Medical device industry stakeholders have spent much time and money lobbying to repeal the 2.3% medical device tax before it takes effect in January, but voices from Capitol Hill are starting to temper that enthusiasm.
Rep. Bill Owens (D-N.Y.), who was one of a dozen Democrats to sign on to a House bill to repeal the medtech levy earlier this year, told reporters last week that medical device makers may have better luck repealing the tax in 2013.
That may dash the hopes of medtech lobbying groups the Medical Device Manufacturers Assn., the Medical Imaging & Technology Alliance, and the Advanced Medical Technology Assn., which have been working to repeal the tax before it hits device makers in January.
Industry insiders had been looking to the "lame duck" period between election day and the seating of a new Congress as a window for pushing repeal, regardless of who won the White House. True to their word, stakeholders moved forward with repeal efforts with an eye toward the end of the year.
The trio of industry lobbying groups organized an executive fly-in on Capitol Hill last week, including more than 50 medtech executives who presented lawmakers with a call to action with more than 800 signatures, representing "hundreds of thousands of medical technology jobs," according to a press release.
The 2.3% levy, which is expected to raise about $30 billion over 10 years, may be getting lost in the flurry of activity around the fiscal cliff and other tax measures that some members of Congress view as more immediate. Those include the alternative minimum tax and unemployment insurance, House Ways & Means Committee ranking member Sandy Levin (D-Mich.) told the National Journal.
Rep. Owens, an open opponent of the medtech tax, agreed that the levy would likely be dealt with next year, as the rhetoric around repeal fits closer with issues slated for 2013.
Device makers have centered their strategy around efforts to paint repeal as a matter of tax reform, distancing the bill from the Affordable Care Act it’s contained in.
"We believe, candidly, that if we are successful in repositioning the device tax as a jobs and economic growth issue in the context of tax reform, that many more Democrats will view that issue in the same way and join us in the effort to repeal the tax going forward," AdvaMed CEO Stephen Ubl told reporters in February, when the lobbying group released a set of principles for modifying the U.S. tax system.
House Ways & Means Committee chairman Rep. David Camp (R-Mich.) "has indicated he will do tax reform next year. And I think the place for [medical device tax repeal] to fit in is in that legislation," Owens told the Post Star. "Unfortunately I think that’s the likelihood."
AdvaMed and other medtech groups have been unwilling to discuss back-up plans or modifications to the tax that might ease the burden for smaller companies, focusing all efforts on wholesale repeal.
"We’re trying to think about too many hypothetical scenarios where we’re not successful this year," AdvaMed senior executive vice president David Nexon told reporters last week. "If we are unsuccessful this year, which I don’t think we’re ready to concede, but if we are and we get into next year and there’s a tax reform discussion, I think we would certainly want to be part of that discussion."
Should the excise tax survive the onslaught of repeal lobbying, the industry will have to come up with about $2.5 billion to comply with the levy in 2013, according to new estimates.