Medical device tax has cost the industry $1B (and rising)

Industry lobbying groups want you to know that the 2.3% medical device tax has cost companies a combined $1 billion (and rising) since it kicked in on Jan. 1, 2013.

The Medical Imaging & Technology Alliance, AdvaMed and the Medical Device Manufacturers Association released a joint statement noting the milestone, arguing that the money paid to this tax has siphoned investment away from research and development, capital spending and job creation.

That bit of information is part of a prolonged campaign now underway that seems to be designed to build public and congressional support for a repeal over time, acknowledging the reality that it may not be a quick thing to accomplish.

Some context: The device tax was passed as part of the Affordable Care Act, and it is meant to raise $30 billion over a decade to help fund the massive health reform law. Lobbying efforts had initially focused on trying to repeal the tax before it kicked in last January. But now, device groups are digging in for the long haul, issuing a continued stream of releases and statements trying to outline the damage they argue the tax is causing to their industry and the country at large.

Congress as a whole has come out in support of repealing the tax, but Democrats that support getting rid of it generally want to find another funding source to replace it first. And President Barack Obama would likely veto any tax repeal that reaches his desk. As a result, anti-tax lobbying has become more nuanced. This tax milestone announcement is one of many courses of action in that regard.

Here's another: AdvaMed separately said it supports repealing the 2.3% tax as part of a broader revamp of the U.S. tax code. Tax code reform might take time to achieve, but Democratic Sen. Max Baucus of Montana (chairman of the Senate Finance Committee) and Republican Rep. Dave Camp of Michigan (chairman of the House Ways and Means Committee) have begun a national tour to collect feedback and solicit support for a tax code revamp.

Sensing opportunity to link both issues together, AdvaMed is arguing that repealing the medical device excise tax in the context of a broader tax code appeal would improve competitiveness and build jobs. They now argue that the device tax is just one more problem for the med tech industry in what they term an "uncompetitive tax system."

Expect more lobbying salvos against the tax, with numerous arguments and tactics, in the months ahead. Eventually, tax opponents clearly hope, something will stick. -- Mark Hollmer (email | Twitter)

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