UPDATED Sept. 16, 2014, with comment from AdvaMed CEO Stephen Ubl.
The U.S. House of Representatives is slated to take up a package of already-passed jobs bills this week, including a provision sponsored by Rep. Erik Paulsen (R-Minn.) that would repeal the medical device tax.
MassDevice.com spoke with Paulsen today about the upcoming vote and why now might be the most propitious moment for repealing the tax, a 2.3% excise levy on U.S. sales of prescribed medical devices that was enacted along with the Affordable Care Act in 2010.
Estimates of the impact of the medical device tax have varied wildly since its inception in 2009, and 4 years of political deadlock, which included a federal government shutdown over the issue, have done little to add clarity. Federal government officials have projected that the tax will raise about$30 billion over 10 years. Back in July 2013 a report released by a coalition of medical device lobbying groups estimated that the tax had cost the industry $1 billion during the 1st 6 months of that year.
But in July, MassDevice.com learned via a Freedom of Information Act request to the Internal Revenue Service that the tax bureau collected $1.4 billion from the medical device tax in 2013, the 1st year it was in effect, far short of all predictions. Then an audit by a U.S. Treasury inspector general released last month revealed that the IRS is having major trouble even determining which companies are subject to the tax, meaning that the IRS collected a little more than $913 million during the 1st half of 2013, well shy of the $1.2 billion it expected to collect.
In a telephone interview from Washington today, Paulsen told us that those reports are further evidence that the tax ought to be repealed.
"The statistics are real: Venture capital funding is drying up in this industry and companies are cutting back on R&D," he said. "The timing is really good right now, because we’re at the end of our year."
Should the jobs package pass the House this Friday, Paulsen said he believes the medical device tax repeal provision stands a good chance of making it through the Senate and even winning a signature from President Barack Obama.
"Knowing that 79 senators voted to repeal the tax, if the leadership allows this to come for a vote it’s going to pass [the Senate] overwhelmingly. We just need the opportunity to have the vote," Paulsen said. "If it’s combined with other tax measures I think we have a real opportunity to see it happen."
"AdvaMed commends the House for taking action on legislation that includes a repeal of the jobs-crushing medical device tax. AdvaMed also appreciates the House’s efforts to address other specific components of the tax code that are important to innovative and emerging growth medical technology companies," Advanced Medical Technology Assn. president & CEO Stephen Ubl said in prepared remarks. "AdvaMed supports the effort to eliminate the negative impact this tax has had and will have in the future."