The U.S. House of Representatives has voted to completely repeal the excise tax on medical devices that industry has been railing against for years, following a series of bargainings, postponements and suspensions.
The 2.3% tax on sales by manufacturers and importers—estimated by the government to be worth nearly $20 billion over 10 years—has limped along since it was enacted to fund 2010’s Affordable Care Act, enduring several outright repeal attempts and delays.
After its implementation was pushed back by two years, Congress voted in January to reschedule the tax once again, to 2020, as part of a spending deal to reopen the government.
The latest bill, H.R. 184—passed 283 to 132—would act retroactively, applying to all sales made since Dec. 31, 2017. It now heads to the Senate after garnering over 275 bipartisan cosponsors in the House, with at least 45 Democrats joining nearly all of the Republican delegation.
"Today's vote is a win for American innovation, American jobs, and most of all for American patients, who benefit from the life-changing innovations our industry produces every day," AdvaMed President and CEO Scott Whitaker said in a statement.
H.R. 184, or the Protect Medical Innovation Act of 2017, was spearheaded by Minnesota Republican Erik Paulsen, whose district covering the suburbs of Minneapolis is adjacent to Medtronic’s global headquarters—and has been supported by the state’s Democratic senators, Amy Klobuchar and Tina Smith. Medtronic previously described the tax as a significant challenge to the industry.
The bill also has the support of the White House. Earlier this week, the Trump administration stated (PDF) the repeal would lower healthcare costs, and cited the move’s bipartisan support.
"The overwhelming, bipartisan support for repeal sends a strong message that lawmakers recognize this tax is not good health policy or good fiscal policy," said Whitaker. "We know a significant majority of the Senate feels the same way and urge them to quickly take up this measure and eliminate once and for all this drag on one of the country's best hopes for better patient care and economic growth."
While the medical device excise tax was in effect, the medtech industry lost nearly 29,000 jobs, or 7.2% of its workforce between 2012 and its suspension in 2015, according to a previous analysis by AdvaMed. The numbers include jobs cut in anticipation of the tax taking effect in 2013.
Before the vote, Boston Scientific President Jeff Mirviss wrote in a blog post that the tax threatens investments in jobs and innovation.
“When it was introduced, many device manufacturers faced difficult choices that would impact headcount or reduce investment in research and development,” Mirviss said.