Joe Turner, seen when he was a senior research engineer with Medtronic Inc., measures the mechanical properties of a spinal system in a Medtronic Inc. biomechanical testing laboratory in Memphis, Tennessee, U.S., on Tuesday, Aug. 25, 2009. MedtronicBLOOMBERG NEWS
The medical technology industry once again is pushing for a permanent end to a medical device tax they’ve worked with Congress to shelve for almost four years now.
The 2.3% tax on medical device sales that is part of the Affordable Care Act has already been on temporary hiatus since the beginning of 2016 and is scheduled to expire at the end of this year.
“We are in the fourth year of two consecutive two-year suspensions,” Scott Whitaker, CEO of The Advanced Medical Technology Association (AdvaMed) said Monday afternoon. AdvaMed represents hundreds of medical device makers, including Abbott Laboratories, Johnson & Johnson, Medtronic and Stryker.
Before it was put on hiatus, the IRS collected between $ 1 billion and $ 2 billion a year in 2013, 2014 and 2015. By the end of this year, the medical device tax will have already been “off the books” longer than it was “on the books,” AdvaMed’s Whitaker said.
There are several opportunities in Congress to add the medical device tax to legislation including budget legislation, tax bills or end-of-the-year omnibus spending measures, device makers say.
The legislation to bring a permanent end to the medical device tax already has bipartisan support in the Republican-controlled U.S. Senate, including 10 Democratic co-sponsors that include Sen. Amy Klobuchar, the Minnesota Democrat running for president in 2020. And in the U.S. House of Representatives, which is this now controlled by Democrats following last year’s midterm elections, more than 200 co-sponsors are expected to sign on to support legislation ending the device tax, AdvaMed said.
Meanwhile, device makers say the existing device tax is hurting medical innovation, particularly at small firms given one-third of device makers have 20 or fewer employees.
The current two-year suspension of the tax was expected to cost the U.S. government about $ 3.7 billion, a Congressional Budget Office report said. And the Joint Committee on Taxation has said repealing the medical device tax would cost the U.S. Treasury about $ 20 billion over a decade.