Sen. Scott Brown told an audience of about 275 medical device makers today that he’ll continue to battle the healthcare reform act and its 2.3 percent tax on medical devices.
“It’s not over,” the Massachusetts Republican said in a speech this morning at the Mass. Medical Device Industry Council’s 12th annual MedTech Investors Conference.
The Patient Protection and Affordable Care Act, signed into law by President Barack Obama in late March, contained provisions for a 2.3 percent excise tax on U.S. sales of medical devices. During his campaign for the U.S. Senate seat left vacant by the death of Sen. Edward Kennedy (D-Mass.) last year, Brown told MassDevice that he’d stop the healthcare reform act in its tracks if elected.
“I can stop the bill and bring it back to the drawing board,” Brown said during a January campaign stop at Zoll Medical Corp. (NSDQ:ZOLL). “In the middle of the recession, to basically put a tax on a company like this — [Zoll] said outright that that one act alone would cut their profit — then you throw onto that the expiring tax cuts and the potential [carbon] cap-and-trade tax, they’re going to have to either relocate, lay people off or increase their prices. There’s no two ways about it.”
Although Brown did win the election, he was unable to deal a mortal blow to the healthcare reform act. A measure he co-sponsored to roll back the medical device tax provision failed to make it out of the Senate in March.
Today Brown promised to fight on against the device tax.
“I filed a bill to repeal it. I’m still on it. We’re working on it daily. This isn’t over, OK?” Brown said at the MassMEDIC conference. “The healthcare bill and its implementation and the way it affects your industry is not over.”
Opponents of the healthcare reform act lost another round yesterday after a federal judge in Michigan ruled that the law’s “individual mandate” requiring people to buy health insurance is constitutional. That case is one of 15 to 20 legal challenges mounted by healthcare reform opponents around the country.
Brown’s solicitude for the Bay State’s medical device cluster did not go unrecognized at the event. MassMEDIC presented the senator with its "Legislator of the Year" award. MassMEDIC president Tom Sommer told MassDevice that Brown was quick to become an advocate for the cluster after winning his Senate seat.
"Immediately upon being sworn in, he developed an amendment to the health care reform bill that would have eliminated the medical device tax," Sommer told us. "We’ve never had anyone in [the Massachusetts congressional] delegation that has stepped up so quickly and so forcefully on issues of interest to the medical device industry. He was there for us immediately. That means a lot to the people in this room. We’ll continue to work with him in the future."
Sommer said MassMEDIC discussed an offsetting tax credit for medical device companies with Mass. Housing and Economic Development secretary Gregory Bialecki.
"All parties agreed that it would be best to return to that subject after the election, but they’re committed," Sommer said. "They have a package of economic development tax incentives that I think they’re putting together for introduction next year. We were told that [a medical device offset] was certainly within the realm of their interest.”
MassMEDIC chairman Tom Taylor, also president of Roush Life Sciences, said the revenue-based tax is detrimental to new companies with products in the development stage.
“My biggest concern is that when you have a company with $5 million in revenues and $5 million in expenses like R&D, you’re hitting that company’s bottom line,” Taylor said. “We’re trying to do a carve-out for small companies.”
MassMEDIC is also pushing Gov. Deval Patrick for training, R&D and other credits designed for new companies, he said.