Medical Device Excise Tax: Patient Care, Local Economies at Stake

Tuesday, June 2, 2015

There are many statistics and figures that get cited on both sides of the debate on repealing the medical device tax, but there is one number that cannot be contested: 1,000.

That is the approximate number of patient groups, innovators, associations and provider organizations that came together and urged congressional leadership in the House and Senate to put an end to the damaging effects of the medical device tax and repeal it once and for all. Associations including MedTech, a trade association for the Bio/Med industry in New York State, represent our interests and those of nearly 350 other New York State (NYS) medical technology companies.

Why? Because the effects of this tax are devastatingly clear: it thwarts innovation, hurts patient care and destroys jobs.

Organizations from every corner of the country representing a diverse makeup of innovators and healthcare advocates agree: the extraordinary price tag of the medical device tax on innovators comes at the cost of high paying jobs and research and development, serving as a barrier toward American investment and medical innovation. This is why the repeal of this tax has gained strong, bipartisan, bicameral support in Congress.

The medical device excise tax creates a significant opportunity cost to all medical device makers. Billions of dollars that could be spent in developing enhanced medical technologies for better and more cost-effective patient care are instead diverted to the I.R.S as result of this tax. Many companies report shelving R&D projects. Young, early revenue companies – often those developing the most forward-looking medical technologies – are especially challenged to bear the burden of the tax, as it can effectively wipe out any profit.

On the front line of addressing the needs of patients and providers, we know the impact of the medical device excise tax all too well. As the eighth largest medical device presence in the nation, the industry in NYS accounts for more than 13,000 jobs and $4.6 billion in overall economic impact. In Upstate NY alone, the medical device industry em- ploys 8,400 residents across 141 business establishments.

NY is a shining example of the combination of entrepreneurism and innovation to build a dynamic industry. Medical device innovators tackle some of the most pressing health care challenges every day – driving down the costs of care, shortening hospital stays and improving clinical outcomes. Sadly, the device tax remains a devastating hurdle to build upon the successes of the past, and worst of all, it is threatening the hopes of a brighter future.

In the last Congress, 79 Senators voted to make repeal of the medical device tax a top priority, and already this year, there are over 280 co-sponsors of legislation in the House of Representatives to do the same. Thankfully, many of NY’s elected officials have recognized the importance of repealing the device tax, including Senators Schumer and Gillibrand, and Representatives Collins, Gibson, Hanna, Higgins, Katko, King, Maloney, Reed, Stefanik, Tonko and Zeldin. We’re relying on their continued support to turn the bipartisan calls for repeal of this devastating tax into reality. Let’s allow innovation to flourish.

Joseph DeVivo, President & CEO AngioDynamics

Curt Hartman, President & CEO CONMED Corporation

Sam Heleba, CEO Graphic Controls

Thomas J. Hook, President & CEO Greatbatch, Inc.

James A. Campbell, President Viewpoint Systems, Inc.

Steve Meyer, President & CEO Welch Allyn, Inc. 

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