The medical device tax has survived repeated repeal attempts, but the measure’s endurance relies on misconceptions about the industry, according to intellectual property attorney Michael Rosen.
Advocates of the tax have argued that device makers have little room to complain about the 2.3% levy, sometimes depicting the industry as a cash cow that could stand to return a few pennies to support a cause that will bring it more patients and thus more profits.
Rosen framed his argument as a response to an editorial published last month in the New York Times, in which Center for American Progress health policy vice president Topher Spiro called attempts to repeal the medical device tax "doubly disingenuous."
"Not only can the medical-device industry easily afford the tax without compromising innovation, but the industry’s enormous profits are a result of anticompetitive practices that themselves drive up medical-device costs unnecessarily," Spiro wrote. "The tax is a distraction from reforms to the industry that are urgently needed to lower health care costs."
"To the extent Spiro and others paint the medical device industry as an oligopoly controlled by massive, greedy, multinational corporations, a dose of reality is warranted," Rosen responded. "According to an industry study, 80% of companies in the field employ fewer than 50 people, and 98% employ fewer than 500."
Other harmful misconceptions include arguments that medical device companies hike their prices when selling in the U.S. and the companies stand to gain more from the newly insured patients under the Affordable Care Act that they stand to lose in paying in new taxes.
Rosen ceded that medical technologies do cost more in the U.S. than abroad, but maintained that it’s a point taken out of context. The cost of all healthcare is generally higher in the U.S., whether it’s a device, a drug or a procedure, and that’s the price the U.S. pays for being "the engine of innovation for the whole world."
The 2nd point, sometimes called the "windfall rhetoric," has been cited by everyone from patient groups to the White House, claiming that the medical device industry will sell more products thanks to the Affordable Care Act and should therefore help fund the law. Device makers point to the state of Massachusetts, which established its own version of universal state-based healthcare years ago, as evidence that the newly insured patients aren’t the kind who need medical devices. Most medical devices go to patients already covered by Medicare.
Despite facing some adamant opposition, "repeal remains a possibility," and it has little to do with the fate of healthcare reform in general.
"Ultimately, and perhaps ironically, the medical device excise tax battle has little to do with the merits and demerits of Obamacare," Rosen said. "The administration simply uses this important, innovative industry as a piggy bank for its health care experiments."