Newspaper article Roll Call

The Innovation Roadblock: Why Congress Should Repeal the Medical Device Tax | Commentary

Newspaper article Roll Call

The Innovation Roadblock: Why Congress Should Repeal the Medical Device Tax | Commentary

Article excerpt

By Mary Woolley and Gregory Sorensen

Investment in medical innovation, including medical devices, is smart for our nation -- for patients, their families and the economy. That is why we believe Congress should vote to repeal the medical device excise tax established as part of the Affordable Care Act.

Opposition to the medical device tax is not a commentary on broader health reform. If increased investment in medical innovation is a national priority, as we strongly believe it is, imposing an excise tax on one of the most prolific medical technology industries is counter-strategic. That is one reason why many Democratic lawmakers who support health reform want to see the tax repealed.

The term "medical device" may not immediately bring to mind the astounding array of innovations that fall under this category. Here are just a few: medical imaging, sophisticated diagnostic blood tests, pacemakers, stents, prosthesis, oxygen delivery systems, and the transfusion and infusion equipment needed to treat cancer, diabetes, arthritis, and a host of other serious conditions. In other words, medical devices save lives and restore mobility and independence to individuals with disabling injuries or health conditions.

Congress typically levies excise taxes to strategically discourage harmful behaviors such as smoking and alcohol consumption. It's surprising, then, that an excise tax would be levied on a positive behavior, that is, investment in research and development. Yet, that's what is happening. In fact, according to a recent analysis by Ernst & Young, venture capital investment in medical devices in 2013 fell 17 percent from the previous year. Moreover, more than half (53 percent) of medical device firms responding to a recent industry survey reported cutting R&D funding as a direct result of the tax, while 85 percent said they would reinstate foregone R&D projects if the tax is repealed. How could it possibly be a good idea to dis-incentivize U. …

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