U.S. Senate hopeful Scott Brown is no fan of the medical device tax — or the entire healthcare reform bill, for that matter.
On a campaign stop at Chelmsford, Mass.-based resuscitation device maker Zoll Medical Corp. (NSDQ:ZOLL), Brown promised he’d do all he could to kill the proposed 10-year, $20 billion levy on medical device makers contained in the Senate’s healthcare reform package.
“I can stop the bill and bring it back to the drawing board,” Brown told MassDevice. “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.”
Brown and a sizable media contingent toured the company’s Chelmsford facility for about 30 minutes before the candidate took a few minutes to answer questions, mostly about polls showing him closing in on his opponent, Mass. Attorney General Martha Coakley.
Brown took a moment to express his opposition to the medical device tax, which Zoll officials said could cost the company between $5 million and $10 million a year, depending on how the tax is structured. It’s a move officials said threatens to put the company in the red.
Brown’s opposition to the medical device tax brings him in line with several of the more liberal Democrats in Congress, including Sen. Al Franken (D-Minn.) and Sen. John Kerry (D-Mass.), who have both voiced their opposition to the medical device tax. In December, both senators co-sponsored an amendment to delay the device tax to 2013 (the amendment was not adopted in the Senate’s final version of the bill, which must still be reconciled with a similar version from the U.S. House of Representatives).
Zoll CEO Rick Packer told MassDevice that the current climate has him feeling a bit more cost-conscious.
Asked if the proposed device tax would put a damper on the company’s previously announced plans to add more sales staff, Packer said, “If we go [profit]-neutral. There’s no telling.”
When pressed, Packer said that there were other pressures beyond a looming tax hike to consider.
“The recession has slowed down our hiring growth,” he said. “We’re not adding a ton of people and it puts us in a more conservative mood until we see how this tax gets ironed out.”
Packer told MassDevice in September last year that he was strongly opposed to taxing medical device makers to pay for healthcare reform.
“On the surface, it makes no sense for companies like ours. Maybe it makes sense for some medical device companies that are hugely profitable, but if you look at most [device] companies, they aren’t like that, ” he said back then. “We’re not pharmaceutical companies. Our level of profitability doesn’t approach that level and that’s because the market for devices is much, much smaller, so you can only be so big, and so efficient and so profitable. I think they pick these numbers out of the air — they don’t tie them to the reality of the industry and certainly the numbers for Zoll aren’t right. Even if I thought it was the right way, morally and ethically, to pay for the reforms, it would be taking a company like Zoll to a loss position in order for us to pay our fair share. It makes no sense.”
While Zoll officials didn’t go so far as to endorse Brown, Packer did endorse Brown’s sense of fashion. Both men were wearing the same stylish grey pinstripe suit.