The U.S. House of Representatives passes a jobs package that would repeal the medical device tax and issue refunds for all levies paid since the 2.3% excise tax went into effect last year.
UPDATED Sept. 19, 2014, with comment from MDMA, MITA and AdvaMed.
The U.S. House of Representatives voted yesterday to repeal and refund the medical device tax and promptly went into recess until after the mid-term elections in November.
The House voted 253-163 to approve the “Jobs for America Act,” a package of bills that had already individually passed the lower chamber. The package includes a measure that would roll back the 2.3% excise tax on U.S. sales of medical devices and issue a retroactive refund to companies for payments made on the tax since it went into effect last year.
The Joint Committee on taxation estimates that repealing and refunding the medical device tax will cost $4.48 billion in revenues in fiscal 2015 and $25.74 billion over fiscal years 2015-2024. Estimates on how much the tax would raise have varied wildly over the years, with federal officials projecting that the tax will raise about $30 billion over 10 years and a coalition of medical device lobbying groups estimating the tab at $1 billion during the 1st 6 months of last year.
But the IRS told MassDevice.com this summer that it collected just $1.4 billion from the medical device tax in all of 2013. Then an audit by a U.S. Treasury inspector general released last month revealed that the IRS is having major trouble even determining which companies are subject to the tax. The IRS collected a little more than $913 million during the 1st half of 2013, well shy of the $1.2 billion it expected to pull in.
Earlier this week Rep. Erik Paulsen (R-Minn.) told MassDevice.com those reports and its deleterious effect on the medtech industry show that the time is right for repealing the tax.
“The statistics are real: Venture capital funding is drying up in this industry and companies are cutting back on R&D,” Paulsen told us. “The timing is really good right now, because we’re at the end of our year.”
But it remains to be seen whether a lame-duck Senate, controlled for now by Democrats, will take up a jobs bill that would roll back a portion of the Affordable Care Act. Although there’s bipartisan support for repealing the medical device tax – including a symbolic 79-20 Senate vote for repeal last year – Senate majority leader Harry Reid 9D-Nev.) has been steadfast in opposing any changes to Obamacare.
Paulsen said he’s optimistic that the upper chamber will follow through if there’s a vote on the jobs package.
“Knowing that 79 senators voted to repeal the tax, if the leadership allows this to come for a vote it’s going to pass [the Senate] overwhelmingly. We just need the opportunity to have the vote,” he said. “If it’s combined with other tax measures I think we have a real opportunity to see it happen.”
In a joint statement, the leaders of 3 medical device trade groups praised the House vote for repeal and refund.
“MDMA thanks the House of Representatives for working to strengthen medical technology innovation by removing a major roadblock towards developing the cures of tomorrow,” Medical Device Manufacturers Assn. president & CEO Mark Leahey said in prepared remarks. “Repealing the medical device tax not only empowers patients and providers, but will allow America’s innovators to create more high-tech manufacturing jobs that our communities desperately need.”
“Federal policies that affect medical imaging innovation also have reverberating effects on patients, jobs and the U.S. economy,” added Medical Imaging & Technology Alliance executive director Gail Rodriguez. “We support the bipartisan efforts to repeal this harmful tax and pursue policies that promote the development of life-saving technologies.”
“Repealing this tax will help ensure the U.S. maintains its global leadership in this high-tech manufacturing sector and advance the development of new cures and treatments,” AdvaMed president & CEO Stephen Ubl said in the statement. “We greatly appreciate the ongoing support from both sides of the aisle on this important issue.”