US Senators introduce bill to repeal medical device tax

8 March 2019 (Last Updated March 8th, 2019 12:16)

US Senators Pat Toomey and Amy Klobuchar have introduced bipartisan legislation to repeal medical device tax across the country.

US Senators introduce bill to repeal medical device tax
If it were to be implemented again, the medical device tax is estimated to cause 25,000 job cuts by 2021. Credit: Pepi Stojanovski on Unsplash.

US Senators Pat Toomey and Amy Klobuchar have introduced bipartisan legislation to repeal medical device tax across the country.

In 2013, the 2.3% excise tax was introduced as part of the Patient Protection and Affordable Care Act. The tax applies to a wide range of medical equipment such as pacemakers, stents, joint replacements and surgical tools.

Having been suspended twice since January 2016, the latest pause is set to expire on 1 January 2020 and US lawmakers are looking for a permanent repeal.

In July last year, the US House of Representatives passed a bill to finally eliminate the tax by a 283-132 vote. Senate is yet to act on the legislation.

The latest bipartisan legislation introduced by Toomey and Klobuchar has secured support from 18 additional senators.

Toomey said: “The spectre of the re-imposition of the punitive medical device tax threatens patients, American jobs and medical innovation. It’s time to end this uncertainty once and for all and finally repeal the medical device tax. I urge my colleagues to join this bipartisan effort.”

“It’s time to end this uncertainty once and for all and finally repeal the medical device tax.”

The medical device tax applies to gross sales. If it were to be implemented again, the tax is estimated to see an approximate increase of $20bn over ten years.

When the tax was in effect between 2013 and 2015, 29,000 employees lost their jobs, according to the Department of Commerce. Industry research and development (R&D) also experienced a $34m reduction in funding when the tax was in force. The American Action Forum predicts that 25,000 more jobs would be lost by 2021 if the tax is reinstated.

Medical device trade group Advanced Medical Technology Association (AdvaMed) continues to support a permanent repeal of the tax.

AdvaMed president and CEO Scott Whitaker said: “Unless Congress acts quickly, America’s medical technology companies face a $20bn tax hike at the end of 2019 when the device excise tax returns. If not stopped, this tax will put future patient innovations and good-paying US jobs at risk.

“The broad bipartisan backing of this bill reflects members’ understanding of the negative impact on job creation, investment and patient care should this tax return, and the urgent need for repeal.”