AdvaMed, MDMA Press Conference Challenges Medical Device Tax

Posted by Bob Michaels on November 14, 2012

The medtech industry stands to pay roughly $2.5 billion to comply with the medical device tax, according to a new report from Ernst & Young. That amount represents an almost 30% increase in its federal tax burden. Over the next ten years, the excise tax is expected to increase federal tax revenue by $29 billion, according to the Joint Committee on Taxation.

To bring attention to the issue, AdvaMed (Washington, DC) and the Medical Device Manufacturers Association (MDMA; Washington, DC) hosted their first online press conference on Twitter around the #repealdevicetax hashtag.

When asked how likely a repeal of the tax would be, AdvaMed stated that it is “cautiously optimistic.” MDMA added that there is bipartisan support for a repeal and that doing away with the tax would “drive down healthcare costs and create jobs.” The two trade associations have partnered with MITA to fly 52 CEOs from across the country to Washington, DC. Executives taking part in the event include Dan Moore of Cyberonics; Don Fowler of Toshiba America Medical Systems; Rob Cascella of Hologic; Caroll H. Neubauer of B.Braun Medical Inc.; and Steve Ferguson of the Cook Group.

When asked over Twitter how the organizations propose that a repeal of a tax would be paid for, MDMA said they would defer to Congress in how to pay for it.

If the tax is not repealed before it goes into effect on January 1, AdvaMed plans to continue working with the IRS on the regulations, adding that a repeal of the device tax is “a down payment on broader tax reform.” The U.S. corporate tax rate with the device tax would be among the highest in the world.

On Twitter, Rep. Erik Paulsen (R-MN) pointed to the need for a device tax repeal, pointing to the 400,000 Americans who are employed by the medtech sector—some of whose jobs may be threatened as device firms look to cut costs as their profits shrink or go into the red.  

Brian Buntz is the editor-at-large at UBM Canon's medical group. Follow him on Twitter at @brian_buntz.