How Repealing the Medical Device Tax Can Lessen the Pain

scott 1Scott Whitaker
President and CEO of AdvaMed (the Advanced Medical Technology Association)

Nearly 50 million adults have significant chronic pain or severe pain, according to a 2015 study by the National Institutes of Health’s National Center for Complementary and Integrative Health. That is why the medical technology industry is continually advancing and developing new innovations that can provide solutions to managing chronic pain and can help lessen a patient’s use of opioids and other oral pain medications.

However, MedTech innovations are being threatened by Washington lawmakers’ inability, at least so far, to act on meaningful health care reform. As Congress and the Trump administration figure out how to move forward, one way to score an impactful win is to repeal the medical device excise tax permanently.

Originally passed to help fund the Affordable Care Act (ACA), the medical device tax — a 2.3 percent tax on gross revenue — was suspended temporarily in late 2015. This suspension has allowed innovators to reinvest in their businesses by hiring more skilled workers, increasing research and development (R&D) and launching new products to advance patient care. If Congress takes no further action this year, however, the tax will automatically come back into effect at the beginning of 2018.

The tax may sound small, but the reality is that it has a large impact on medical technology companies’ bottom lines. In fact, recent data from the U.S. Department of Commerce shows that nearly 29,000 U.S. medical technology industry jobs were lost during the three-year period the tax was in effect. The ripple effect was even greater. It meant millions less spent on hiring, investment and R&D.

device 123Until the medical device tax is repealed for good, the innovation ecosystem supporting the creation of life-changing medical technologies — including technologies that aid in pain management, like spinal cord stimulators and neuroablation — remains threatened. Only permanent repeal of the tax will allow MedTech companies to confidently re-invest in R&D for the long-term and ensure the next generation of life-changing medical technologies are available to patients when they need them. Permanent repeal will create the kind of certainty the industry needs to drive long-term planning and investment.

The potential for collateral damage if Congress fails to act cannot be overstated. Inaction by Congress would mean a tax increase on the very medical technologies that today are helping people live longer, healthier lives, and that yield savings across our health care system by replacing more invasive procedures, reducing hospital stays and allowing people to return to work more quickly.

Medical innovation should be protected and enabled. That is why the President and Congress need to do the right thing and permanently repeal this onerous tax. Suspending the tax again is not enough. Permanent repeal must be a priority for the sake of spurring economic progress and development of the next generation of treatments and cures. Simply put, it’s the right course for continued American leadership in medical innovation. And it is essential to America’s health.

Editor’s note: During the month of September, we encourage everyone to join the conversation online by using the hashtag #painfacts.

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