Medical device tax: Zoll CEO Packer says levy will lead to permanent job losses and higher healthcare costs

May 25, 2012 by MassDevice staff

Zoll CEO Rick Packer says the medical device tax will lead to higher costs, fewer jobs and more off-shoring both for his company and for the med-tech industry.

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Rick Packer may have orchestrated a dazzling $2.3 billion acquisition of Zoll Medical (NSDQ:ZOLL) by Japan's Asahi Kasei Corp. (TYO:3407) this spring, but he still sees the medical device tax as a major stumbling block for both his company and the med-tech industry in general.

The Zoll CEO told a forum in Boston this week that he still finds the tax infinitely frustrating, even 2 years after it first started making headlines as part of President Barack Obama's healthcare reform law.

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"It's hard for everybody in the device industry, because all of the new patients that many people are promising us don't kick in for a few years down the road. But the tax starts in 2013," Packer said. "For most of my business, which is a capital equipment business, nobody needs a 2nd defibrillator. There aren't going to be more heart attacks because of having universal healthcare, so there is no upside to my business from universal healthcare. There is only this tax, and it's absolutely going to mean fewer jobs, full stop. There's no question about that."

Zoll, which became a wholly owned subsidiary of the Asahi Kasei Group after the deal closed last month, will continue to be led by current management and with all current business units and operations intact, according to an SEC filing. Nevertheless, Packer said the device tax will force the company to tighten its belt.

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