House passes bill to repeal medical device excise tax; hailed as a 'vote to protect jobs and encourage innovation'

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The “Healthcare Costs Reduction Act” passed today on the floor of the House of Representatives by a bipartisan vote of 270 to 146. The bill, sponsored by Rep. Erik Paulsen (R-MN), would repeal the $29 billion tax on American medical device companies that is part of the healthcare reform law. The bill now moves to the Senate.

“The House has taken a stand for American leadership in medical device innovation and the nearly half million U.S. jobs it supports,” said Paulsen. “This new ill-conceived tax would force many of our nation's bright medical technology innovators to lay off workers, move jobs overseas, or worse yet, close their doors altogether. With today's vote,” he said, “we show the nation what we can accomplish when we put progress before partisanship. I appreciate the support from my colleagues on both sides of the aisle and look forward to action in the Senate on this vital bill for American jobs.”

Rep. Erik Paulsen speaks on the House floor urging passage of a bill to repeal the medical device tax.

The vote was hailed by AdvaMedas a “vote for protecting jobs and for encouraging the innovation that leads to tomorrow's treatments and cures.” The device industry has never supported the 2.3% excise tax and has fought hard urging Congress to repeal it. “As we said before, if we don't repeal the device tax, three things will happen, and they're all bad,” said Stephen Ubl, president and CEO of AdvaMed, at a press conference immediately following the vote. “Companies will cut jobs. Several studies have shown that the device tax could cost tens of thousands of jobs, and several companies have announced layoffs that are attributable, at least in part, to the device tax. Companies will reduce research and development, which will stifle innovation, or they'll pass along the cost of the tax to consumers, which would undermine one of the central goals of healthcare reform,” he said.

Ubl reiterated a point hammered home repeatedly by the industry group: “If America is going to continue to be the world leader in development of new medical devices and diagnostics, we need public policies that will support that development.” Today's vote, he said “is a terrific step in the right direction.”

Mark Leahey, president and CEO of the Medical Device Manufacturers Association (MDMA), issued the following statement: “As Congress encourages America's innovators to create jobs, repeal of the medical device tax is a crucial step to empower medical technology entrepreneurs to answer this challenge. This not only makes good policy, it sends the right message to job-creators that our elected officials are prepared to work on bipartisan proposals to remove the road blocks in their way.”

He added, “The millions of dedicated workers who are a part of this industry have committed themselves to improving the quality of life for patients and to address some of the most daunting challenges in the delivery of care. Repeal of the medical device tax empowers this proud American industry to continue this important work, and will help ensure we remain the world leader in cutting-edge medical technology."

Ubl also noted the significance of this vote and the momentum it could bring when the issue comes up in the Senate. “We also think it's an action-forcing event for the Senate. We are heartened by the number of senators who have said they oppose the tax, and it's becoming a central campaign issue in several Senate races around the country, notably in Massachusetts and Indiana. So we think the House vote provides terrific momentum as we turn our attention to the Senate and we remain optimistic that there's a path forward this year.”

Ubl said that AdvaMed believes that there is “significant bipartisan support to repeal the tax,” noting that two democrats, Elizabeth Warren (D-MA) and Joe Donnelly (D-IN), have come out against the tax. “I think there are going to be opportunities in the Senate. We're certainly focused on potential end-of-the year legislation, and we'll be continuing to have discussions with those members, particularly in those states where there's a large presence of the device industry.”

Major device OEM Boston Scientificalso issued a press release applauding the passage of the bill. “This innovation-killing tax will have a significant negative effect on our ability to invest in new therapies for the patients we serve,” said Hank Kucheman, chief executive officer at Boston Scientific. “Our industry is an American success story built upon the ingenuity and inventiveness of thousands of people who work every day toward saving or improving the quality of patient lives. During this time of economic uncertainty, policymakers should be doing everything possible to create and nurture jobs like these.”

Mike Mahoney, Boston Scientific's president added, “We appreciate the hard work and thoughtfulness of members of Congress who have advocated repeal, particularly Rep. Erik Paulsen (R-MN), the lead sponsor of HR 436.” He noted that these members “recognize the immense value our employees and technologies bring to our economy and healthcare system. The innovation process is already challenging. Repealing this ill-conceived tax is a critically important step for Congress to take. We hope the Senate will follow suit shortly.”

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