Health Care Reform, Device Tax

What is the medical device tax?

The proposed $40B tax was included in the America’s Healthy Future Act which was passed by the Senate Finance Committee. The tax would equate to a roughly 3.5% tax levied on the total revenues of a company, regardless of whether a company generates a profit. Therefore, many companies may owe more in taxes than they generate from their operations. The result would be devastating to innovation, investment and the economy.

What is MDMA’s position?

MDMA supports bipartisan legislation to improve patient care, reform the insurance industry and promote prevention and wellness. However, the medical device tax being discussed on Capitol Hill will hinder achieving these objectives. The overwhelming majority of innovation from the medical device industry comes from smaller manufacturers who work closely with clinicians and engineers to develop the therapies and treatments of tomorrow. If enacted, this tax will stifle innovation, harm patient care and weaken the position of the US as the global leader in medical device innovation.

MDMA has been consistently opposed to any medical device tax. For those who justify the tax as “shared responsibility”, MDMA points out that other elements of the bill will result in over $20B in cuts to the device industry. Furthermore, claims that the taxes levied on medical device companies will be offset due to an increased pool of insured beneficiaries receiving treatment are overstated. Since the majority of products impacted are used in acute care settings where there are legal obligations to treat a patient, the effect of expanded coverage is not likely to increase utilization.

What is MDMA Doing?

MDMA has called upon its hundreds of members to participate in congressional fly-ins, congressional hearings, write letters and call their Members of Congress to oppose the tax. Our members are communicating the detrimental impact this tax will have on achieving the long term objectives of health care reform. MDMA believes the bill should include provisions that promote innovation and improve patient care, not harm the system.