Senators React to the Medical Device Tax
BY LAUREN UZDIENSKI, SEPTEMBER 22, 2009
Last week the senators from Minnesota and Indiana, both states with thriving medical device industries, sent a letter to Max Baucus opposing the Senate Finance Committee's healthcare reform proposal. Echoing the sentiments of AdvaMed and others, the senators argue that the $4 billion proposal "will seriously threaten thousands of American jobs and deter innovation in the industry."
Signed by Al Franken, Amy Klobuchar, Richard Lugar and Evan Byah, the letter attempted to quantify the potential financial impact of the tax on the device industry. The authors suggest that the device fees would effectively create an annual income tax surcharge of between 10-30% on device manufacturers, limiting the funds available to reinvest in R&D and resulting in job losses and a suppressed rate of innovation. The senators note that the hospital industry agreed to $155 billion in spending cuts over the next decade, $15 to $17 billion of which could in turn be passed along to devicemakers. With the additional tax, devices would be contributing more than their "fair share."
Late last week, Baucus received 564 suggested amendments from his peers in the Senate, with several addressing the device industry tax. Republican senators Grassley (Iowa), Hatch (Utah) and Cornyn (Texas) suggested striking the tax entirely, though in a statement today, Baucus appeared to be holding firm on industry fees. While updating the bill to exempt consumer products costing up to $100 from the medical device tax, Baucus suggested raising the fees on insurers from $6 billion to $6.7 billion annually in an effort to help finance the $900 billion reform effort. So far, no changes have been announced for devices, though the bill is clearly changing by the minute.
