Recommendation

Congress should restore the tax credit for biopharmaceutical production in Puerto Rico and other U.S. territories.

Details

Section 936, which released pharmaceutical manufacturers from taxes on profits made in Puerto Rico and other U.S. territories, contributed to making Puerto Rico a pharmaceutical manufacturing powerhouse, but the phase-out of the provision from 2006 to 2016 contributed to a shrinking of the sector, not to mention a 40 percent reduction in the territory’s manufacturing jobs base. This in part explains why the territory’s economy has shrunk nearly every year since phase-out of the provision began in 2006.

Learn more:

▪ Stephen Ezell, “Faulty Prescription: Why a “Buy American” Approach for Drugs and Medical Products Is the Wrong Solution” (ITIF, June 2020), https://itif.org/publications/2020/06/15/faulty-prescription-why-buy-american-approach-drugs-and-medical-products/.