Medical device tax repeal bill reintroduced in U.S. Senate

U.S. Senator and Democratic presidential candidate Amy Klobuchar (D-Minn.) reintroduced a bill to permanently repeal the 2.3% federal excise tax on medical device sales, with a new co-sponsor. Sen. Pat Toomey (R-Penn.) has signed on to co-sponsor, replacing Sen. Orrin Hatch (R-Utah), who did not run for re-election last fall.

The medical device tax went into effect in 2013 and has been suspended twice. One two-year pause ended in January 2018 and the second moratorium is due to expire at the end of 2019. The tax on the sale of most medical technologies was enacted as part of the Affordable Care Act and applies to medtech companies’ revenues, not profits. In 2018, the U.S. House of Representatives passed a bill to repeal the tax 283-132, but the Senate failed to act.

In February, U.S. Rep. Ron Kind (D-Wis.) inked a letter to colleagues in the House of Representatives seeking support for a new bill to repeal the tax. The House version of the Protect Medical Innovation act of 2019 already has backing from Jacki Walorski (R-Ind.), Scott Peters (D-Calif.), Richard Hudson (R-N.C.), Terri Sewell (D-Ala.), Darin LaHood (R-Ill.), Suzan DelBene (D-Wash.) and Jason Smith (R-Mo.).

Kind would be stepping in as lead sponsor for former Congressman Erik Paulsen (R-Minn.), a longtime champion of the legislation who lost his re-election bid to Democratic newcomer Dean Philips.

In his letter to colleagues, Kind called the 2.3% excise tax “extremely punitive to medical technology investors,” and said that since its inception there has been “growing bipartisan support” to end it.

The Senate bill has attracted nine senators each from both the Democratic and Republican parties. They include Lamar Alexander (R-Tenn.), Dick Blumenthal (D-Conn.), Bob Casey (D-Pa.), Mike Crapo (R-Idaho), Tammy Duckworth (D-Ill.), Chuck Grassley (R-Iowa), Maggie Hassan (D-N.H.), Jim Inhofe (R-Okla.), Johnny Isakson (R-Ga.), Doug Jones (D-Ala.), Martha McSally (R-Ariz.), Rob Portman (R-Ohio), Jacky Rosen (D-Nev.), Jeanne Shaheen (D-N.H.), Kirsten Sinema (D-Ariz.), Tina Smith (D-Minn.), Thom Tillis (R-N.C.), and Todd Young (R-Ind.).

Medtech trade group AdvaMed continues to drum up support for a permanent repeal of the tax, saying that short-term suspensions limit the ability of companies to make longer-term investments in new technologies and treatments.

“Unless Congress acts quickly, America’s medical technology companies face a $20 billion tax hike at the end of 2019 when the device excise tax returns,” said AdvaMed president and CEO Scott Whitaker in a prepared statement. “If not stopped, this tax will put future patient innovations and good-paying U.S. jobs at risk.”

AdvaMed, the Medical Device Manufacturers Association (MDMA) and Minnesota-based trade group Medical Alley each thanked the Senate bill’s lead sponsors for taking it up again.

“We are grateful to Senator Klobuchar for her bill to once and for all repeal the medical device tax,” said Medical Alley president & CEO Shaye Mandle. “Medical device companies have been subject to great uncertainty because of this tax, limiting their ability to invest in the life-saving research they’re capable of producing.”

“When the medical device tax was in place, billions of dollars were sent to the I.R.S. instead of being invested in the next generation of cures and therapies for patients. We simply cannot allow this to happen again, and today’s introduction of the ‘Protect Medical Innovation Act’ shows that a broad, bipartisan coalition in the Senate agrees,” added MDMA president & CEO Mark Leahey. “MDMA thanks Senators Toomey and Klobuchar and all the original cosponsors for their ongoing leadership on this crucial issue for medical innovation and patient care, and we remain committed to working with them and all of the stakeholders who recognize how destructive the medical device tax is.”

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