A medical device tax that has caused years of consternation and created a political hot potato could come back into effect on New Year’s Day, but life sciences groups are calling for the tax to be read the last rites.
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 2018 to reschedule the tax once again, to 2020, as part of a spending deal to reopen the government.
But we are now fast approaching 2020, and life sciences groups are urging a fast and final measurement to kill it off once and for all.
Scott Whitaker, president and CEO of AdvaMed, said: “America’s business leaders have the right idea when it comes to what’s best for American patients, jobs, and healthcare innovation. We appreciate their unified voice in calling for repeal of the device tax.
“Every day our industry is creating life-changing innovations that save and improve lives, which means good-paying jobs in communities throughout the country. We can’t allow this progress to be threatened with the return of this onerous tax. There is overwhelming bipartisan support to repeal it, we just need Congress to act.”
Whitaker has previously called on both Congress and President Donald Trump to repeal the medical device tax.
In a joint letter to Congress, the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers also urged lawmakers to “fully repeal” the device tax along with other healthcare-related taxes before adjourning for the year.
The business groups said that putting the device tax back onto the books “would undermine America’s global leadership in product innovation, clinical research, and patient care.” They also cited the 29,000 industry jobs lost when the tax was in effect from 2013-2015 and the estimated “53,000 jobs that would be preserved or gained from repeal.”
Writing in the San Francisco Chronicle over the weekend, Mike Guerra, president and CEO of the California Life Sciences Association in South San Francisco, the trade association for California’s life sciences industry, echoed these concerns and the call for its termination.
Writing in the newspaper, Guerra said: “Congress wisely suspended the device tax twice in 2015 and 2018. But delaying the tax only kicked the can down the road, bringing us to a critical juncture today. If Congress does not act swiftly now, this harmful tax will go back into effect in a little over a month.
"If nothing is done, the current suspension will expire on Dec. 31, 2019. However, companies who start planning their budgets earlier in the year have already had to make hard choices in anticipation that the tax will return on Jan. 1. If it does return in January, these companies will owe their first tax payments two weeks later.
“Temporary suspensions, and the uncertainty surrounding whether or not the tax will go back into effect, simply will not get the job done. The device tax is bad for California’s medical technology economy and bad for patients’ health, and repealing it is long overdue.”