While the status of the U.S. health-care system has divided Congress, there’s one reform provision that unites a bipartisan majority of lawmakers, including Sens. Bob Casey and Pat Toomey: Repealing the innovation-crushing medical device excise tax.
With health reform languishing in the Senate, it’s time to move forward with repealing this tax now, which will help create high-quality jobs in Pennsylvania. Doing so will also spur investments to realize innovative and life-saving solutions for patients in our state and around the nation.
Originally passed to help fund the Affordable Care Act, the medical device tax levied a 2.3 percent excise tax on the sales of medical devices and equipment ranging from pacemakers and artificial joints to endoscopes used to see and treat diseases such as cancer inside the body. The tax was temporarily suspended in late 2015, thanks to the leadership and support of Casey and Toomey.
That was an important and helpful step, but it’s not enough. We need to encourage innovation for breakthrough medical devices here in Pennsylvania and across the country, not discourage it. That is why Congress must act now to permanently repeal the device tax. Otherwise, medical-technology companies will be hit with a tax increase of $20 billion at the end of the year, which will create a ripple effect for years to come.
As a global health-care company focused on minimally invasive medical solutions, we know firsthand that the medical device tax will disrupt the industry’s ability to make investments in research and development and bolster the long-term medical innovation pipeline. The industry is making budgetary and planning decisions now that will impact innovations in a decade and needs the certainty that would be engendered through full repeal.
The overwhelming majority of the world’s health-care innovation occurs in the United States. A burdensome tax levied on our country’s most critical and innovative companies puts that global standing — and patient care — in jeopardy.
Medical technology companies are reporting that they’re leveraging the suspension of the device tax to expand their businesses and investments in research and development. Imagine what the industry could do to address debilitating diseases and transform the quality of life if there were certainty that the device tax would be permanently repealed. Life-saving innovations are on the line, and patients should not have to pay the price.
A permanent repeal would not only ensure greater investment in R&D, but it also would put more Pennsylvanians to work in high-quality jobs. According to a study conducted by the American Action Forum, if the device tax is permanently repealed, the net impact could be more than 53,000 additional American jobs. That’s good news for Pennsylvania, where medical technology companies account for nearly 16,000 direct and indirect jobs and 278 individual business establishments.
With so much dividing Congress these days, the repeal of the medical device tax will bring much-needed unity and a legislative victory for lawmakers. More importantly, it will be a victory for many of our patients now and in the future. What are we waiting for?
Todd Usen is president of the Medical Systems Group at Olympus Corp. of the Americas.