Even as the U.S. Supreme Court essentially upheld the entire health reform law, the medical device industry renewed its commitment to overturning one of its major elements: a 2.3% excise tax.
The tax would have essentially been negated if the Supreme Court overturned the law, but the 5-4 decision leaves the revenue measure in place.
Minutes after the ruling, AdvaMed president and CEO Stephen Ubl issued a statement that reiterated support the device industry's major trade group continues to have for the "goals of [healthcare] reform." But the device tax is expected to raise about $30 billion from the industry over a decade to help fund some of the law's major provisions. And Ubl said the tax must still be repealed "because of its damaging effects on economic competitiveness, jobs and the research and development needed to find [tomorrow's] treatments and cures."
He noted that the House has already voted to repeal the tax, and that AdvaMed plans to keep pushing for its removal "with policymakers on both sides of the aisle," before it goes into effect in January.
Thomas Sommer, president of the Massachusetts Medical Device Industry Council, or MassMEDIC, gave FierceMedicalDevices a similar response. His group continues to support "the overall goals of healthcare reform," but wants the tax gone because of its potential impact on "patient and caregiver access to new medical technologies," its impact on jobs and the harm it could cause to "sustained R&D activities at our companies."
Hitting that point home, Stryker ($STK) announced it had already begun plans to close two New York facilities and eliminate 107 jobs by year-end. The company said the job cuts/closures are in direct connection to the 2.3% tax and Stryker is cutting costs to make up for the extra expense. Zimmer has also said it will slash jobs as a result, and Boston Scientific ($BSX) and Medtronic ($MDT) each predict tens of millions of dollars in extra expense.