Medical Device Manufacturers Achieve Symbolic Victory

March 22, 2013

Despite a Senate vote in favor of repealing the medical device tax, don't bet on manufacturers escaping the new tax.

On Thursday, the Senate approved an amendment to the Senate Budget Resolution by Sen. Orrin Hatch, R-Utah, and Sen. Amy Klobuchar, D- Minn., that expressed support for repeal of the tax, part of the Affordable Care Act. However, the amendment, passed in a 79-20 vote, is non-binding. Observers say the vote gave many senators political cover to support manufacturers in their states without actually voting to repeal the tax.

The health care law levies a 2.3% tax on sales of medical devices which is estimated to raise $30 billion in new revenue over the next decade. The Obama Administration has argued that medical device manufacturers will benefit from an influx of 30 million people who will gain health insurance under the ACA and become consumers of their products. The tax, according to the administration, helps the industry support the cost of this expansion in coverage.

However, industry leaders remain steadfastly opposed to the tax.

"This tax on gross sales threatens regional economic vitality, badly needed jobs and patients' hopes for new, life-saving products and treatments," said Steve Ferguson, chairman of Cook Medical. "Thousands of layoffs in the U.S. have already occured because of this tax."

Calling the tax a "clear and present danger" to Florida's medical manufacturing industry, John Ray, executive director of the Florida Medical Manufacturers Consortium, said Congress should "seize this bi-partisan momentum to end the medical device tax immediately."

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