Congress Seeks To Repeal Medical Device Tax In Federal Budget Proposals

Members of both the U.S. House and Senate expressed their renewed commitment to repeal the 2.3 percent medical device excise tax by including measures in their respective federal budget plans, garnering the support of the Advanced Medical Technology Association (AdvaMed).

The tax is expected to generate more than $29 billion in revenue between its inception and 2022, which represents a small fraction of the Affordable Care Act’s (ACA) operating budget. Though the portion is small, no suitable candidate for alternate funding has been found.

The tax has bumped along in its first year with an increasing number of congressmen and women on both sides of the aisle voicing dissent. Last August, Med Device Online detailed the IRS’s struggles in ascertaining exactly which manufacturers were subject to the tax.

Proponents of the tax believe that efforts to repeal reflect an ongoing effort to chip away at the ACA, but opponents argue that the tax is an undue burden on manufacturer’s ability to fund job growth and technical innovation.

JC Scott, senior executive vice president of AdvaMed, released a statement in support of the proposed repeal, commending both House and Senate members for making room for it in their budget proposals.

“The tax is a drag on a high-technology, research-based manufacturing sector that provides life-saving, life-enhancing treatments and cures,” Scott said. “Every cent paid toward this onerous tax is one that would be better spent on research and development.”

Last fall, the Joint Committee on Taxation (JCT) released a report that claimed the tax would have a very minimal effect on the business practices of affected manufacturers. According to the JCT, the tax affects less than half of the medical device industry’s output and projected that employment would fall by less than two-tenths of 1 percent.

Even so, the report did very little to stymie the efforts of Congress members who are devoted to defeating the tax. Both Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Senator Pat Toomey (R-Pa.) released a joint statement in support of the proposed repeal.

“This tax not only discourages economic growth and drives up medical bills, but it also hurts the patients who stand to benefit the most from American innovation and ingenuity,” said Toomey in the statement.

Toomey’s statement also cited a study conducted by AdvaMed that reported a loss of 33,000 existing or potential jobs in the tax’s first year alone.

Med Device Online  reported on the JCT’s economic analysis last November and cited Steve Ubl, president of AdvaMed, who believed that the White House “is not necessarily married to the policy” and might let the measure stand unopposed if put to a vote.

With both the House and Senate currently under GOP control, that vote seems likely. Last year, Toomey co-sponsored a bipartisan amendment to the 2014 budget resolution that would repeal the tax, and the amendment passed by a vote of 79 to 20.