In a recent meeting with Senate Finance Committee staff, patients, investors, and business owners large and small came to Washington to advocate for a repeal of the medical device tax – a poorly constructed tax policy that punishes the innovators who are developing the very technologies that will lead to effective treatments for countless Americans. From all stakeholders, the message was clear: repeal this failed policy once and for all.
On any given day, more than 2 million Americans enter the U.S. health care system via a visit to the hospital or an outpatient facility. Moreover, every one of those visits involves multiple interactions with medical technology – everything from stethoscopes and tongue depressors to x-ray and MRI machines to pacemakers and hip implants.
Thanks to innovations like these, countless Americans are living longer, healthier, more productive lives. Just think: nearly 4 million people every year can see clearly thanks to intraocular lenses for cataracts; nearly 1 million can walk thanks to artificial knees; 350,000 hearts are beating steadily thanks to pacemakers and ICDs; and millions of cancer fighters and survivors can monitor their disease and celebrate remission thanks to diagnostic imaging that guides prompt and effective treatment.
America is the global leader in medical technology, and we should be proud of this progress that’s good for our economy and improves lives here and around the world.
However, a threat looms on the horizon. In a few months, many of these life-changing devices – along with almost every other medical device from sterile surgical gloves to the particle accelerators used to administer proton beam therapy – will face a punitive sales tax increase.
Since it was passed into law, the medical device tax was only implemented for a brief period between 2013 and 2015. Within this short window, however, the tax wreaked havoc. Along with costing the medical device sector nearly 30,000 jobs, critical investments in MedTech research and development declined by an average of 20 percent. Recognizing the unintended negative consequence of the tax, lawmakers have now suspended it for multiple years, but have yet to repeal this failed policy.
By January 2020, the current suspension is set to expire, allowing the negative impact of the tax to once again rear its ugly head. While providers and device manufactures will take the initial hit, it is patients and workers who will ultimately pay the price. Firms are already setting aside resources to pay the tax, leaving less to invest in research and development. This translates to slower hiring and delays in developing the next generation of life-saving treatments and technologies.
Fortunately, there is an obvious solution that policymakers can pursue to avoid these outcomes: complete and total repeal of the tax. The Protect Medical Innovation Act of 2019 (H.R. 2207, S. 692) sponsored by Reps. Ron Kind (D-Wis.) and Jackie Walorski (R-Ind.) and Sens. Pat Toomey (R-Pa.) and Amy Klobuchar (D-Minn.) would do away with the device tax once and for all to ensure the American medical technology sector is protected for future generations.
This bipartisan legislation already has strong support in both chambers, including a record number of Democratic Senate co-sponsors. Every time device tax repeal has come up for a vote, it has received overwhelming support, so there is no reason for further delay. Congress must act quickly to pass this legislation and send it to the president’s desk, where the White House has already indicated the legislation will be signed.
It is rare for so many politicians of so many different political stripes to agree on a single issue. The fact that so many are united around repealing the device tax is a testament to how important medical technology is to our country’s health care system and economy.
We urge lawmakers to act swiftly and vote for full repeal before this harmful tax increase returns.
Patrick Hope is the executive director of the Medical Imaging & Technology Alliance. Scott Whitaker is president and CEO of the Advanced Medical Technology Association.