President Obama's Support for Medical Device Tax Hurts CNY Economy

Thursday, August 22, 2013


Jessica Crawford is the president of MedTech Association, an association of pharmaceutical, biotech and medical technology companies, their suppliers and service providers, and research universities.

As President Obama visits our region to promote middle-class growth and new education opportunities, Syracuse has much to be proud of. While many post-industrial cities across the country seek to re-establish their identity for this century, Syracuse's proactive approach to revitalization amid an economic downturn is allowing the city to emerge as a leader in technological advancement and entrepreneurship in New York state.

President Obama's visit is an opportunity to debate just what policies should be in place -- and which ones need to end -- for Central New York to continue its recent success. With many industry leaders and lawmakers highlighting the need for tax reform to foster business growth, it is crucial to highlight how the medical device excise tax, passed as part of the Affordable Care Act, is harming entrepreneurial efforts in the medical device sector.

MedTech is an active state association of pharmaceutical, biotech and medical technology companies, their suppliers and service providers, and research universities. It was founded specifically to facilitate the commercialization of new medical products in the region, including increased translation and transfer from research universities.

Through advocacy, public education, industry marketing, networking and collaboration, MedTech strives to keep bio/med firms healthy and growing in New York state and to help firms remain competitive in a difficult global market. Policies such as the medical device tax undermine MedTech's mission by raising the cost of doing business and impeding promising industry developments.

The nexus between higher education and entrepreneurship has been a critical element in fostering innovation and business growth in Syracuse, especially in the medical device industry. Medical device technology companies often collaborate with local higher education institutions to develop new technologies and bring them to market. The medical technology industry already supports more than 81,000 jobs in New York alone, representing more than $5 billion in total personal income and $17 billion in output for the state. Partnerships between universities and entrepreneurs are helping bring some of that precious economic progress back to Syracuse and Central New York.

One local success story is member company Blue Highway, a research, development and technology solutions company, founded as a partnership between Syracuse University and Welch Allyn, a medical device manufacturer. Blue Highway works with academia and industry to provide proof-of-concept and product development services in the healthcare and medical device domain. However, policies such as the medical device tax are stunting the growth of medical technology companies focused on patient care. Without that growth, Central New York will have an even harder time returning to economic relevance.

According to a study by research group Battelle, the medical device tax could cost New York more than 1,700 jobs and a potential economic impact to the state totaling $357 million. Congressman Dan Maffei has co-sponsored legislation that would repeal the tax, and both New York Sens. Kirsten Gillibrand and Chuck Schumer voted for efforts to repeal because this dynamic industry is so critical to innovation, high-caliber manufacturing jobs and economic growth. The New York delegation's leadership on this important issue is one of the main reasons that broad, bipartisan support continues to build for these efforts.

Perhaps the most disconcerting aspect of the device tax is that it is harming future technologies and growth we cannot yet calculate. Levied on companies regardless of profitability or size, the tax will significantly hinder the transfer of ideas from universities to medical device companies wanting to bring products to market.

Despite broad-based bipartisan support for its repeal, the medical device tax continues to threaten the 21st-century innovation and high-tech jobs our elected officials claim to support. If Central New York is to continue empowering tomorrow's innovators, it must help put an end to policies, like the medical device tax, that discourage those very things.

View All News »