Medtech: Beware of the GOP's Double-Edged Sword

Posted in Medical Device Business by amanda.pedersen on June 27, 2017

Yes, the Senate healthcare bill would effectively kill the much-loathed medical device tax, but the proposed legislation could be a double-edged sword for the industry.



By now most stakeholders in the industry have heard the stats that support a permanent repeal of the 2.3% medical device excise tax, which Congress suspended in 2015, and which is due to return at the end of this year unless permanently repealed.  

The strongest argument the industry has lodged against the device tax is that it’s a jobs killer, as data from the U.S. Commerce Department showed that the medical technology industry experienced a decline of nearly 29,000 U.S. jobs while the tax was in effect. The American Action Forum, a center-right policy institute, claims that permanent repeal of the device tax could result in more than 53,000 additional industry jobs, compared to what would occur if the tax remains in effect.

So it comes as no surprise that industry advocacy groups would be quick to applaud any effort that would effectively kill the innovation-harming device tax, even if that means supporting a healthcare bill that would repeal the tax, but also leave 22 million more people without health insurance over the next decade, and cause premiums to rise over the next two years.

Earlier this week, AdvaMed shared a Journal Gazette article via Twitter, which was written by Rep. Jim Banks, a Republican congressman from Indiana, who voted for the American Health Care Act (AHCA) in May. Both the AHCA and the Senate's recently released draft legislation dubbed the Better Care Reconciliation Act include a full repeal of the device tax. AdvaMed's Tweet didn't directly support the Senate bill, but simply stated that device tax repeal is "a vital component" of the GOP's overhaul of current healthcare legislation.

So far, that's about as close as any industry group has come to voicing an opinion on either bill publicly, although a blog Scott Whitaker, president and CEO of AdvaMed, wrote for RealClear Health suggests that it might have made more sense for lawmakers to deal with the device tax separately, instead of including it in a broader piece of healthcare legislation.

“The tax is different from other ACA-related taxes, and deserves separate consideration,” Whitaker wrote. “It’s not grounded in any healthcare policy, it’s not linked to coverage, and it’s not in the best interest of patients.”

Many would argue that the GOP's most recent attempt at healthcare reform is not in the best interest of patients either, yet the industry has been largely silent on that issue.

Senate Republicans were initially expected to vote on legislation repealing the Affordable Care Act this week, but on Tuesday decided to delay the vote until after the July 4 recess. That decision came after a Congressional Budget Office score on the measure found the bill would leave 22 million more people without insurance compared to present law over the next decade. The analysis also found that the Senate bill would cause premiums to rise over the next two years, although premiums would decrease starting in 2020.

In a June 26 letter to Senate leaders, James Madara, MD, executive vice president and CEO of the American Medical Association (AMA), explained why the AMO is opposed to the draft legislation. "Medicine has long operated under the precept of Primum non nocere, or 'first, do no harm," Madara stated. "The draft legislation violates that standard on many levels."

Nadim Yared, AdvaMed's chairman, has said that the organization's top priority is to ensure the device tax is repealed, "no matter what form."

While there are many solid arguments for why device tax repeal is at the top of the agenda for AdvaMed and other industry trade groups, surely medtech leaders will, at some point, look beyond the "job-killer" tax and consider what the GOP's proposed legislation could mean for millions of patients.

If these patients do not have health insurance, won't that eventually harm medical innovation just as much as the device tax has?

Amanda Pedersen is Qmed's news editor. Contact her at


[Image courtesy of Pixabay]