Opinion

To Revive Medical Device Innovation, Simply Say ‘Yea’

Congress has returned from its summer recess and is heading into what’s likely to be one of the most bruising and partisan midterms in a generation. But before the smash-mouth politics begins in earnest, let’s remember that when an issue is important enough, both Republicans and Democrats can come together, put ideology aside and focus on reforms that benefit all of us.

That’s what happened in July, when an overwhelming, bipartisan majority in the House agreed on both health and tax policy with the vote to repeal the medical device tax.

This latest vote on H.R. 184 was among the largest bipartisan votes this session (283 yeas to 132 nays), with 57 Democrats joining — more than any previous vote to repeal this tax.

The fact that there was such strong bipartisan support for the measure in our hyper-politicized atmosphere — and in an election cycle — speaks to the fact that lawmakers understand that this tax simply makes no sense — not for American innovation, not for American jobs and not for American patients.  

Now, the Senate has a chance to finish the job and send this legislation to the president for his signature. While the 60-vote threshold is always a tough mountain to climb, we have received strong indications from both parties that the votes are there.

Already, the Senate companion bill (S. 108) has strong bipartisan support. In July, Alabama Sen. Doug Jones became the ninth Democrat to cosponsor repeal. He joins a group of diverse lawmakers that represents the bluest blue states to the reddest red states; if something can breach that kind of ideological divide, it’s something a solid majority of their colleagues can support, as well.

There is no policy rationale for imposing a 2.3 percent sales tax on life-changing innovations — everything from heart valves and artificial joints to surgical gloves and dental instruments.

There are no advocates for increasing the tax burden on small, entrepreneurial companies, which make up the bulk of the medical technology industry — more than 80 percent have fewer than 50 employees and have little or no sales revenue. The tax imposes a double penalty on startups, since the tax is imposed on the first dollar of revenue earned. In addition, it restricts the ability of established medical technology companies to invest in or acquire startup companies by cutting into research and development and acquisition budgets.

And no one is arguing the medical device tax is good for the U.S. economy, future innovation or patient care. The tax was suspended two years after it first went into effect in 2013, but in that short time, the negative impact was clear. According to the U.S. Department of Commerce, approximately 29,000 medtech jobs were lost from 2013-15, not coincidentally during the time the tax was in effect. And recent studies have shown a full repeal will save or create over 50,000 jobs.   

We are too close. We are too close as a Congress and as a country to repealing this tax. Two constitutional institutions have now spoken — the House with its vote, and President Donald Trump signaling he would sign any bill outlawing the levy. One to go.

We’ve already seen Democrats and Republicans in the Senate put ideas before ambition and people before politics. Bipartisan efforts that prioritize Americans would end this tax and let the political chips fall where they may come November.

American patients and their families don’t deal in — or care about — Machiavellian moves to ensure the status quo remains. Our time is now. Patients know it; families know it; American medtech manufacturers know it.

The House has acted. Let’s not stop now. Get full repeal of the device tax done once and for all. Ensure America remains the world leader in medical innovation. I guarantee the country will be better with the outcome of a healthier tomorrow.

 

Scott Whitaker is CEO of AdvaMed.

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