Reed, Whitehouse vote to repeal tax on medical-device makers

March 22nd, 2013 at 9:46 am by under Nesi's Notes, On the Main Site

U.S. Sens. Jack Reed and Sheldon Whitehouse were among the 79 senators who voted Thursday night to get rid of a tax on sales of medical devices passed in 2010 to help fund President Obama’s health reform law.

The two Rhode Island senators joined 31 of their fellow Democrats and all 45 Republicans in voting to repeal the 2.3% excise tax on medical devices, which took effect Jan. 1. Getting rid of it would cost the federal government $29 billion from 2013 to 2022, according to the Center on Budget and Policy Priorities, a left-leaning Washington think-tank that opposed repealing it.

Whitehouse and another stalwart liberal, Massachusetts Sen. Elizabeth Warren, were among those who sided with the device industry on the repeal measure, which was introduced by Republican Orrin Hatch of Utah and has been the subject of a heavy lobbying effort.

Stephen Lane, chairman and chief venture officer of the Providence-based medical-device firm Ximedica, said at a manufacturing forum last year co-hosted by Congressmen David Cicilline and Jim Langevin that the tax was causing his industry to move production to Asia. Cicilline and Langevin voted to keep the tax, and Cicilline clashed over the question with his Republican opponent Brendan Doherty in a WPRI 12 debate last fall.

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4 Responses to “Reed, Whitehouse vote to repeal tax on medical-device makers”

  1. Randy Tuomisto says:

    Whitehouse, Warren and Reed bought off for pennies. If they only understood how the medical device industry is raping the healthcare of America. You only need to look at what they pay the medical device sales reps especially those selling stents and pacemakers. They are making on the average $300K with some over $800K. Believe me, these sales reps in no way require this compensation-these devices could be sold directly to hospital device/equipment evaluation committees, which include MD’s, and make the appropriate decision on what device to buy. This step alone would eliminate huge dollars. Moreover, the truth on this tax is:
    1. The tax does not single out the medical device industry for unfair treatment. The excise tax is one of several new levies on sectors that will gain business due to health reform. The expansion of health coverage will increase the demand for medical devices and could offset the effect of the tax.
    2. The tax will not cause manufacturers to shift production overseas. The tax applies equally to imported and domestically produced devices, and devices produced in the United States for export are tax-exempt.
    3. The tax will have little effect on innovation in the medical device industry. To the contrary, health reform may well spur medical device innovation by promoting more cost-effective ways of delivering care.

  2. Val Smith says:

    PLEASE!!!! You have no idea how hard a sales representative works. I am not a sales representative but I know many and how hard they work for their money. They work 24/7 to be there to assist the hospital and MD with implantations at any hour of the day or night. . They are trained to problem solve for the new technology and any complications that may arise. By the way many of their salaries do not includes any expenses from travel and personal taxes.

    Maybe you should consider what an athlete or movie star makes in comparison. Their incomes could easily be taxed with an excise tax of some sort. One could rationalize that if people are healthier, they could go to the movies or ball games more. The whole thing is just absurd. Talk about raping America. Look what it costs to go to a movie or a ball game these days. A proposed excise tax on the entertainment industries “gross sales” would surely help the national debt. This industries makes people smile. . . it makes people happy. Medical devices save lives.

    If an excise tax must be done on the Medical Device industry at least base it on the alleged excess net profits and not gross sales. Additionally it your rationale is that Medical device industry will increase their sales based on the Affordable Care Act, they why not consider charging ALL industries that are going to profit from alleged increase in hospital census. What about, the computer industry? Surely more computers will be needed if more patients are admitted to the hospital. What about utilities? Surely more electric, water, and telecommunication will be needed if hospital numbers grow. What about, construction? Surely more hospitals are going to be needed with the expected sudden tremendous increase in patients coming to the hospital. What about transportation to and from hospitals, What about waste management? Surely you can see that there will be more waste related to patient care. Why aren’t Pharmaceutical company being charged a medical excise tax? According to the government’s way of thinking many industries could benefit from an increased Hospital census.

    In summary, if an excise tax must be implemented at least make it apply to all who stand to gain from the increase in hospital census. By the way, For the record, I do own a small manufacturing company and hospitals are a big customer for us. Our products are not medical devices but unfortunately, the FDA does not have a “classification” for my products and as a result, they can be found in a miscellaneous category. If my products do not meet the requirements for the retail exemption, and I had to pay the medical excise tax, I would not be moving to Asia or any other country. Regrettably I would be closing my doors. The 2.3 percent far exceeds my net profits these days. Very little is written anywhere about the devastating effect this tax will have on small business.

    1. John Eckberg says:

      Hello Mr. Tuomisto: You couldn’t be more wrong. If you could wave your magic wand and wipe out/give back to U.S. healthcare all the cost of all medical devices, it would lower the total healthcare cost in our nation by five percent to six percent. Medical device companies and their account reps are not to blame for the high price of healthcare. Matter of fact, devices have lowered the cost by virtually eliminating exploratory surgery.

  3. John Eckberg says:

    And I remain the media relations director of Cook Medical, the nation’s largest privately owned device company. Sens. Jack Reed and Sheldon Whitehouse should be praised for voting to repeal this job-killing tax that crushes companies’ free cash flow, R&D and jobs.