Medical Device Excise Tax Remains in Limbo

President Trump and Paul Ryan (R-Wis) have not yet successfully replaced the Affordable Care Act with the American Health Care Act (“AHCA”).  The medical device industry had been paying particular attention to the proposed reform because the 2.3% excise tax that was suspended for 2016 and 2017 is scheduled to go back into effect on January 1, 2018. The tax, which has already required the payment of billions of dollars by device manufacturers, has an outsized impact because it is assessed on gross sales, not profits.

Scott Whitaker, president & CEO of AdvaMed, told MassDevice.com that:

The fight is far from over for repeal proponents. The trade lobby plans to continue its ‘aggressive’ push to capitalize on the bipartisan support for repealing the tax. We cannot allow this tax to be reimposed on a vibrant and innovative American industry and look forward to working with Congress and the administration to end this tax once and for all.

AdvaMed plans to huddle with longtime Capitol Hill supporters of repealing the tax, including Reps. Erik Paulsen (R-Minn.), Ron Kind (D-Wis.), Sens. Orrin Hatch (R-Utah), and Amy Klobuchar (D-Minn.).

Whitaker believes there are several options to make the excise tax go away permanently, including stand-alone legislation.  The Republican-controlled House has approved repeal of the excise tax four separate times in the past three years, including most recently in January 2017.  The repeal “is probably going to get put into a budget reconciliation that only needs a simple majority vote in the Senate,” said Steve Parente, a professor and director of the Medical Industry Leadership Institute at the University of Minnesota. According to Parente, proponents feel that this time around, the chances of passing such a bill are much better with a Republican controlled House, Senate, and Presidency.

Despite the setbacks, the medical device industry continues to lobby both sides of the KnobbeMedical Lobby Chart (2)aisle to fight the excise tax.  An estimated $158 million was spent on lobbying in Washington since 2012 by medical device manufactures, according to OpenSecrets.org, a nonprofit group that tracks and reports on money’s impact in politics.  According to Opensecrets.org, in 2016 there was a reported $22.3 million spent on lobbying with more than $8 million have been spent on political campaigns.

Regardless of the failure of the AHCA bill, and the previous repeal legislation, news articles note that the medical device industry continues to look for supporters and ways to keep the excise tax suspended with potentially millions more being spent in lobbying this year.

 

 

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