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It's safe to drink tap water and have ice in your drinks in urban areas, but stick to bottled water everywhere else.
Two mosquito-borne diseases are prevalent in Panama: dengue fever (especially in Bocas del Toro) and malaria (in the Darién, Guna Yala, and parts of Chiriquí). Prevention is better than a cure: cover up your arms and legs and use a strong insect repellent containing a high concentration of DEET. Don't hang around outside at sunset, and sleep under a mosquito net in jungle areas.
Sunburn and sunstroke are potential health hazards when visiting Panama. Stay out of the sun at midday and use plenty of high-SPF-factor sunscreen when on the beach or hiking. You can buy well-known brands in most Panamanian pharmacies. Protect your eyes with good-quality sunglasses, and bear in mind that you'll burn more easily at higher altitudes and in the water.
In Panama farmacias (drugstores) sell a wide range of medications over the counter, including some, but not all, drugs that would require a prescription in the United States. Familiar brands are easy to find, otherwise ask for what you want with the generic name. Note that acetaminophen—or Tylenol—is called paracetamol in Panama (just as in the U.K.) Farmacias Rey and Farmacias Arrocha are two local drugstore chains with branches all over the country, many of which are open 24 hours.
Farmacias Arrocha (www.arrocha.com.)
Farmacias Rey (www.smrey.com.)
If you're traveling anywhere east of Panama City and the former Canal Zone, a yellow fever vaccination is recommended. Remember to keep the certificate and carry it with you, as you may be asked to show it when entering another country after leaving Panama.
The CDC recommends mefloquine, proguanil, or doxycycline as preventive antimalarials for adults and infants in Panama if entering a malaria zone east of the Panama Canal. Chloroquine is sufficient for western Panama malarial regions. To be effective, the weekly doses must start a week before you travel and continue four weeks after your return. There is no preventive medication for dengue.
Centers for Disease Control & Prevention (877/394–8747 international travelers' health line. www.cdc.gov/travel.)
World Health Organization (www.who.int.)