News Feature | January 5, 2017

House Bill To Permanently Repeal Device Tax Filed Anew

By Jof Enriquez,
Follow me on Twitter @jofenriq

U.S. Reps. Erik Paulsen (R-Minn.) and Ron Kind (D-Wisc.) have reintroduced a bill in the U.S. House of Representatives seeking to permanently repeal the medical device excise tax, which currently is suspended until Dec. 31, 2017.

Paulsen was the lead sponsor of a similar measure that passed the House in June 2015. Instead of a full repeal of the device tax, though, a bipartisan-backed omnibus bill that included a two-year moratorium on the device tax was signed by President Barack Obama in December 2015.

Industry stakeholders have since been lobbying hard for a permanent repeal of the contentious 2.3-percent levy on medical products, which many companies consider an unnecessary burden that is killing American jobs and hindering U.S.-led innovation.

"One of the best ways to protect American manufacturing, spur innovation, and make sure the latest and best medical technology is affordable for patients is to repeal this burdensome tax," Paulsen said in a statement, reports "We are already seeing new American jobs and increased investment in research and development as a result of the temporary suspension of this tax."

A survey by the Medical Imaging & Technology Alliance (MITA) released in July 2016 noted that the device tax suspension has had a positive impact on U.S. jobs and innovation. In particular, the survey found that 69 percent of respondents are now likely to hire more U.S.-based employees and 77 percent are likely to invest additional resources in research and development (R&D) given the two-year suspension.

Some observers believe that incoming U.S. President Donald Trump will likely rescind the device tax, given his Republican party mates' position against the tax as a funding mechanism for Obamacare. Medtech trade groups praised the House bill.

“Introduction of the Protect Medical Innovation Act is a key milestone in finally repealing this onerous tax once and for all. As one of the first bills to be introduced in the House in the new session, this sends a strong signal that repeal is a high priority for the incoming Congress,” stated AdvaMed president and CEO Scott Whitaker.

“As we predicted, the temporary suspension of the tax has led medical technology companies to reinvest funds that would have gone to the tax into new R&D, infrastructure improvements, and new hiring. With the suspension set to expire in 2017, for these benefits to continue for the long term, companies need the certainty of permanent repeal to support future job growth and sustainable R&D investment. This will help ensure a strong pipeline of continued medical innovation for patients worldwide,” added Whitaker.

California Life Sciences Association (CLSA) President & CEO Sara Radcliffe also weighed in: “CLSA applauds the reintroduction of legislation to permanently repeal the ill-conceived 2.3 percent medical device tax, which could further hamper innovation and investment in medical technology research and development, if not fully rescinded," she said.