U.S. Lawmakers Set Sights On Medical Device Tax Repeal
By Jof Enriquez,
Follow me on Twitter @jofenriq
A bipartisan group of lawmakers in the U.S. House of Representatives recently introduced a new measure to repeal the medical device tax during the opening session of the 114th Congress. The piece of legislation is the latest attempt to nix the controversial tax ‒ a key source of funding for Obamacare.
Rep. Erik Paulsen (R-Minn) recently proposed the Protect Medical Innovation Act, which would repeal the 2.3 percent excise tax on medical devices. The measure has the backing of 254 cosponsors, including 27 Democrats, according to a press release from the Congressman.
“The medical device tax continues to stifle innovation, cost American jobs, and drive up health care costs despite bipartisan opposition in both houses of Congress,” Paulsen said in his statement. “With over 250 cosponsors day one of the new session, it’s clear repealing this tax should be one of the priorities for the new Congress. The American people are looking for their elected officials in Washington to find common ground and repealing the medical device tax is a great place to start.”
Paulsen is a member of the House Ways and Means Committee, the bicameral Joint Economic Committee, and co-chair of the Congressional Medical Technology Caucus.
Republicans have led numerous measures to repeal the tax, but the previously Democrat-led Senate prevented those measures from advancing. After wresting control of the Senate in the mid-term election, however, Republicans hope to win a repeal this time.
“Many of us were saying from the outset this is a very ill-conceived idea,” Paulsen said of the tax at a recent news conference with Rep. Ron Kind (D-Wis) and other supporters, according to The Hill. “You’re going to have fewer start-ups, less ideas in the garage.”
Killing jobs and stifling medtech innovation are the major reasons why industry groups have strongly lobbied against the tax since its implementation in 2013. In a recent statement, trade associations including the Advanced Medical Technology Association (AdvaMed), the Medical Imaging & Technology Alliance (MITA), and the Medical Device Manufacturers Association (MDMA) lauded the latest measure.
“Repealing the medical device tax is critical for the United States to maintain its global leadership in this high-tech manufacturing sector and to allocate resources toward the development of new cutting-edge technologies. This tax on innovation stymies the search for cures and treatments and stalls job creation,” said Stephen J. Ubl, president and CEO of AdvaMed, in the statement. “We appreciate the ongoing support from both sides of the aisle and the leadership of Reps. Paulsen and Kind on this important issue.”
In a previous Med Device Online (MDO) article, Ubl wrote that the tax has negatively impacted medtech R&D and manufacturing investments, and resulted in the loss of 165,000 U.S. jobs during its first year of implementation.
A 2014 report from the Joint Committee on Taxation (JCT) estimated that the device tax will raise $29 billion in revenue between fiscal year 2013 and 2022, according to another MDO article. However, contrary to claims made by opponents of the tax, the JCT also said that “it is unlikely that there will be significant consequences for innovation.” Moreover, the JCT claims that just 0.2 percent of jobs are said to be in jeopardy as a result of the tax.
Paulsen’s measure does not propose the means to make up for the nearly $30 billion in revenue the tax aims to generate over the next ten years, according to a Syracuse.com report.
Congress’ own think tank, the non-partisan Congressional Research Service (CRS), also said in an analysis that industry claims of massive job losses may be exaggerated, according to an editorial in USA Today. The CRS report said that the medical device tax will have “fairly minor effects” and that job losses will be “little or none.”