The medical device industry is keeping the pressure on Congress to push for a vote to repeal the medical device tax, a 2.3 percent levy on U.S. sales of medical equipment, which was contained in last year’s landmark health care reform law.
More than 400 medical device companies, industry councils and other stakeholders signed a letter addressed to leaders in both the House of Representatives and Senate, asking legislators to repeal the tax outright.
“We believe that implementation of this $20 billion excise tax will adversely impact patient care and innovation, and will substantially increase the costs of health care,” industry officials wrote . “On behalf of the more than 400 undersigned organizations, companies, and venture capital firms representing hundreds of thousands medical technology jobs, we ask that you bring the device repeal legislation, which has the support of more than 175 Members, to a vote this year.”
The industry said that the device tax, set to go into effect in 2013, will increase the effective tax rate for device firms, forcing cutbacks in R&D and costing the industry “thousands of high paying jobs.” In addition, they argued that the excise tax will be passed on to customers causing higher overall medical costs.
Industry representatives added that the tax will not be offset by an increased demand for health care, citing Massachusetts’ landmark health care reform and insurance mandate as evidence.
“It is important to note that there is no evidence suggesting a device industry “windfall” from healthcare reform,” officials wrote. “Unlike other industries that may benefit from expanded coverage, the majority of device-intensive medical procedures are performed on patients that are older and already have private insurance or Medicare coverage. Where states have dramatically extended health coverage, such as in Massachusetts where they added 400,000 new covered lives, there is no evidence of a device windfall.”
The medical device industry has been stepping up its calls for a repeal of the device tax recently with varying results. While industry has been able to cobble support from GOP leaders in both houses of Congress and some leaders on the Democratic side, there have been no votes on the issue and none are expected to occur any time soon.
Last week, AdvaMed released a report that said the costs of medical devices and diagnostics have barely budged over the last 20 years, with prices growing at an average annual rate of 1.0 percent compared to national inflation at 2.8 percent, according to the report. Medical device spending has gone from 5.3 percent of national health expenditures in 1989 to 5.9 percent in 2009, according to the study.