MDMA opposes medical device tax as part of the health care reform bills

Medical Device Manufacturers AssociationOct 12 2009

Yesterday, the Medical Device Manufacturers Association Board of Directors met and unanimously voted to oppose any device tax as part of the health care reform bills moving through Congress. MDMA Chairman Joe Kiani, Chairman and CEO of Masimo Corporation, stated that, "MDMA supports bipartisan legislation to improve patient care, reform the insurance industry and promote prevention and wellness. The current medical device tax being discussed on Capitol Hill will hinder achieving these objectives. The overwhelming majority of innovation from the medical device industry comes from smaller manufacturers who work closely with clinicians and engineers to develop the therapies and treatments of tomorrow. If enacted, this tax will stifle innovation, harm patient care and weaken the position of the US as the global leader in medical device innovation."

Earlier this week MDMA executives and members met with members of Congress to communicate their concerns about the device tax. In a statement, MDMA President and CEO, Mark Leahey, said, "There can be little doubt -- the proposed tax will have a cascading effect upon innovation, access to technology and employment in the industry."

On Tuesday, MDMA sent a letter to Senate Finance Chairman Max Baucus and Ranking Member Charles Grassley expressing its "steadfast opposition" to the tax and stated that "if enacted, this fee would have a devastating impact on innovation, investment and the nation's economy." The letter went on to say, "it is not a proposal supported by the overwhelming majority of the device industry."

It has been suggested that medical device companies need to contribute cuts to help make up for the costs of expanding coverage. This is in addition to other elements of the bill, including the $155B in payment reduction to hospitals that will already adversely impact the medical device industry. Additionally, proposed cuts in the areas of imaging, durable medical equipment and clinical lab supplies are also included in the bill.

Furthermore, claims that the taxes levied on medical device companies will be offset due to an increased pool of insured beneficiaries receiving treatment are overstated. Since the majority of products impacted are used in acute care settings where there are legal obligations to treat a patient, the effect of expanded coverage is not likely to increase utilization. In fact, if the bill succeeds in improving the health of Americans, procedures and interventions will likely be reduced.

MDMA President and CEO Mark Leahey went on to state, "In the coming weeks our hundreds of member companies across the country will do all we can to communicate the detrimental impact this fee will have on achieving the long term objectives of health care reform. The bill should include provisions that promote innovation and improve patient care, not harm the system."