Medtech industry takes one more stab at permanently repealing device tax

December 10, 2018

Capitol buildingThe medical device industry has launched a full-court press to encourage Congress to permanently repeal the medical device tax before the end of the year.

More than 140 companies and organizations have signed a letter urging Congress to fully repeal the 2.3% excise tax. Doing so would allow the “medical technology industry [to] continue innovating new approaches to managing chronic health issues, improving the overall quality of life, and developing technologies that could revolutionize the way we treat disease and illness in this country,” said the letter.

The tax, which is part of the Affordable Care Act, aka Obamacare, has been suspended since 2014 and is slated to go back into full effect in 2020. Because it taxes revenues, not profits, the tax disproportionately hurts smaller companies that generate revenue but not profit, according to proponents of the repeal. Small companies are a font of innovation and constitute more than 80% of the industry, noted the letter.

Former U.S. House Speaker Newt Gingrich stressed the urgency of repealing the tax in an editorial he penned for StatNews last week. Republicans should get this done now during their lame duck session, he wrote, because “it’s unlikely that Democrats will do anything now that helps make the case it is destructive to economic growth.”

Repeal of the device tax has had bipartisan support in the past, notably from Democrats representing states with a consequential medical device industry, such as Massachusetts and Minnesota.

The letter that was sent to the majority and minority leaders of the House and Senate was signed by a number of associations and professional groups as well as healthcare companies including Bayer, Edwards Lifesciences, GE Healthcare and Stryker.

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