Bruce Japsen, moderator (left) and Scott Whitaker, CEO of AdvaMed at CONVERGE 2016
The medical device industry and its largest lobby group have pushed relentlessly to repeal the 2.3 percent medical device tax, and while they didn’t win that battle, they earned a reprieve in the manner of a two-year pause.
At a conference in Philadelphia hosted by MedCity News, Scott Whitaker, president and CEO of AdvaMed, shared some details about how the pause has been a boon to its constituents.
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The device industry has not paid the sales tax since January. Here’s an anecdote Whitaker shared with the audience, without identifying the medtech startup by name.
A small company struggling on its next round of financing, having a very, very difficult time raising money – the capital that they needed to take their product to the next stage, (which would be) clinical trials with the FDA. The device tax was suspended. A large company came in a month later, invested a significant amount into that company. They met their fundraising goals …and now are in the next stage of approvals with the FDA.
Whitaker added that the above was just one of many such stories he has heard following the temporary suspension. Another positive development that can be traced to the repeal is the recent collaboration between Boston Scientific and Mayo Clinic.
In March, Boston Scientific publicly shared details of a collaboration with the Mayo Clinic that began three years ago borne of a desire to speed up product development. One aim of the multimillion-dollar investment by Boston Scientific is to develop and commercialize novel products quickly while another is to test cleared products in new clinical environments.
Although the collaboration dated to before the device tax suspension Michael Mahoney, CEO of Boston Scientific, alluded to that event for the continued investment into such innovation.
“Our continued investment in this collaboration is an example of our commitment to further investing in jobs and innovation as a result of the recent suspension of the Medical Device Tax.” Mahoney said in a news release at the time.
A Boston Scientific spokesman said the amount of money invested in the collaboration was doubled because of the money freed up from paying the device tax. This is part of the evidence that AdvaMed is collecting to convince the political class that the device tax needs to die
“We have a series of these examples. We are using these to explain to Congress we need to repeal (the device tax)…,” Whitaker said.
While it has never been definitively proven that the device tax has hurt innovation in any way, industry advocates have repeatedly said that the tax that Whitaker described as the “penalty tax” has been harmful to small companies especially.
Photo: MedCity News
