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

  • Albright Technologies expands their silicone offerings
    Albright Technologies, a rapid silicone prototyper, has added silicone injection molding tooling and services to its product lineup. Liquid silicone injection molding became a suitable product offering as Albright expanded its offerings to better serve the silicone molding market. While silicone prototypes are commonly manufactured with low volumes in mind; injection molded liquid silicone rubber parts are […]
  • Applied Silver launches SilvaClean, silver treatment for textiles
    Applied Silver, Inc, is launching SilvaClean, a state-of-the-art silver treatment for textiles, at the Association for Professionals in Infection Control and Epidemiology’s (APIC) forty-second Annual Conference taking place at the Music City Center in Nashville, from June 27 through June 29. Hospitals have invested significantly in reducing the potential of infection through products and processes designed […]
  • Two-Component technology for improved quality of life
    In the field of injection molding and mold making, toolcraft covers all processes within the added value chain–from the design and selection of materials through to the creation of finished and qualified products. Complete solutions offered include injection molding for parts in the small and extremely small component areas, e.g. for medical technology. Utilizing two-component […]
  • GDS security protects medical devices from hackers
    As data breaches become more commonplace with serious consequences to personal, corporate and national security, it is clear that there is no shortage of accomplished and effective hackers ready to steal data and trade it on the open market. Global Data Sentinel (GDS) has the ability to provide retroactive security to remove access to email […]
  • BRAEBON and SomnoMed combine products to combat sleep apnea
    BRAEBON Medical Corporation announces that the DentiTrac oral appliance compliance system has passed a regulatory hurdle and is now FDA cleared in the USA for use with the SomnoDent oral device. BRAEBON congratulates SomnoMed for being the first company to achieve this milestone. “We are pleased DentiTrac is launching in the US market. Accurate oral appliance […]
  • For advanced shielded plastic connector solution, ODU delivers with latest product
    ODU, a company which designs and manufactures connector solutions and cable assemblies, is announcing ODU MEDI-SNAP EMC, the advanced shielded plastic connector solutions, to the US market. ODU MEDI-SNAP EMC is the latest addition to ODU’s Push-Pull circular connectors. The advanced medical connector solution is lightweight, autoclavable, sterilizable and it offers a touch proofed housing and reliable […]
  • LifeVac steps towards availability on European markets
    On June 16, 2015, LifeVac Europe received confirmation from the UK Ministry of Health that LifeVac is now registered in the Medicines and Healthcare products Regulatory Agency public access data base. This is the final step towards acquiring the CE mark and making LifeVac available to the entire European market. “We are very excited to […]
  • A few ideas for improving productivity in medical processes
    Drive-based vibration and slosh control can help improve throughput in machines that assemble medical devices and products. Bipin Sen • Ed Lasch Bosch Rexroth Corporation Simply increasing the speed of a system that assembles medical devices, or packages medical products, seems like an easy way to boost throughput – until unwanted vibration (either induced […]
  • ODU announces MEDI-SNAP EMC for next generation medical applications
    ODU, announced ODU MEDI-SNAP EMC, the advanced shielded plastic connector solutions to the US market. ODU MEDI-SNAP EMC is the newest addition to ODU’s Push-Pull circular connectors. The advanced medical connector solution is lightweight, autoclavable, sterilizable and it offers a touch proofed housing and reliable EMI protection at the same time. ODU MEDI-SNAP EMC is available in […]
  • Evaluating the risk of device misconnections: Designing for medical devices with ISO 80369 in mind
    Beginning in the 1990s, concerns grew regarding the proliferation of medical devices fitted with luer connectors and the reports of patient injuries and deaths arising from misconnections. Thus began a many-years process to develop new industry standards for the small-bore connectors used in medical device applications. The much-anticipated ISO 80369 series of standards for small-bore […]
  • Custom molded filter screen assemblies limit contamination and reduce product failure
    Molded screen insert assemblies from Minnesota Rubber and Plastics are custom designed for water, beverage, off-highway and transportation applications to filter out fluid contaminants and reduce product failure. A wide range of screen options are available in many materials for difficult filtration applications allowing use with different fluids. Filter assembly orifice sizes available range from .71 […]

Leave a Reply