Puerto Rico tax shows drugmakers the door

Perhaps it's just a case of bad timing. Because the only other explanation for Puerto Rico's new tax--a 4 percent levy on companies that have manufacturing operations there but headquarters elsewhere--is that legislators are giving the boot to the pharma industry.

Perhaps the legislators are unaware that the recent large and high-visibility drug recalls, by such big-name big pharmas as Johnson & Johnson/McNeil ($JNJ) and Pfizer ($PFE), are tied to the island. If so, they are also likely unaware that Congress is now investigating the capabilities of the FDA office there.

The recalls and the spotlight on the FDA office are reason enough for any drugmaker to think twice about moving, or even keeping, any part of its operations there. One of the quick actions taken by Pfizer in response to its recent pallet-bred musty-odor recall of Lipitor, in fact, was to pull some bottling operations out of Puerto Rico's tropical climate--and away from the questionable supply chain that incorporates pallets treated with a fumigant largely unused in the developed world for more than a decade.

But it seems unlikely the Puerto Rican legislators could be so uninformed. So the only message the new tax can send is this: Bye-bye, pharma.

- see the article

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