House Healthcare Reform Bill to Include Device Tax; Senate Rumored to Lower Fees
BY LAUREN UZDIENSKI, OCTOBER 27, 2009
Few details have been released from the House's healthcare overhaul legislation, but yesterday the Wall Street Journal reported that the House would offset reform costs by charging an excise tax on medical devices. The tax would be expected to raise $20 billion between 2013 and 2019.
There are a couple of key differences between the House proposal and the $40 billion in device fees set by the Senate. First, the House's tax would not be effective until 2013, whereas the Senate tax would be begin in 2010. Second, the House tax is an excise tax, paid at point of sale, so a manufacturer selling a device to a hospital would pay the tax on it. Exact details, such as the tax rate, have not been made public.
The plan will be formally introduced in the House this week, with a vote likely to take place in November.
Along with these developments in the House come rumors that the Senate is planning to revise their previous $40 billion tax downward. The Baucus plan passed in committee two weeks ago with the device tax at $4 billion annually, appropriated by market share, but now the Journal is reporting that Senate Majority Leader Harry Reid (D-NV) is planning to introduce the bill to the Senate floor with a device tax of $15-$20 billion. Pharma is still expected to pay $23 billion over ten years on a larger market size, but the $15-$20 billion for devices is in line with what analysts have projected and what AdvaMed was rumored to have offered.
