Puerto Rico’s healthcare system is a paradox of strength and fragility. With one of the highest insurance coverage rates in the US (around 94 percent) and a long tradition of medical excellence, it has also faced persistent funding gaps and a growing exodus of talent. Now, new federal policy shifts risk deepening these vulnerabilities. Yet, against this challenging backdrop, Puerto Rico is emerging as a launchpad for pharmaceutical innovation and advanced therapies, hinting at a more resilient future if critical gaps can be addressed. This article is part of the Healthcare & Life Sciences Puerto Rico country report, coming soon.
Funding Gaps
Luis E. Pizarro Otero, president of the Puerto Rico Chamber of Commerce, points out that while Puerto Rico operates under the same federal compliance standards as the mainland United States, it receives only a fraction of the financial support.
“Despite having the highest Medicare Advantage (MA) penetration rate in the country, with 85 percent of Medicare beneficiaries enrolled, and 99 percent in four-star plans or above, including the largest five-star plan in the nation, the island receives the lowest reimbursement rates,” he explains. Puerto Rican patients receive Medicare reimbursements approximately 41 percent below the national average and 22 percent lower than other mainland jurisdictions like the US Virgin Islands. Medicare is the US federal health insurance for people 65+ and some with disabilities while MA is its private plan alternative offering bundled benefits.
Puerto Rico operates a separate Medicaid program (locally called Mi Salud), distinct from stateside Medicaid (a joint federal-state program providing health coverage to people with low incomes). While eligibility standards are similar, federal funding is capped and primarily provided through block grants. This often forces the government to reduce services or limit enrolment when funds run low; indeed, Puerto Rico receives under 15 percent of what a similarly sized state might get.
According to Pizarro, average annual per capita healthcare expenditure in the US stands at around USD 15,400, compared to just 5,400 in Puerto Rico. This imbalance has weakened infrastructure, limited investment capacity, and fuelled the migration of healthcare professionals to the mainland, where compensation can be two to three times higher.
Puerto Rico’s health indicators reflect these structural challenges. Approximately 27.8 percent of adults on the island reported fair or poor health to the Puerto Rico Community Health Assessment in 2022, well above the US average of 16.1 percent. Moreover, the island’s poverty rate stands at 43 percent according to 2022 reporting from the US Census Bureau – nearly four times higher than the mainland US average – further straining public health resources.
These longstanding challenges are set to deepen with recent developments in Washington. The Trump administration’s so-called ‘One Big Beautiful Bill,’ which was approved by both the Senate and Congress in July 2025. The Bill proposes sweeping Medicaid cuts estimated at up to USD 930 billion over the next decade. For Puerto Rico, which already starts from a disadvantaged baseline, these cuts could further squeeze services and deepen healthcare disparities.
“Rather than pushing into a conversation not designed to include us, our efforts are focused on maintaining rigorous compliance with federal funding requirements and information exchange with key congressional partners,” Pizarro notes. Against this backdrop, relatively lowly goals are being set; Pizarro underscores that protecting the current level of Medicaid funding would be seen as a strategic success for now.
Víctor Ramos Otero, the island’s Secretary of Health, adds that provider payments are significantly lower on Puerto Rico than on the mainland. “We have funding until 2027 under the federal law establishing Medicaid for territories, which differs from the law for states. Discussions on cuts are expected in 2027,” he says. Ramos highlights two major program gaps: long-term care for the elderly and Medicare Part B payments for dual-eligible patients, which together represent approximately two billion dollars in lost support. These gaps not only drive patients to migrate for services but also incur higher costs for the federal government.
Workforce Challenges
These funding constraints and structural gaps also contribute to workforce challenges, affecting both recruitment and retention across the health sector. Millie Rivera, business director Puerto Rico & LATAM chief of staff at women’s health player Organon, notes that “one of the challenges is a growing shortage of physicians, a situation that, if left unaddressed, could evolve into a critical access crisis over the next ten years.” She stresses the importance of involving the private sector in long-term workforce solutions, particularly for women, who often face disproportionate barriers.
Others from the life science community echo this concern. Javier Deida, regional business director and country lead at Pfizer laments that “Puerto Rico produces outstanding medical graduates, yet many are forced to leave for training elsewhere due to limited residency slots. Too often, they do not return,” he explains. Deida emphasises expanding local fellowship opportunities and better-structured incentive schemes as key strategies to improve retention.
“The physician shortage in Puerto Rico is frequently misunderstood,” adds Salvador Rovira, president and CEO of CredeMtia, a healthcare software development company and service provider. “While some doctors have emigrated, the deeper issue lies in an ageing workforce and limited local training capacity. The average physician is now around 60 years old, and many are retiring, not due to dissatisfaction, but because they are financially secure, exhausted by bureaucracy, or ready to join family elsewhere. At the same time, although Puerto Rico’s four medical schools graduate approximately 450 students annually, fewer than half can access a local residency position. The remainder must leave the island to pursue specialist training, not because they want to, but because the system gives them no alternative.”
