Kerry expresses concern over taxing the medical device industry

September 17, 2009 by MassDevice staff

Massachusetts' lone senator stops short of joining the Indiana and Minnesota delegations' opposition to a proposed $4 billion annual tax on medical device makers.

Sen. John Kerry voiced concern, but not outright opposition, to a proposed $4 billion annual surcharge on medical device makers' sales.

Kerry, the lone senator from Massachusetts, issued a statement through his press office in Washington saying that, "we should explore whether there are better ways to raise revenue than assessing across the board excise taxes on specific sectors of the health industry."

That's a reference to a healthcare reform bill out of the Senate Finance Committee that would levy a $40 billion contribution on the medical device industry over 10 years, according to an as-yet-undefined market share calculation. The proposal drew outraged howls from industry leaders.

And legislators from both sides of the aisle from med-tech-heavy states,
Democrats Sen. Amy Klobuchar and Sen. Al Franken of Minnesota and Sens. Richard Lugar (R-Ind.) and Evan Bayh (D-Ind.), also registered their disapproval.

The senators sent a letter to Finance Committee chairman Sen. Sen. Max Baucus (D-Mont.), asking him to reconsider the proposal because the fees would "threaten thousands of jobs and stifle innovation."

Baucus' bill, released Sept. 16, calls for an annual fee of $4 billion on manufacturers and importers of medical devices, starting in 2010. It also has provisions for hefty fees from health insurers ($6 billion), drug makers ($2.3 billion) and clinical laboratories ($750 million).

Here's the text of Kerry's full statement:

"We’re all struggling to find ways to create the revenue for reform and I’ve been putting some tough medicine on the table myself, but I know there is broad concern in the Senate about the potential unintended consequences of some of the notions being kicked around. Different industries are different, period, and a broad brush can be counterproductive. In this case the medical device companies pave the way on new technology that saves lives and money, so anything that could stifle research and development concerns us in the short and long term. We should explore whether there are better ways to raise revenue than assessing across the board excise taxes on specific sectors of the health industry."