Letter to U.S. Senators in opposition of efforts to delay or repeal excise tax on medical devices

December 19, 2012

Note: The Patient, Consumer, and Public Health Coalition sent this letter to 15 Democratic Senators and 2 Democratic Senators-Elect who had signed a letter urging Majority Leader Harry Reid to delay the implementation of the excise tax on medical devices. We are concerned that efforts to delay or repeal the medical device excise tax will affect funding for the Affordable Care Act.
We sent the letter to the following:
Senators: Amy Klobuchar, Kay Hagan, Al Franken, Herb Kohl, Barbara Mikulski, John Kerry, Charles Schumer, Kirsten Gillibrand, Robert Casey, Ben Nelson, Debbie Stabenow, Jeanne Shaheen, Richard Durbin, Patty Murray, and Richard Blumenthal.
We also sent letters to Senators-Elect Joe Donnelly and Elizabeth Warren.

Dear Senator,

As members of the Patient, Consumer, and Public Health Coalition, we strongly oppose efforts to delay or repeal the 2.3% excise tax on medical devices.  The excise tax was included in the Patient Protection and Affordable Care Act (ACA), so that it would help to pay for benefits such as affordable health insurance for currently uninsured and underinsured Americans.  The Affordable Care Act will greatly benefit medical device manufacturers because more patients and consumers will have coverage that will enable them to afford medical devices.

We are aware that you signed a letter to Majority Leader Harry Reid supporting a one-year delay in the medical device excise tax. It is clear that the medical device industry will not be content with a delay in the implementation of the excise tax – they want the tax repealed, as is evident by the newspaper ads they are running in publications such as The Hill.

Meanwhile, opponents of ACA have been working overtime to defund the Act.  The one-year delay would cost the U.S. Treasury $1.7 billion, which would certainly undermine the ACA’s fiscal integrity.   It seems likely that the opponents of the ACA will work with the medical device industry to make the one-year delay an indefinite delay, and that could easily succeed since starting the tax in 2014 would be counted as a $1.7 billion revenue increase that many Members of Congress will reject.  This would be unacceptable to those of us who strongly support the Affordable Care Act. Given the magnitude of what a delay will mean, we respectfully ask you to reconsider your position.

According to the Joint Committee on Taxation, repealing the excise tax on medical devices would cost more than $29 billion over 10 years.[1]  This would undermine the ACA’s fiscal integrity and set a terrible precedent that could encourage others to try to undo crucial funding provisions in the ACA.

In order to make coverage available to more Americans, it is necessary for companies that will benefit from the bill to help pay for it.  Every time a patient sees a health care provider, a myriad of medical devices may be used, such as screening tests, needles, antiseptic wipes, ultrasound, CT scans, and MRIs.  And of course, more insured patients means more cardiac devices, orthopedic implants, and many other implants and diagnostic devices will be needed.  Medical devices are used by patients of all ages, and many of them are not on Medicare.

The medical device industry already pays less than its fair share to the FDA or the federal government compared to the pharmaceutical industry.  For example, in FY 2013, the largest pharmaceutical company pays a user fee of $1.96 million for each application for a new prescription drug, no matter how basic the product, compared to only $248,000 that the same company would pay when it submits an application for a new and very complex medical device or a mere $4,960 that it would pay if the application is for a moderate-risk but still life-sustaining device such as a blood clot filter or an artificial hip. Smaller device companies currently pay much lower user fees, and the smallest companies have their first user fee waived completely for an application for a new and very complex medical device.

As a strong supporter of the Affordable Care Act and a champion of fairness, we urge you to reverse your support for this effort to delay the implementation of the medical device excise tax, as well as efforts to repeal the tax.  We greatly appreciate your past support of the ACA.  Please do everything in your power to ensure that the ACA is not undermined by powerful special interests, such as the medical device industry.

American Medical Women’s Association
Annie Appleseed Project
Breast Cancer Action
Connecticut Center For Patient Safety
Jacobs Institute of Women’s Health
National Consumers League
National Physicians Alliance
National Research Center for Women & Families
Our Bodies Ourselves
THE TMJ Association
U.S. PIRG
WoodyMatters

For more information, contact Paul Brown at (202) 223-4000 or at pb@center4research.org

 


[1] Joint Committee on Taxation (May 29, 2012). Description of H.R. 436, the Protect Medical Innovation Act of 2011. https://www.jct.gov/publications.html?func=startdown&id=4431

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