporations from paying taxes on income generated in U.S. territories. When the exemption expired in 2006, much of the industry began to leave, eliminating thousands of jobs and damaging the island's economy.

But a revitalized Puerto Rico pharmaceutical industry could be part of the solution to current drug shortages, said Ezekiel Emanuel, an oncologist and professor of medical ethics and health policy at the University of Pennsylvania.

New incentives could come with stipulations, such as requiring the use of U.S.-made pharmaceutical ingredients. It's reasonable for the government to assist in revitalizing the industry, in the same way it has allocated billions for clean energy and microchip manufacturing, according to Emanuel.

“It’s just about the money. I don’t think it’s complicated,” he said.

In critically important products, the U.S. has fallen behind in pharmaceutical manufacturing.

“While the United States does not need to make every drug itself, it does need increased domestic production capacity for key drugs.”

—The White House, in a 2021 report

For example, around 73% of all FDA-registered plants making active pharmaceutical ingredients were outside the United States as of a 2021 report from the White House. Active pharmaceutical ingredients are the essence of a medication; for example, acetaminophen is the active ingredient in Tylenol.

Nearly all antibiotics come from China.

"While the United States does not need to make every drug itself, it does need increased domestic production capacity for key drugs," the White House said, adding that it's both a public health and national security issue.

Even if a manufacturer made the decision today to start production of a particular drug, it could take several years before the first dose is ready for the public.

“That’s all the more reason to get started," Emanuel said. "You’ve got to plan for this and get it going ASAP.”

The scarcity of some chemotherapies for cancer patients, the ADHD drug Adderall, antibiotics such as amoxicillin and penicillin, anti-inflammatory corticosteroids, and some over-the-counter medicines hit patients hard during the worst of the COVID pandemic and its aftermath.

Manufacturing issues and shortages of raw materials were largely blamed. Discontinued drugs, sometimes replaced with more profitable ones, exacerbated the problems.

In January 2023, Emanuel wrote a column in The Washington Post calling for the reinstatement of the drug manufacturing tax exemption in Puerto Rico. Before that tax break ended, he said, it allowed drug companies to keep the 2022 equivalent of about $235 million per year — or 70 cents for every American annually.

"Critics might argue that the government should not subsidize manufacturing of drugs, given the huge profits of drug companies. But the U.S. government does a great deal of subsidizing in the national interest — from chip manufacture to defense," Emanuel wrote.

After the column was published, he was told the previous exemption in Puerto Rico wouldn't work now because of changes in tax laws.

"I may have been wrong about the old-style incentive, but I'm not wrong about what we need to do. Give some kind of incentive," Emanuel said in his Journal Sentinel interview. "We don't want to be beholden to the Chinese, and India has a very poor track record for keeping the integrity and purity of the medicines they produce."

Puerto Rico has industrial sites that would be ideal for rapid deployment of additional pharmaceutical and medical device manufacturing, according to the business groups Invest Puerto Rico and JLL Puerto Rico.

The island has 60 years of experience with FDA regulations and, although its industry has downsized, an abundance of talent remains, including scientists, technicians and FDA inspectors.

“We have been the medicine cabinet of the United States for so long, that it's second nature to a lot of the engineers, production managers and facilities on the island,” said John Bozek, Invest Puerto Rico's strategy and research director.

Many companies are finding a niche in high-end medicines

Robert Salcedo, co-founder of OcyonBio in Aguadilla, Puerto Rico, is motivated by unavailable and unaffordable medicines. Originally from the Dominican Republic, he was 10 years old when his family immigrated to New York in 1976. They were, he said, “first-generation poor.”

His aunt died because she couldn’t afford a particular medication. Not wanting her family to know, she would pretend to visit the doctor, and instead of getting the medication, inject herself with a syringe filled with water.

“She actually died from contaminated water, instead of a disease,” Salcedo said. “That shouldn’t happen to anyone. My mission is to provide affordable medicines to the world.”

OcyonBio is focused on developing gene and cell therapy treatments for different types of cancer and degenerative diseases such as Alzheimer’s. The research facility has landed three companies from Asia and three from the mainland U.S., and has been pursuing a Taiwanese company making a product for blood cancer.

Puerto Rico, Salcedo says, is well suited for biotech companies. The costs are much lower than in places like California, there’s available talent, and the legal system mirrors the rest of the United States. He echoed many others in emphasizing the risks for being overly reliant on foreign-made pharmaceuticals.

“The wakeup call was COVID," he said. "Another COVID is coming. We don’t know when or what it’s going to be, but it’s coming. If we’re not prepared, we’re going to be in deep trouble.”

Puerto Rico-based Cytolmmune Therapeutics is developing gene-cell therapy for cancer patients.

The company is in Toa Baja, a city near San Juan known for its annual Pee Wee Reese World Series for baseball players ages 12 and under.

