The medical device excise tax could result in a loss of 21,390 full-time jobs and a GDP reduction of $1.7 billion, according to a report from the Tax Foundation, a nonpartisan, business-friendly think tank.
According to the report, the tax is projected to raise about $25 billion over the next 10 years. Other research from the Medicare Payment Advisory Commission reported that there was a job loss of 29,000 when the tax was in effect from 2013 to 2015.
The medical device tax was enacted as part of the Affordable Care Act in 2010 and previously reduced innovation and research and development in the industry when it was in effect. It adds a 2.3% excise on the value of taxable medical devices and was in place for three years before being suspended in 2016 until the end of 2017. Congress then extended the moratorium for 2018 and 2019, but there has been little movement this year, and the tax is scheduled to take effect again on Jan. 1, 2020.
Devices affected by the tax include X-ray machines, hospital beds, MRI machines and other medical devices listed as devices with the FDA under Section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR part 807.
The Protect Medical Innovation Act of 2019, under H.R. 2207, was introduced to the House Ways and Means Committee in April this year. The bill would repeal the excise tax on the sale of a medical device by the manufacturer, producer or importer. It has drawn bipartisan support in the House with 256 cosponsors, which consists of 189 republicans, 66 democrats and one independent. The last action on the bill was its introduction to the committee in April, according to the Congressional website, but has since drawn support from more representatives, most recently Rep. Dan Bishop of North Carolina on Dec. 3.
The U.S. Senate also introduced the Protect Medical Innovation Act of 2019 in March this year, under S.692. The last action on the act was on March 7 when the bill was read twice and referred to the Committee on Finance. The bill has 36 cosponsors in the Senate from 26 republicans and 10 democrats.
In October this year, AdvaMed’s president and CEO Scott Whitaker asked President Donald Trump in a letter to back the repeal of the medical device tax.
“Given your remarkable accomplishments in the private sector, you know a suspended tax is little more than a looming tax. Innovators and entrepreneurs must plan and act as if the tax will ultimately be imposed on them. The highly competitive medical technology industry needs certainty to make multi-year investments in the R&D, hiring and growth necessary to unleash life-changing innovation,” Whitaker wrote in the letter. “By preventing a tax increase on healthcare as you and your administration consider decreasing taxes in 2020, this administration would be supporting a simple, commonsense way to incentivize business activity, spur economic development, create jobs and improve our healthcare system in one fell swoop.”
