Back in June when the House of Representatives voted to repeal the medical device tax that the industry believes will kill jobs and stifle innovation, Representative Erik Paulsen (R-MN) likely believed that he might achieve the impossible: throw out that portion of the healthcare law completely.
The wind was at his back with 37 Democrats joining their Republican counterparts to repeal the 2.3 percent device tax that is set to go into effect in January.But despite Paulsen’s best efforts, the Senate has not brought the bill up for a vote.
Congressman Erik Paulsen, chair of Medical Device Caucus
He may not admit it outright but it appears that these days, Paulsen, who was the chief author of the bill to repeal, is recognizing that the battle may as well be over.
An industry champion, Paulsen still vowed to fight on asking an audience of medical device executives gathered at the Medical Devices Summit Midwestin Bloomington, Minnesota on Thursday to write to their senators and persuade them to bring the bill to the floor after the election. Note those words: after the election.
“This is a ticking time bomb that must be stopped,” he said. “You got to push this out.”
In an interview after the speech, Paulsen said that there is a “realistic opportunity for maybe delaying the tax.” When asked if there would be an appetite for tackling this after the election, he replied “yes.”
But that seems optimistic, especially if the Democrats prevail.
Part of the problem appears to be that the titans of the industry that he refers to, including Medtronic, have not really come out forcefully against the tax. In fact, even when asked point blank to comment about the medical device tax at a July healthcare conference in Philadelphia, a senior Medtronic executive did not take the bait, even as a smaller company’s CEO criticized it openly.
Paulsen said that St. Jude Medical just laid of 300 employees and the move was considered to be taken to offset the cost pressures of the device tax. Yet, unlike Stryker, St. Jude Medical, also a medical device titan, did not causally link the layoffs to the tax.
What’s more, an effort to rally medical device industry to rise up in unison against the device tax has also failed miserably.
The owner of the LinkedIn Medical Devices group, boasting more than 133,000 members, launched a campaign to collect at least 25,000 signatures on a petition to be sent to the Senate in April. As of Sept. 6, the effort had stalled garnering only 8,878 signatures.
In Thursday’s keynote speech, Paulsen described the device tax as ill conceived and wondered aloud why the medical device industry was singled out to pay it. While the tax may be ill conceived, especially at a time that the device industry is facing many different headwinds, perhaps the tax is payback for years of incredibly high profit margins and opaque pricing.
Even the nonpartisan Government Accountability Office was flummoxed by industry’s pricing when it attempted to analyze it.
By Arundhati Parmar
Arundhati Parmar is the Medical Devices Reporter at MedCity News. She has covered medical technology since 2008 and specialized in business journalism since 2001. Parmar has three degrees from three continents - a Bachelor of Arts in English from Jadavpur University, Kolkata, India; a Masters in English Literature from the University of Sydney, Australia and a Masters in Journalism from Northwestern University in Chicago. She has sworn never to enter a classroom again.More posts by Author
Certainly device companies create jobs and we need to tax the data sellers instead of level the balance here and not make it so easy to get the data for nothing and profits for free with mining. What incentive does a company have to build a factory and hire a few geeks, write some code and roll in profits. If Walgreen in 2010 made short of $800 million in 2010 just selling data, imagine how big that pool is to tax once you bring in banks and all kinds of other industries. It's a no brainer to excise tax this and license it, and I think about this every time I pay an excise tax to buy a tire so I can drive to a now lower paying job:)
We have too much of the economy based on intangibles and the device tax when it was set up was maybe not a bad idea but the economy has changed and we need to roll with it and change as needed and regain a balance between tangibles and intangibles, both have value but right it is a bit lop sided. Here's what I wrote in an opinion piece about Cook Medical. Again as consumers we pay excise tax on tires to keep the highway infrastructure going so it's time for the big profit makers who rely on government IT systems to pay their share and be licensed and taxed to sell data as well as a requirement for a federal site that all disclose what kind of data they sell and to who, consumers want to know:)
http://ducknetweb.blogspot.com/2012/07/cook-medical-cancels-plans-for-factory.html
The language surrounding taxation in our common discourse is repeated in Parmar's reporting; "kill jobs and stifle innovation", "ticking time bomb", ill-conceived, singled out, and payback. The reporter then connects 300 layoffs to "cost pressures of the device tax". Ironically, in the same report Parmar enumerates that, when offered the opportunity, large corporation leaders and industry members provide no support to the opposition to taxation.
The country's wealth is immobilized in the static accounts of large industry and high net worth citizens. That sequestered wealth, held absent from a dynamic economy, has led to shrinkage of the spending power of the vast bulk of the population. The entitlement argument, that our wealthy citizens and corporations are entitled to benefit from the advantages of our country without ensuring the continuance of those benefits through public spirited action and taxation, sustains our economic malaise.
The wealth we've enjoyed in our industry comes about through our individual drive, individual invention and innovativeness, good fortune, and the benefits our nation provides - transportation and communication infrastructure, military defense, rule of law, widely distributed education, inexpensive yet reliable electricity distribution, reliable clean water distribution, disaster recovery services, our patent office, reliable sewage, transparency in our finance markets, massive support for early and basic medical research, and availability of healthcare services through a number of government-provided insurances.
We corporate citizens must ensure that government pays down debt, once citizens have returned to being the key drivers of consumption. We corporate citizens must demand excellent regulation, excellent and efficient financial management, and highly competent services from our government. Hoping for less or more government is no more meaningful than hoping for more or less nails on a jobsite. We need enough nails, not too many, not too few, and we need the right nails at the right time. And we expect to pay for those nails, because nails are good, and they have a price.
In short, we need what taxes provide, both in services and restoration of wealth to the active economy. Our industry appears to recognize that all healthy and wealthy segments of industry must contribute to the general well-being and to debt service.