“Another COVID is coming. We don’t know when or what it’s going to be, but it’s coming. If we’re not prepared, we’re going to be in deep trouble.”

—Robert Salcedo, co-founder of OcyonBio

Cytolmmune is a clinical-stage company, meaning its work is being done through trials and studies. It aims to use the power of a patient’s own immune system to eliminate cancer cells.

Cytolmmune CEO José Vidal has spent more than 20 years developing biopharmaceuticals worldwide.

His mother is an ovarian cancer survivor. Beyond the science, he says, "that aspect of humanity is what keeps everyone here working 16 hours a day."

Vidal has lived in California and other places, but having been born and raised in Puerto Rico, he wanted to come home. He’s actively recruited others in the sciences as well.

“There are a lot of Puerto Ricans working in the cell-therapy industry,” Vidal said.

He was a vice president with pharmaceutical manufacturer Amgen when Hurricane Maria made landfall in Puerto Rico on the morning of Sept. 20, 2017, with Category 4 winds of 155 mph. The island took a direct hit.

Amgen had food and water for around 100 employees who had sheltered at its operations to keep vats of microbial cells for drug production intact, but not the crowds that showed up pleading for assistance. It was heart-wrenching for Vidal and his team to turn them away.

"I had to deal every day with a line at the main gate, of people that I know, that I am friends with, that I know their kids, begging me to go in to find something to eat," Vidal said.

Hurricane Maria disrupted everything

Many of the nearly 50 drug manufacturing plants on the island were temporarily idled in the wake of Maria, and thousands of their employees had their lives upended by floods and mudslides that destroyed their homes.

Some U.S. hospitals reported shortages of saline solution and cancer drugs.

"At the time, it was estimated that 10% of drugs consumed by Americans, including a number of top-selling patented drugs, were manufactured on the island," the White House report said.

Parts of Puerto Rico were without electricity for months. Manufacturers had backup power systems, but in the aftermath of the storm, many employees didn't return to work quickly because their homes had been badly damaged or destroyed, and they were consumed with getting their lives back in order.

In Juana Diaz, a city of about 45,000 on the island's southern coast, contact lens manufacturer CooperVision became an oasis for victims. The company provided shelter for families and diverted some of its water supply to the community. It provided gasoline for people who had no other way to fuel up their cars.

"We were able to mitigate a little bit of the nightmare we were seeing a couple of miles away," said Rolando Collazo, vice president of technical innovation.

The CooperVision plant, one of the largest contact lens manufacturing facilities in the world, resumed operations in a few days. But there was some trepidation about whether the company's California-based owners would continue investing in Puerto Rico, where it employs around 2,000 people.

"The reality was the complete opposite," said Luis Cartagena, associate director of business strategies.

Not only did the company stay, last summer it announced a $500 million expansion of its operations in Juana Diaz, and a new factory in the nearby city of Ponce.

"The planned investments represent a significant expansion of our global manufacturing," said Rolando Torres, executive vice president of global operations.

The Juana Diaz facility is more than a manufacturing plant. Many of the new technologies CooperVision has deployed at its other plants in the U.S. and Europe were developed in Puerto Rico.

The multi-project expansion is expected to create about 700 jobs on the island. It also, Puerto Rican leaders hope, sends a message to other companies to double down on the island's future.

The island knows it needs to sell itself to businesses, workers

Puerto Rico has struggled with poverty for decades. In 2023, its poverty rate of around 42% was far worse than any U.S. state. The island's median household income is around $24,000 a year, and the cost of many items is steep because they have to be shipped in from long distances. Unemployment runs high, and the population has declined because of an exodus to parts of the U.S. where jobs are readily available.

Puerto Rico's current focus is on attracting bioscience and other advanced industries such as aviation and aerospace. In June, the island landed two more bioscience operations.

A tropical climate, beautiful beaches, and Latin American culture are a powerful draw for many people, but leaders know they need more.

"We recognize that the talent exodus is a challenge. We're working to ensure that people on the island, and outside the island, know of all the opportunities arising here because there are many of them," said Ella Woger-Nieves, chief executive officer of Invest Puerto Rico.

Alfredo Orengo was one of those who left. He now lives in Janesville and works as a supervisor at Stoughton Trailers in Stoughton, Wisconsin, a large manufacturer of semitrailers.

Orengo quit high school following the hurricane, and through an employment agency, was hired to work at a chicken processing plant in Kansas. He was there for a year, got his general education diploma, or GED, and sent money home to help his parents repair their hurricane-damaged house.

At Stoughton Trailers, Orengo has advanced through several positions to become a second-shift supervisor. If he ever returns to live in Puerto Rico, his job prospects would be much better from the skills he's acquired here.

Back home, he used to perform magic tricks for children. Now it's a hobby, but it could become a business. His family and best friends are still in Puerto Rico, and while he's enjoyed living in Wisconsin, he longs to be with them after he's saved enough money from working here.

“In 10 years, I would love to go back," Orengo said.