Puerto Rico, a solu­tion to U.S. sup­ply chain problems

This op-ed originally appeared in The Palm Beach Post.

With the U.S.-Iran peace deal in tat­ters, Amer­ic­ans are bra­cing for poten­tial dis­rup­tions to global energy sup­ply chains. This is just the latest crisis to expose how vul­ner­able the U.S. is to for­eign sup­ply shocks. Flor­ida Sen. Rick Scott has repeatedly warned that for­eign adversar­ies — par­tic­u­larly China — are pre­pared to exploit sim­ilar weak points.

He noted last month that “there’s noth­ing good about the gov­ern­ment of China… We can’t be depend­ent on them for any­thing.” Few national secur­ity liab­il­it­ies are more troub­ling than pre­scrip­tion drugs.

Today, roughly 90% of all pre­scrip­tions filled in the United States are gen­eric drugs. Mil­lions of Amer­ic­ans depend on them every day to man­age chronic con­di­tions such as dia­betes, heart dis­ease, and high blood pres­sure. Yet a major­ity of these drugs are made using Act­ive Phar­ma­ceut­ical Ingredi­ents (APIs) — the build­ing blocks of vir­tu­ally all medi­cines— from China.

By keep­ing all of our phar­ma­ceut­ical eggs in China’s bas­ket, the U.S. is open­ing the door to a med­ical sup­ply crisis that only Beijing can solve. This movie has already played out recently with crit­ical goods like rare earth metals and soy­beans.

Phar­ma­ceut­ic­als could be next on that list. That’s because Beijing’s five-year indus­trial strategy expli­citly pri­or­it­izes bio­tech­no­logy and advanced life sci­ences as areas of future dom­in­ance. In fact, China’s por­tion of global phar­ma­ceut­ical licens­ing deals has increased six­fold over the past ten years.

To Wash­ing­ton’s credit, poli­cy­makers have taken some steps to rec­tify this issue. The Trump admin­is­tra­tion has moved to estab­lish a stra­tegic API reserve and stream­line reg­u­la­tions for com­pan­ies look­ing to onshore drug pro­duc­tion.

Con­gress has played its part too. Tax cuts passed last July restore some R&D expens­ing, giv­ing man­u­fac­tur­ers the con­fid­ence to make long-term invest­ments in domestic pro­duc­tion.

But more can be done on Cap­itol Hill. As the White House con­tin­ues to advance policies aimed at reshor­ing crit­ical indus­tries, Con­gress should cement these reforms into law. Doing so would ensure that future admin­is­tra­tions can­not simply reverse course with the stroke of a pen.

Sev­eral regions are well-posi­tioned to help. States like Indi­ana and North Car­o­lina are proven phar­ma­ceut­ical man­u­fac­tur­ing hubs. Mean­while, the U.S. ter­rit­ory of Puerto Rico — often referred to as “Amer­ica’s Medi­cine Cab­inet” — is already a major pro­du­cer of pop­u­lar medi­cines and is poised to grow fur­ther.

The Island has infra­struc­ture tailored spe­cific­ally to phar­ma­ceut­ical pro­duc­tion — from FDA-reg­u­lated facil­it­ies to export-ready logist­ics net­works and a work­force with the tech­nical expert­ise neces­sary to expand high-value bio­lo­gics. Earlier this year, for example, the Amer­ican drug­maker Amgen unveiled a $300 mil­lion com­mit­ment to grow its foot­print in Puerto Rico.

For Flor­ida, Puerto Rico’s suc­cess is more than a national eco­nomic issue — it’s a regional oppor­tun­ity. As the closest state to the Island and home to one of the nation’s largest Puerto Rican pop­u­la­tions, the Sun­shine State is uniquely posi­tioned to bene­fit from deeper eco­nomic integ­ra­tion with Puerto Rico’s man­u­fac­tur­ing sec­tor.

Flor­ida’s senior leader is right to raise con­cerns about Amer­ica’s depend­ence on China for crit­ical goods like medi­cine. Smart poli­cy­mak­ing from Con­gress com­bined with Puerto Rico’s biotech com­pet­ency can help to wean the U.S. off Beijing. Energy sup­ply dis­rup­tions are bad, but being cut off from lifesav­ing medi­cines would be even worse.

 James Bowers is the exec­ut­ive dir­ector of Oppor­tun­ity Puerto Rico, which pro­motes invest­ment in the Amer­ican ter­rit­ory.