AdvaMed, industry rev up for post-election device tax fight

By Mark Hollmer and Damian Garde

AdvaMed and others remain hopeful post-election that they can corral enough Congressional support to repeal the 2.3% medical device excise tax before it kicks in on Jan. 1. But the industry isn't hedging any bets.

"We will work to look at any opportunity that presents itself in November and December, and will carry on the cause next year as well, if necessary," said J.C. Scott, AdvaMed's head of government affairs, in an interview Wednesday morning with FierceMedicalDevices. Scott cited bipartisan support for a repeal from House Democrats, as well as some of the new Democratic winners in the Senate, as reason to be hopeful.

"The device tax has evolved from being looked at as a healthcare reform issue to really a tax reform issue," Scott said. "And we will continue to work to highlight what we think are the negatives of the policy for the industry." He added that AdvaMed will be eyeing the upcoming lame duck session of Congress very closely to see "whether there will be any opportunities to address the tax." Congress itself injects another variable into the equation, with what fiscal package, if any, it ends up putting together to address the risk of automatic tax increases and spending cuts also slated to begin Jan. 1.

Steve Ferguson, CEO of vocal tax opponent Cook Medical, tells FierceMedicalDevices that Tuesday's results change little about his company's efforts to get the charge repealed. Ferguson's goal is to make sure everyone in Congress clearly understands the impact the tax will have on the medical device industry. "We consider this a nonpartisan issue, and so we didn't look at it as who won or lost," he said.

That said, Ferguson sees reason for optimism in the election of Elizabeth Warren in Massachusetts and Joe Donnelly in Indiana, two anti-tax Democrats. Once those two are inaugurated, there will be at least 15 Senate Democrats who have spoken out against the charge, Ferguson said, possibly enough support to bring the repeal bill to vote in the higher chamber.

Congress initially approved the tax as part of the national health reform law. But the industry has become increasingly vocal in opposing the measure as something that will kill jobs and innovation. Companies including Welch Allyn and others have already slashed jobs or retrenched from expansion plans, blaming the device tax for the decision. It will become a far messier endeavor to push repeal of the device tax after Jan. 1. That's because it is structured as an excise tax, Scott explains, where companies will have to make deposits every two weeks beginning the first of the year to fulfill their new tax obligations.

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