A report just released by a coalition of medical device lobbying groups said the medical device sales tax enacted under the Affordable Care Act has already cost the orthopedics manufacturing industry $1 billion.
According to the Medical Imaging & Technology Alliance and the Medical Device Manufacturers Association, the 2.3 percent medical device tax is costing medical device makers a collective average of $194 million per month. The MITA said that is money that should be going to research and development efforts.
In a press release, MITA Executive Director Gail Rodriguez said, “The $1 billion threshold is frightening as every dollar spent paying for this medical device tax threatens medical innovation and American jobs. MITA is pleased to see bipartisan support for repeal of the tax building in both the House and the Senate, but Congress cannot wait any longer to repeal this burdensome tax and protect jobs and essential R&D funding.”
In a prepared statement for MassDevice, MDMA President and CEO Mark Leahey added,
“Each day that goes by with the medical device tax in effect is a major roadblock for patient care, job creation and innovation. This issue is a shining example where there is overwhelming bipartisan support in both chambers of Congress to right a wrong, and MDMA continues to work with all stakeholders to get repeal of this onerous policy across the finish line.”
The tax, implemented by the Affordable Care Act to help raise funds for healthcare reform, took effect at the start of 2013, despite the efforts of medtech industry groups to strike the levy in Congress. Although device makers have managed to generate support from lawmakers on both sides of the aisle, repeal efforts have been hindered by disagreements on how to make up for the $30 billion in revenue the tax is supposed to raise over the course of a decade.
Warsaw is known as the Orthopedics Capital of the World. It is where three of the world’s five leading orthopedic device companies began and still remain. Those “big 3” are Zimmer, Biomet and DePuy, but there is also Medtronic, a major spinal implant manufacturer and dozens of suppliers and contract manufacturers.
According to a 2009 BioCrossroads report, collectively, the Warsaw orthopedics companies earn more than $11 billion in annual revenues. That represents “better than a 50 percent market share in the United States and more than a 33 percent market share in the world.”