Repeal of medical device tax would support medical technology innovation

A recent article on National Public Radio website tells the story of Alan Dembach, who, after the shaky hands caused by a bad case of essential tremors became too much for him to bear, turned to an innovative new treatment that allowed him to get his business – and his life – back on track. The treatment, known as focused ultrasound, sends high-frequency sound waves through the skull to treat the affected area of the brain. It has shown promising results in treating essential tremors without the need for invasive surgery.

Like Mr. Dembach, millions of Americans have benefited from innovative medical technologies like focused ultrasound, and millions more rely on more commonly known imaging devices such as MRI machines or CT scanners to receive accurate, and hopefully early, diagnoses.

{mosads}Americans should be proud of how far this technology has come. And elected officials in Washington should do their part to ensure that the U.S. medical technology sector, the largest and most dynamic in the world, is enabled by positive policies and protected from harmful ones. That is why we are concerned that once again in fewer than two years, many of these innovative devices could be subject to a punitive sales tax.

The intention when implementing the device tax was to help offset the cost of the Affordable Care Act, but advocates for the tax failed to consider the impact this would have on medical innovation. And although policymakers have been wise to suspend the tax two times, the continued uncertainty has made it difficult for industry to plan research and development, capital investment and hiring more than two years into the future. The obvious solution is the right solution: The full and permanent repeal. Congressional action alone can ensure that this policy is ended once and for all.

Device manufacturers have substantial evidence showing the tax has impeded research and development investment and curtailed hiring thousands of workers into above-average paying jobs while the tax was in force. According to figures from the U.S. Department of Commerce, in 2015 alone the medical technology industry lost or forewent 29,000 jobs due to the tax. Another analysis showed that as much as $2 billion in R&D investment likely would be lost each year if the tax were placed back into effect. 

All of this can be avoided if Congress takes action to eliminate this tax. Fortunately, the House of Representatives is expected to vote soon on the bipartisan Protect Medical Innovation Act (H.R. 184) bill, which is sponsored by Reps. Erik Paulsen (R-Minn.) and Ron Kind (D-Wis.). It already has enough co-sponsors to assure passage. And when it is sent to the Senate, they need to act in the same bipartisan fashion as soon as possible.

Repealing the device tax will yield immediate benefits. A recent survey conducted by the National Electrical Manufacturers Association showed that nearly 70 percent of the leading device manufacturers would be likely to hire in the coming year if the device tax were repealed. Sixty percent said they would use the additional funds to increase R&D spending and accelerate the development of even more cutting-edge products.

Congress: Act quickly to pass this legislation. People like Mr. Dembach are counting on the innovative technologies that have had profound positive effects on their lives. It is the right thing to do.

Patrick Hope is the Executive Director of the Medical Imaging & Technology Alliance.