Secretary Ramos and the wider administration of Governor Jenniffer González-Colón have outlined several initiatives to address these workforce gaps. These include student loan repayment programs supported by a legal trust fund, simplifying licensing requirements through a unified health professionals code, and creating a centralised credentialing database. Currently, only 3,000 of Puerto Rico’s 9,000 doctors receive a four percent tax incentive. Ramos is negotiating to expand this number without jeopardising public finances.
The Chamber of Commerce also sees targeted incentives as a crucial tool. Pizarro argues that the current universal application of tax incentives could be rebalanced: “If Mayagüez [a city and region on Puerto Rico’s west coast] lacks neurologists, incentives should be targeted specifically at attracting and retaining neurologists in that area, rather than being extended universally to physicians regardless of local need.” He suggests phasing out benefits for late-career practitioners and redirecting them to new graduates more likely to stay and serve full-time.
Pharma Market: Opportunities & Obstacles
Despite these structural strains, Puerto Rico has shown remarkable adaptability, positioning itself as a promising hub for pharmaceutical investment and commercialisation.
Organon’s Rivera highlights Puerto Rico’s strategic importance: “Puerto Rico is our fastest-growing market in the Latin America & Mexico region and among the top ten worldwide. We have a broad portfolio, including biosimilars, immunology, oncology, fertility, and women’s health. Around 55 percent of the market is public, and 45 percent is private – our focus is on ensuring patients in both channels have access to affordable, quality medicines.”
Echoing this momentum, Glorimar Torres, general manager and country director at Amgen, explains: “Puerto Rico is one of our fastest-growing markets in the region and has consistently delivered double-digit growth. We are already among the top six companies for sales in Puerto Rico, which is significant for an innovator company like Amgen.”
Puerto Rico operates under US FDA jurisdiction, allowing faster approval timelines and direct alignment with mainland launches. This strategic benefit is highlighted by Juan Ignacio Diddi, general manager for BMS Puerto Rico & Caribbean. “One of the biggest advantages of Puerto Rico is that we can launch products almost simultaneously with the US,” he explains.
A prime example is BMS’s introduction of CAR-T cell therapy at Auxilio Mutuo Hospital. CAR-T (chimeric antigen receptor T-cell) therapy involves reprogramming a patient’s own T-cells to recognise and attack cancer – a complex and often expensive breakthrough treatment for certain blood cancers. Diddi describes this as a milestone: “It showcases the capacity of the island to quickly integrate cutting-edge therapies and provide local patients with global-standard care.”
Yet, even with FDA alignment, specific local regulatory work remains crucial. Naiomi Chardon, commercial director and co-founder of Rebexa Group – a leading Puerto Rican regulatory consultancy – clarifies that “even when products are FDA-approved, they still need to be registered locally under the Puerto Rico Pharmacy Act. This local registration ensures accountability and traceability and acts as an added layer of public health protection. Similar frameworks exist in some US states, but in Puerto Rico, it is strictly enforced.”
While the commercial environment is strong, actual market access for new therapies can be complex. Amgen’s Torres warns that “while physicians are generally well-educated and products can be justified through the exception process, gaining access through insurance plans isn’t always straightforward. Even if a product is FDA-approved and prescribed, it can be challenging to get it included in formularies, especially for innovative or high-cost therapies.”
Diddi underscores that market access requires more than regulatory green lights. “First, clinical trials play a crucial role,” he begins. “We have increased clinical trials by 20 percent in the past year, which gives patients early access to therapies and strengthens local medical infrastructure. Second, addressing access in underserved communities is key; with a poverty rate of over 40 percent financial barriers remain high. Our patient support programmes help at every step, from financial assistance to education.”
He adds, “Lastly, pricing and sustainability are universal challenges. We work with governments and healthcare systems to balance innovation and affordability, developing sustainable models that ensure patients get the right treatments at the right time.”
Pfizer’s Javier Deida agrees. “Although there is a general understanding of the value that innovation brings, the key challenge lies in creating a framework that makes it economically feasible,” he states “While list prices match the US, local rebates shape real access. We focus on ensuring innovation is not just approved but truly reaches patients.”
Reasons to be Cheerful
Despite all these headwinds, there are reasons for cautious optimism. Since 2009, advocacy efforts have led to historic gains, especially in Medicaid funding, and steady improvements in the MA administrative process. Pizarro cautions, however, that “administrative improvements alone cannot resolve the structural inequity.”
For Puerto Rico to stabilise its healthcare system, retain clinical talent, provide broader and faster access to medicines, and improve patient outcomes, additional funding is essential. As Secretary Ramos puts it, while Puerto Rico’s healthcare professionals are as qualified as their mainland counterparts, “when it comes to equipment, technology, and the necessary resources to make everything work, there is a clear disparity.” Addressing this gap will be key to ensuring that all Puerto Ricans can access the quality of care they deserve.
Regardless of the challenges, Secretary Ramos is positive about the system he oversees. “There are many needs and problems to address, and new emergencies arise daily in our hospitals, diagnostic centres, and other facilities,” he concludes. “However, our team works with great enthusiasm and commitment. The Secretary of Health’s employees are dedicated to our mission, and we will not let patients down.”
