A U.S. Senate subcommittee today held a hearing on the medical device tax featuring testimony about its deleterious effects from industry and patient advocates.
The Senate Finance Committee’s healthcare panel, led by Sen. Patrick Toomey (R-Pa.) and ranking member Sen. Debbie Stabenow (D-Mich.), convened the hearing to consider the impact of the medical device tax.
The medical device tax was enacted in 2010 as part of the Affordable Care Act. The 2.3% levy on all U.S. sales of prescribed medical devices went into effect at the beginning of 2013 and is forecast to raise between $20 billion and $30 billion over 10 years.
"My strong preference would be to have a full and permanent and complete repeal of the medical device tax, because it’s my view that this tax is doing considerable harm – economic harm. I am concerned about the impact that is has on innovation in the medical device industry. And I am really concerned about the impact it has on individual patients – current patients and future patients," Toomey said.
“The medical device industry’s work and creativity is really a part of every medical success story,” Stabenow added.
The panel heard testimony from several witnesses, including Bruce Heugel, CFO for Bethlehem, Pa.-based B.Braun of America. Quinton Farrar of West Surry Strategies in Keene, N.H., also spoke for the industry. They were joined by patient advocates Alyra Donisvitch of Manchester, Maine, and Mark Judge of South Fayette Township, Pa.
"Every day this tax is in place, innovators are making difficult decisions including cuts to R&D which are devastating to patient care," Mark Leahey, president & CEO of the Medical Device Manufacturers Assn., said in a release. "The overwhelming bipartisan support for repealing the device tax shows that Congress recognizes how important medical technology is for patients and our economy. MDMA remains committed to working with Congress and the broad coalition of stakeholders who agree that we need to put an end to this policy that thwarts innovation. Repealing the medical device tax would bolster patient care and job creation, and help America’s entrepreneurs address the daunting challenges facing our health care system."
Stephen Ubl, president & CEO of AdvaMed, said in prepared remarks that the hearing highlights "the negative impact the medical device tax is having on American jobs, innovation and patients."
"Evidence continues to mount on how this tax is a drag on a high-technology, research-based manufacturing sector that provides life-saving, life-enhancing innovations," Ubl said. "There is strong bipartisan support in both chambers of Congress to repeal this anti-patient, anti-innovation tax, and we urge members to act to eliminate the tax as soon as possible."
There are several bills afoot in both the Senate and House that would do away with the tax. Rep. Erik Paulsen (R-Minn.) has spearheaded efforts in the House to repeal the medical device tax and is the lead sponsor of H.R. 160, the "Protect Medical Innovation Act of 2015." There are 277 co-sponsors of Paulsen’s bill, including 36 Democrats.
Sen. Orrin Hatch (R-Utah) is the sponsor of the Senate’s companion bill for repealing the medical device tax, S. 149 or the "Medical Device Access & Innovation Protection Act." The measure has 35 co-sponsors, including 5 Democrats.
A pair of Democrat-led bills would also repeal the tax, but unlike the Hatch and Paulsen measures would replace the lost revenue by closing tax loopholes for the energy industry. A bill by Sen. Ed Markey (D-Mass.), S. 844 or the "No Taxation on Device Innovation Act," has no co-sponsors. It’s counterpart in the House, sponsored by Rep. Alma Adams (D-N.C.), is H.R. 1533 or the "Medical Device Tax Elimination Act." Adams’s bill has 4 Democratic co-sponsors.
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