Now that the medical device tax has been implemented and device makers have already made their first payment to the IRS, the focus has turned to getting this thorn in their side repealed. They have gained some support in that effort, and AdvaMed says that legislation introduced in the US House of Representatives and the Senate shows the growing bipartisan support for repealing the medical device tax.
“The momentum from the last Congress is carrying over with a broader array of champions working to defeat this terrible tax,” says AdvaMed president and CEO Stephen J. Ubl. “On both sides of the aisle, members of Congress know the device tax hurts our economy, kills jobs, and slows the march of medical progress needed to fight disease and reduce long-term health costs. The medical technology industry is united in its commitment to repeal this tax and appreciates the leadership shown in Congress to continue the effort.”
Reps. Erik Paulsen (R-MN) and Ron Kind (D-WI) reintroduced the House repeal bill, the “Protect Medical Innovation Act,” with more than 175 co-sponsors, including 20 Democrats. Ubl praised Paulsen and Kind for working together on the repeal effort. Senators Orrin Hatch (R-UT) and Amy Klobuchar (D-MN) introduced the “Medical Device Access and Innovation Protection Act” in the Senate.
“Patients, the healthcare system, and the American economy are winners when legislators work together like this. America’s medical technology industry looks forward to assisting in this important repeal effort,” Ubl says.
The Senate bill includes bipartisan co-sponsorship for the first time from Senators Hatch, Klobuchar, Richard Burr (R-NC), Patrick Toomey (R-PA), Robert Casey (D-PA), John Cornyn (R-TX), Al Franken (D-MN), Dan Coats (R-IN), and Joe Donnelly (D-IN), which AdvaMed says indicates growing support among Senators for device tax repeal.
AdvaMed, MDMA, and the Medical Imaging & Technology Alliance (MITA) all strongly support the legislation. “MITA applauds this bipartisan effort to safeguard American jobs and patient access to innovative diagnostics and therapies,” said Gail Rodriguez, executive director of (MITA), in a joint release. “In uniting together to defeat this burdensome tax, a growing number of members of Congress affirm what manufacturers have long known: the medical device sector is a critical driver of economic growth, bringing the most innovative life-saving technologies to market while creating and sustaining thousands of American jobs. This legislation underscores that repeal is essential so that companies can continue to invest their resources here in America.”
In the joint statement, the coalition stressed that efforts to repeal the tax are not a referendum on the Patient Protection and Affordable Care Act (ACA), but rather, a bipartisan agreement that the medical device tax hurts both patient access to medical technologies and the competitiveness of the US medical device industry.
“Repealing the device tax is our top priority and is critical to job creation and continued medical progress in the medical technology sector,” said Ubl. “We greatly appreciate Senators Hatch and Klobuchar’s continued leadership on this issue.
Ubl notes that the momentum for repeal is growing. “The number of co-sponsors and the strong bipartisan support for repeal underscores the importance of this issue to companies large and small who are already living with the real-world harmful impact this tax is having. We urge Congress to move swiftly on this legislation.”
MDMA president and CEO Mark Leahey also praised the introduction of the legislation. “Americans want Congress to work together on commonsense policies that will grow our economy and improve patient care,” he said, “and this important issue is a great example of how it can be accomplished. We must act quickly if we are to prevent the further loss of jobs and innovation that has already occurred under the medical device tax, and MDMA and our members will zealously push to get this legislation across the finish line.”
Under the 2.3% tax, device manufacturers are now required to pay an estimated average of $194 million per month in medical device tax payments (with a payment of approximately $97 million due semimonthly). Inudstry made its first semimonthly payment of approximately $97 million to the IRS at the end of January. According to AdvaMed, the tax has already led to layoffs, reductions in planned facility expansions, and other cost-cutting measures, which the association blames for stunting economic growth, impeding innovation, and affecting patient care. Studies show the tax threatens up to 43,000 jobs nationwide.
The medical technology industry helps employ more than 2 million people in the US, and salaries in this sector are 40% higher than the national average.