Device makers respond to the State of the Union with renewed calls for device tax repeal

President Barack Obama’s State of the Union speech mentioned jobs, the economy and U.S. small businesses in no short order, and medical device makers seized on the opportunity renew calls for repeal of the medical device tax that took effect at the start of the year.

The Medical Device Manufacturers Assn. issued a press release today responding to the State of the Union address, saying that the industry is "prepared to answer the challenge" to help strengthen the U.S. economy, but that the 2.3% tax imposed on medical device sales is in the way.

"MDMA agrees with the President that we need to grow our economy by expanding our manufacturing base while creating more middle class jobs," MDMA president & CEO Mark Leahey said in prepared remarks. "Unfortunately, a huge barrier stands in their way in the form of a medical device tax that is harming job creation and eroding the quality of care for patients."

Pres. Obama last night expressed interest in tax code reforms that would help small businesses put more of their money toward "expanding and hiring" rather than dealing with complicated forms, as well as incentives for companies that companies that keep manufacturing in the U.S.

Medical device makers have long warned that the new tax, contained in the landmark Affordable Care Act would have the opposite effect – preventing small medtech companies from investing in new hires and pushing more companies to shift their manufacturing overseas.

"Thousands of jobs have already been lost in this high tech, manufacturing-based industry because of the medical device tax, and 10s of 1,000s more are at risk if Congress and the President don’t repeal this ill-conceived tax," Leahey said. "MDMA and others have long warned about the adverse impact of this onerous policy, and now we are seeing the harsh realities."

Medtech companies reportedly laid off about 7,000 workers in 2012 and some companies blamed at least part of their cuts on the medical device tax, including Stryker (NYSE:SYK), which cut about 1,000 employees; Hill-Rom Holdings (NYSE:HRC), which cut 3% of its workforce; and Zimmer (NYSE:ZMH), which announced layoffs and outsourcing for an Indiana facility.

Industry advocates have structured their tax repeal rhetoric around corporate tax reform, hoping to distance the issue from the healthcare reform.

Long time medtech advocate Rep. Erik Paulsen (R-Minn.) earlier this month told reporters that he still sees avenues for repealing the tax tied to larger discussions of corporate tax reform, especially because it will hit healthcare giants as well as small, pre-profit companies.

"It’s not just the larger companies like Medtronic or Boston Scientific – there are 400 of these smaller companies, medical technology companies in Minnesota, that will be impacted by the new tax,"Paulsen told reporters. "This tax is not a tax on profit for companies, this is a tax on their sales, on their revenue, and for most companies that are medical device companies it takes 10-15 years to achieve profitability, so this is the time to push the panic button."

"The simple fact is that our economy needs new jobs paying good wages, which have the added benefits of increasing exports while reducing the costs of care," Leahey said today. "The medical technology industry is one of the few job creators that can deliver, but we need to remove unnecessary hurdles and establish a reasonable and predictable regulatory environment to do so."

Pres. Obama never mentioned the medical device tax during his address last night, but has said in the past that he would veto a repeal bill if such a measure ever made it to his desk. The levy is expected to collect about $30 billion over the course of 10 years, revenue that will fund parts of healthcare reform.

Industry advocates and lobbying groups are still pushing hard for a repeal of the tax, garnering wins last week with both the House of Representatives and the Senate introducing measures to strike the tax from the Affordable Care Act.

Concerns about healthcare costs were also a big feature of Pres. Obama’s address, but he didn’t offer any new avenues for curbing spending, instead rallying support for measures he’d proposed in the past. Such measures include pay-for-quality rather than pay-for-quantity Medicare reimbursement rates, increasing Medicare premiums for seniors and reducing reimbursements for prescription drugs.

"The biggest driver of our long-term debt is the rising cost of healthcare for an aging population," Pres. Obama said. "And those of us who care deeply about programs like Medicare must embrace the need for modest reforms – otherwise, our retirement programs will crowd out the investments we need for our children, and jeopardize the promise of a secure retirement for future generations."

