Healthcare Business News
Rep. Erik Paulsen (R-Minn.)

Lawmakers call again for device tax repeal, touting bipartisan support

By Jaimy Lee
Posted: February 6, 2013 - 3:00 pm ET

Two lawmakers reintroduced a bill Wednesday to repeal the medical-device excise tax, this time with bipartisan support, according to its author, Rep. Erik Paulsen (R-Minn.).

The Protect Medical Innovation Act (PDF) targets a provision of the healthcare reform law that requires manufacturers to pay a 2.3% excise tax on the sales of certain medical devices.

Paulsen was joined by Rep. Ron Kind (D-Wis.) as a co-sponsor in resurrecting the legislation.

The device industry has aggressively fought to repeal the tax, which went into effect Jan. 1, arguing that it hampers innovation and has led to job losses.

“The realization has sunk in,” Paulsen said in an interview. “It's a direct negative impact on a critical sector of our economy.”

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Hospitals and group purchasing organizations say the tax is the device industry's contribution to funding the Patient Protection and Affordable Care Act and unsuccessfully pressed the IRS to require manufacturers to certify that they haven't passed through the cost of the tax to their customers.

At least eight medical manufacturers have informed hospitals that they plan to add the tax to the price of the products they sell, according to letters sent to providers by the manufacturers.

The bill passed the House last June as part of the Healthcare Cost Reduction Act, but never made it to the Senate. At that time, the Obama administration said it would veto the bill, noting that the industry is expected to benefit from the 30 million new consumers who will gain health coverage in 2014.

“The momentum from the last Congress is carrying over with a broader array of champions working to defeat this terrible tax,” Steven Ubl, president and CEO of the Advanced Medical Technology Association, said in a statement.

Other industry groups, such as the Medical Device Manufacturers Association and the Medical Imaging and Technology Alliance, have also publicly opposed the tax.

Support for repeal is growing, Paulsen said. The legislation now has bipartisan support and 175 co-sponsors. In addition, Sens. Orrin Hatch (R-Utah) and Amy Klobuchar (D-Minn.) are expected to introduce companion legislation.

“(The bill) wasn't bipartisan two years ago,” Paulsen said. “It will force the administration to take a second look.”

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