Broad coalition urges House of Representatives to repeal medical device tax

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The fight for repeal of the medical device excise tax gain has continued to gain momentum. As the US House of Representatives gets set to vote on legislation that will repeal the 2.3% excise tax, a broad coalition of medical technology companies and leading associations wrote to Congressional leaders today urging them to repeal the onerous tax that they say will destroy jobs and harm innovation. With more than 700 signatories, the letter is signed by key organizations, including the Medical Device Manufacturers Association (MDMA), the AdvaMed, the Medical Imaging & Technology Alliance (MITA), the US Chamber of Commerce, the National Association of Manufacturers (NAM), the National Federation of Independent Business (NFIB), the National Venture Capital Association, and others.

“We continue to believe that implementation of what was to be a $20 billion excise tax–and is now estimated to collect over $30 billion in taxes–will adversely impact patient care and innovation, and will substantially increase the costs of healthcare,” the letter states.

The 2.3% medical device tax was passed as a part of the healthcare reform legislation in 2010, and the repeal bill, H.R. 436, the ‘Protect Medical Innovation Act,' is scheduled for a vote in the US House of Representatives this week.

The letter went on to note that, “At a time when the federal government is working to promote investment in US industries of the future, it is inconsistent that a tax of this magnitude would be considered on the medical device industry. We must do all we can to encourage and promote research, development, investment and innovation.”

“Members of Congress are asking America's innovators and manufacturers to help revive our economy, and repealing the job-crushing medical device tax would be a huge boost to these efforts,” said Mark Leahey, president and CEO of MDMA. “This bipartisan legislation supports a proud American success story, and removes a serious barrier to creating jobs and improving patient care. The small and innovative businesses that comprise the medical device community are counting on Congress to put an end to this misguided policy.”

“Repealing the device tax is critical to saving jobs across the US. Study after study has shown that if this tax is implemented in January, tens of thousands of good-paying jobs will be at risk,” said Stephen J. Ubl, president and CEO of AdvaMed. “Congress should take a stand now to protect jobs, encourage competitiveness and preserve the research and development needed to find tomorrow's treatments and cures.”

“MITA members continue to oppose the medical device tax because it creates strong headwinds against an important sector of the US economy in difficult economic times,” said Gail Rodriguez, executive director of MITA. “Repeal of the tax is critical to bolstering the economy as it will preserve thousands of jobs and ensure that manufacturers can continue developing innovative medical technologies that benefit patients.”

“Allowing this tax to take effect prevents medical device companies from competing on a level playing field,” said Bruce Josten, executive vice president for Government Affairs at the US Chamber of Commerce. “It will put US medical device companies at a competitive disadvantage to global competitors. Jobs, economic output, and medical innovations will be lost. H.R. 436, the ‘Protect Medical Innovation Act,' would repeal the medical device tax, preserve Americans' quality of life, protect American jobs, and defend American innovation.”

“As the world's leader in innovative life-saving and life-enhancing treatments and equipment, medical device manufacturers and their employees are critical to our nation's health and prosperity,” said Aric Newhouse, senior vice president for Policy and Government Relations for NAM. “A punitive tax on these manufacturers will only serve to stifle innovation and cause devastating job losses. With slow economic growth and weak jobs numbers, it is essential that we repeal this ill-advised tax on job creators and innovators.”

According to AdvaMed, the $30 billion device tax would affect many companies that would owe more in taxes than they generate in profits, as the tax is applied to revenue. This would result in the elimination of jobs, cuts to research and development budgets, and roadblocks in the development of new therapies. Efforts to repeal the tax have included a grassroots campaign as well as consistent lobbying by industry groups.

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