RSS From Medical Design & Outsourcing

  • GlobTek presents its latest level VI AC/DC adapter and connverter
    T-43086-WWVV-X.X-Q Model is an addition to GlobTek’s Level VI compliant GT-43086 family and represents GlobTek’s 6 Watt wall plug-in series of AC/DC adapters (power supplies and chargers) with International Interchangeable blades. GlobTek’s changeable input blade system with individual field replaceable input plugs, including: North America and Japan NEMA 1-15P, Australian, UK BS 1363, European CEE […]
  • Sanmina’s familiarity with FDA gets skin treatment product to market fast
    The medical market for cosmetic devices is booming. However, quickly launching new products to meet demand is becoming more challenging because device manufactures face increased regulatory scrutiny. To help meet regulatory requirements, aesthetic and other medical-device OEMs are partnering with electronics manufacturing services (EMS) companies that also offer expertise with the FDA filings necessary to […]
  • Fluid connectors and quick disconnects for IVD equipment from CPC
    Colder Products Company (CPC) offers thousands of tubing connectors, quick disconnects and fittings for smart fluid handling in IVD and analytical equipment. Non-spill connectors speed testing throughput by eliminating drips, preventing air inclusion and increasing operator safety. Panel mount connectors can be added to existing equipment or bottle caps to provide secure, leak-free connections. Puncture […]
  • 310 Watt desktop medical power supply meets efficiency level VI requirements
    Power Partners releases a new 310 Watt medical grade desktop power supply from their PEAMD Series of AC and DC adapters. The 310 Watt unit is packed for ideal performance inside a compact case measuring 7.8 x 4 x 2 in. with a weight of only 3 lbs. The PEAMD310 Series is approved to the latest […]
  • Saelig introduces Multiple Instrument System MIS4 universal test system
    Saelig Company has introduced the ABI Electronics’ Multiple Instrument Station MIS4, an all-in-one testing tool that provides all commonly required test instruments in one compact programmable hardware module, mounted in a compact case or installed in a PC-drive bay. Controlled by ABI’s sophisticated SYSTEM 8 Ultimate PC software with a simple yet programmable operator interface, […]
  • AssurX announces document management software update for small to mid-size companies in FDA regulated industries
    AssurX, an enterprise quality management, risk and regulatory compliance solution provider, announces the release of the latest update to their AssurX document management software. The document management solution provides a cost-effective solution for small to medium sized companies faced with streamlined operations and is fully compliant for FDA regulated industries. Ideal solution for small to […]
  • Saelig presents new Amplicon Impact-R 1100F series computer
    Saelig Company announces the Amplicon Impact-R 1100F series, a fanless system powered by the Intel ATOM D2550 processor. Configured with a high performance 2.5 in. MLC Solid State Drive (SSD), the Impact-R 1100F series is a silent controller system. With options for multiple serial communication ports, the Impact-R 1100F can offer up seven DB9 connections […]
  • Gerresheimer to acquire Centor
    Gerresheimer AG, a partner to the global pharmacy and healthcare industry, will further extend its pharmaceutical packaging business with the acquisition of Centor. Gerresheimer has reached an agreement with Nemera Development S.A. to acquire 100% of the share capital of Centor US Holding. “Centor is the highly profitable market leader for plastic vials and closures in […]
  • Methods Machine Tools presents the new Nakamura-Tome NTRX-300
    Methods Machine Tools, a developer of precision machine tools and automation, has introduced the new Nakamura-Tome NTRX-300, a multitasking turning center featuring complete parts machining in one operation, with a built-in load and unload automation system and advanced operator recognition management software. The NTRX-300 features true opposing twin spindles: an 8 in. A2-6 25 HP or […]
  • MSC Apex Diamond Python and Smart Midsurface speeds modeling to validation
    MSC Software announced a new release of MSC Apex, the company’s award-winning next generation Computer Aided Engineering (CAE) platform. The MSC Apex Diamond Python release introduces: · The fourth release of MSC Apex Modeler is a CAE Specific direct modeling and meshing solution that streamlines CAD clean-up, simplification and meshing workflow. New in this release is […]
  • Quality Metrics: FDA’s plan for a key set of measurements to help ensure manufacturers are producing quality medications
    Editor’s Note: This article is written by Ashley Boam and Mary Malarkey from the “FDA Voice” blog. Boam is an FDA’s acting Director of the Office of Policy for Pharmaceutical Quality, the Office of Pharmaceutical Quality and the Center for Drug Evaluation and Research. Malarkey is an FDA’s Director if the Office of Compliance and Biologics Quality […]

Leave a Reply