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Pharmaceutical Industry Suggests Incursion Into Orphan Drugs Manufacturing


June 14, 2001
Copyright © 2001 CARIBBEAN BUSINESS. All Rights Reserved.

The government’s implementation of a tax incentive program for pharmaceutical companies that develop orphan drugs and medical devices could turn Puerto Rico into a world benchmark for research & development (R&D) of these products.

"Orphan" refers to drugs and medical devices used in the treatment of diseases affecting fewer than 200,000 patients a year. Because of the limited market, companies usually don’t find it commercially attractive to develop orphan drugs.

As a result of a meeting held in May between representatives of Puerto Rico’s pharmaceutical industry and the U.S. Food & Drug Administration with Hiram Ramirez Rangel, Gov. Sila Calderon’s economic development advisor, the group aims to further discuss the development of an R&D initiative in the northern region of the island, where most pharmaceutical companies are located.

"The FDA provides incentives for companies that develop products known as orphan drugs and special medical devices for rare conditions. The incentives include seven-year marketing exclusivity, tax credits for clinical research associated with the product, research design assistance from the FDA, and grants of up to $300,000 per year.

"If the government of Puerto Rico were to negotiate special R&D tax incentives with companies that expand their plants in Puerto Rico to produce orphan drugs or medical devices, the island could become a world leader in this type of industrial incentives. I don’t believe there is another country besides the U.S. that currently sponsors this type of initiative," said Eric Olivieri, president of the Puerto Rico Pharmaceutical Industry Association and director of quality for Janssen Ortho LLC, who coordinated the initial meeting with Ramirez Rangel.

In 1983, Congress passed a law that provides incentives to drug companies that develop orphan drugs. Among the diseases that are now treated due to the effect of this law are sickle cell anemia, cystic fibrosis, pneumocystis cariinii pneumonia, leprosy, and t-cell lymphoma.

Since 1997, the FDA has also provided medical devices manufacturers with incentives to develop products for small patient populations with diseases similar to those treated by orphan drugs. Approval under the humanitarian use medical device program has developed a urinary tract obstruction stent for unborn babies and a cardiac patch to repair holes in the heart.

Improvements to the island’s infrastructure and its educational programs were other suggestions made during the meeting with Ramirez Rangel. Principal officers of Pall Inc., Baxter Healthcare Corp., Johnson & Johnson, Wyeth Ayerst, GlaxoSmithKline, and Pfizer Pharmaceuticals attended the meeting. FDA District Director Mildred Barber and deputy district director Wayne Matthews, among others, accompanied them.

"The meeting focused on the need for the private sector, government, and academia to work together on a common strategy, both short and long-term, focused on the experience, education, and knowledge of professionals in Puerto Rico," said Olivieri.

Puerto Rico’s pharmaceutical industry accounts for more than 25% of the island’s gross domestic product, or $16 billion. It is also the backbone of the manufacturing sector, generating over 40,000 direct and 120,000 indirect jobs.

"While pharmaceutical exports in 1999 amounted to $17 billion, or 44% of all island exports, product growth depends on the discovery and successful development of new products. In 2000, the pharmaceutical industry invested $26 billion in research & development (R&D) in the U.S.," said Olivieri.

No major pharmaceutical company in Puerto Rico has R&D facilities in Puerto Rico. The Puerto Rico Industrial Development Co. (Pridco) recently granted $9 million to Stryker Puerto Rico to build R&D facilities at its Arroyo medical devices manufacturing plant, while Hewlett-Packard will receive $46 million over a four-year period, which added to the $50 million that the company is investing, will serve to build an R&D technology center within their existing computer supplies manufacturing complex in Aguadilla.

Among the suggestions discussed among them was for Puerto Rico to become a leading technology hub focused on process development, scale-up, & automation; increased efficiency and reduced costs; increased productivity & promotion of future growth; stimulation of new business creation; and driving the direction of future innovations.

The group emphasized improving the infrastructure of Puerto Rico’s roads and highways and its telecommunications systems; developing the transshipment port in the southern region and an air cargo terminal in Aguadilla; and establishing a fast-track policy to advance projects.

Another suggestion was the creation of an industry ombudsman to act as a liaison between the local and federal government and companies, with the support of the Office of the Governor and Pridco in order to assist a potential new company’s location decision-making. The ombudsman could also facilitate the issuance of permits, resolve conflicts, provide pertinent information about local requirements, and coordinate inter-agency marketing efforts.

Quality of life and security were also mentioned as two important factors in a company’s location decision-making process. The elimination of red tape for basic facilities such as electricity, water, and telecommunications and establishing passive parks were also emphasized.

The pharmaceutical industry already has an active role in the education of its present and future labor force. The FDA provides trainings and seminars at universities such as the University of Puerto Rico, Turabo Metropolitan University, and Catholic University in courses such as current good manufacturing practices, regulations & standards, and the importation process.

Pharmaceutical companies provide educational grants to individuals who want to work and advance in the industry. They also work with established associations to disseminate information and discuss issues that will improve the industry such as the PIA, Puerto Rico Manufacturers Association, Medical Device Manufacturers & Related Industries Association, Puerto Rico College of Engineers and Surveyors, and Puerto Rico College of Chemists.

This Caribbean Business article appears courtesy of Casiano Communications.
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