Repealing the job-killing medical device tax will serve as job creator, a survey of medical device executives revealed today.
The poll of 100 medtech executives by the Medical Device Manufacturers Assn. showed that 85% would add new jobs in the U.S. should the 2.3% medical device excise tax be repealed. About 72% of the executives said that their companies had either cut jobs or halted hiring as a result of the tax, which went into effect 2 years ago.
The bulk of the new jobs would be in research & development field, according to the survey, which was conducted during the final 2 months of 2014.
The 2.3% excise tax, enacted in 2010 as part of the Affordable Care Act, went into effect at the beginning of 2013. It applies to all U.S. sales of prescribed medical devices. The medtech industry has fought the tax tooth and nail since even before its inception, as Democrats crafted the healthcare reform bill that became Obamacare.
"Broad support continues to grow for repealing the medical device tax, not just in Congress, but across America’s innovation ecosystem," MDMA president & CEO Mark Leahey said in prepared remarks. "This destructive policy has thwarted job creation and patient care for too long, and MDMA is dedicated to working with the diverse coalition of stakeholders to get repeal of the device tax across the finish line."
"I see firsthand every day the impact the medical device tax has on investing in new jobs and developing new technologies that improve patient care," added MDMA chairman and Volcano (NSDQ:VOLC) CEO Scott Huennekens. "This survey clearly shows what medtech innovators have long argued: If you repeal the medical device tax, it will boost job creation and increase investments in the cures and therapies of tomorrow."
The MDMA survey comes the same day as a report from AdvaMed, another national medtech lobby, based on its own survey of 55 member companies. More than half of the respondents to the AdvaMed poll said they had reduced their R&D spends because of the medical device tax. That survey also claimed that the tax will lead to 195,000 lost jobs over the next 5 years.
"When you’re in stress, you don’t do as much R&D, but you pay for that down the line," he said. "You can’t cut production, because you need the equipment that drives the business. If you have extra money, you do more R&D. We have a list of projects in my company, and most every other company like this, that are not being worked on because we don’t have enough resources to work on them. So we prioritize based on how much we can spend. We draw a line and anything above the line we work on and anything below will have to wait. If you were to give me money back, I could move that line down."
While Zoll hasn’t cut back staff as a result of the tax, Packer promised that the funds recovered from repealing the medical device tax would go straight into his R&D department.
"There is no doubt that this tax hurts innovation. There is no doubt about it meaning less money for R&D. It can’t help the development of new technologies," Packer told us.