Broad Coalition Urges Congressional Leaders to Repeal Medical Device Tax

WASHINGTON, DC -- A broad coalition of medical technology companies and leading associations wrote to Congressional leaders today urging them to repeal the onerous medical device tax which will harm innovation and patient care.  The letter had over 420 signatories, including the Medical Device Manufacturers Association (MDMA), the U.S. Chamber of Commerce, the National Association of Manufacturers (NAM), the National Federation of Independent Business (NFIB), the National Venture Capital Association and others.

“If this tax is not repealed, it will continue to force affected companies to consider cutting manufacturing operations, research and development, and employment levels to recoup the lost earnings due to the tax.  It will also adversely impact patient access to new and innovative medical technologies,” the letter states.

The 2.3% medical device tax was passed as a part of the health care reform last year, and is scheduled for implementation in 2013.

The letter went on to note that “We must do all we can to encourage and promote research, development, investment and innovation. Instead, increased taxes, such as this one on the medical device industry, coupled with the increased regulatory uncertainty the industry also faces, will lead to further job losses, hinder the development of breakthrough treatments and delay patient access to medical technology.”

“MDMA and its members have long argued that the medical device tax will harm patient care and thwart innovation and job creation at a time when we can least afford it,” said Mark Leahey, President and CEO of MDMA.  “Repealing this onerous provision of the health care law continues to build bipartisan support, and this broad coalition shows that medical technology innovators across the country are committed to providing an environment where innovation can thrive.  It is crucial that we support medical technology entrepreneurs as they work to deliver on the promise of a better tomorrow, and develop the therapies and devices that will get us there. Repealing the medical device tax is an important step in that direction."
 

“Allowing the medical device excise tax to take effect would undermine patient care, stifle innovation in medical technology, and further damage our economy,” said Bruce Josten, executive vice president for Government Affairs at the U.S. Chamber of Commerce. “The threat of this looming tax is already forcing medical device manufacturers – most of them small businesses – to slow hiring and to halt R & D investment. If innovation in this important industry is discouraged, the United States will lose its competitive edge in the global marketplace and American patients will lose access to breakthrough treatments and advanced medical technology.  This provision must be repealed in order to restore certainty, spur medical innovation, and keep Americans in these quality manufacturing jobs.”

“The National Association of Manufacturers (NAM) strongly supports efforts to reduce healthcare costs and improve the efficiency of our current system to advance the quality of care,” said Dorothy Coleman, Vice President for Tax and Domestic Energy Policy for the NAM. “However, increasing taxes on medical devices is a counterintuitive approach that will only contribute to rising costs and jeopardize research and innovation that goes into developing new, life-saving devices.”
 
The $20 billion device tax would affect many companies that would owe more in taxes than they generate in profits, as the tax is applied to revenue.  This would result in the elimination of jobs, cuts to research and development budgets, and roadblocks in the development of new therapies.

To view copies of the letter and see the list of signatories, click below.