Anti-Jobs, Anti-Innovation — The Medical Device Tax

the great successes of the U.S. medical device industry in life-saving innovation have made the device manufacturers a target in Congress’ legislation to expand government control over health care. The revenue raisers have the industry in their sights.

From The Washington Post, “Medical-Device Firms Criticize Tax Proposal“:

Under the bill approved on Tuesday, the medical-device industry would pay a total of $40 billion over 10 years. Players big and small in the industry, which makes items from tongue depressors to artificial hearts, warned that the tax would harm their ability to innovate.

“This is a really devastating proposal for a large number of our membership,” said Stephen J. Ubl, president and chief executive of the Advanced Medical Technology Association, the organization hosting this week’s AdvaMed 2009 conference at the Walter E. Washington Convention Center. “It’s bad for patients, bad for jobs and bad for research and development.”

An amendment to remove the $40 billion tax was defeated last week in the Senate Finance Committee by a partyline vote, 13-10.

At a time when unemployment is still rising even with the nascent recovery, the device tax also represents a tax on job creation. As USA Today reports:

Twenty House members from California, home to heart-valve maker Edwards Lifesciences, signed a letter asking the Senate Finance Committee to reconsider the tax. Senators from Minnesota and Indiana — three Democrats and one Republican, in all — sent a similar letter.

“Minnesota, like many states, has lots of people employed in the medical device industry,” Sen. Amy Klobuchar, D-Minn., whose state is home to Medtronic, one of the nation’s largest device manufacturers, said in an interview. “I want to keep jobs in my state.”

Mark Leahy, President and CEO of the Medical Device Manufacturers Association, in a statement: “There can be little doubt — the proposed tax will have a cascading effect upon innovation, access to technology and employment in the industry.”

Meanwhile, the only interest group to have escaped the taxers and “reformers” in the health care legislation, the trial lawyers, also has the medical device industry targeted. The Medical Device Safety Act is one of the American Association for Justice’s top lobbying priorities, the goal being to replace a consistent federal regulatory regime with a patchwork of state regulations determined by the courts — that’s a much more lucrative environment in which to sue manufacturers.

In March, when the bill was reintroduced, NAM President John Engler issued a statement, making the central point: “At a time when our country is mired in a severe recession, suffering from rising job losses and a financial system in tatters, Congress is proposing legislation guaranteed to discourage innovation and drive up medical costs even further.” See also the Forbes column by Richard Epstein, “A Sickly Medical Device Safety Act.”

So here’s a test by which one can hold elected officials accountable: If in a speech, a member of Congress claims the future of the U.S. economy involves high-tech jobs, innovation, and the growth of medical sciences, just ask if this member supports the $40 billion tax on medical devices. If the answer is yes, judge the previous statements accordingly.

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