MichBio Challenges White House's Statement on Device Tax Repeal
As the House sets to vote today to repeal the medical device tax,
takes strong issue with yesterday's statement released by the White
House that threatens to veto any tax repeal legislation.
"We disagree with the President's premise that the device industry
will benefit from the new health care law," said Stephen Rapundalo,
Ph.D., president and CEO of MichBio, and chair of AdvaMed's State
Medical Technology Alliance. "The medical device industry and others
have asked for evidence to substantiate that claim but the White House
has not done so. They make faulty assumptions based on erroneous data.
Indeed, while initial estimates called for $20 billion in taxes, the
latest White House budget estimates it will cost over $30 billion -- a
50% increase! In addition, they don't account for anticipated industry
job losses, expenses associated with managing the tax tracking and
accounting, and lower expected device sales, as others reduce their
healthcare costs through reduced procurement."
The impending 2.3% medical device tax will be a devastating blow to
one of the few U.S. industries that has a net trade surplus and is
responsible for millions of jobs. Over 700 organizations,
associations, companies, patients, providers and venture capital
firms, and prominent non-industry groups like the National Association
of Manufacturers and the U.S. Chamber of Commerce, have joined to
support the bipartisan legislation, H.R. 436, The Protect Medical
With passage of H.R. 436, as many as 40,000 jobs can be preserved and
the device industry can continue to invest in new medical technology
innovation that can bring life-saving treatments for Americans, and
thereby lower healthcare costs.
"We understand the necessity to preserve affordable healthcare, but
going forward with a device tax is not the way to pay for the
Affordable Care Act (ACA)," said Dr. Rapundalo. "Eliminating fraud and
waste in the healthcare delivery system and ensuring that individuals
receive only subsidies that are legally permitted under ACA, alongside
eliminating rebate overpayments, is a much better approach than
singling out a specific industry sector."
The H.R. 436 contemplates a "pay for." A subsidy recapture offset is
designed to protect taxpayers from overpayments of health insurance
exchange subsidies. MichBio disagrees with the President's claims that
the provision will increase taxes on middle class families. Moreover,
any repeal is not a "tax break" for the device industry, but a penalty
for innovating and saving lives.
Repealing this tax on innovation will allow America's medical device
developers, who employ two million workers nationwide, to invest in
the creation of new high-wage positions and maintain America's global
leadership in new medical technology.
"At a critical time for the U.S. economy, the new tax runs counter to
our goal of domestic economic growth and the priorities set out by the
Administration's National BioEconomy Blueprint, as well as those
discussed during numerous White House Business Council meetings with
regional leaders," added Dr. Rapundalo. "We urge the White House to
stand alongside Congress to end the medical device excise tax."
MichBio is Michigan's statewide, non-profit industry association that
represents the medical devices and other bioscience sectors. With well
over 200 medical device and equipment-related companies in the state,
including some Fortune 500 businesses, the sector is integral to
"Our device companies have already taken and are continuing to pursue
strategic steps to contend with the impending device tax," stated
Rapundalo. "Unfortunately, this has meant job layoffs and downsizing,
along with the consideration of moving manufacturing operations
off-shore. The medical device tax is a job-killer for Michigan, and
the U.S., and will only ensure that this sector of the bio-industry
will lose its competitive edge."
MichBio is the trade association committed to driving growth in
Michigan's biosciences industry and its many sectors, including
ag-biotech, food and nutrition, bio-based technologies and renewable
chemicals, industrial and environmental biotech, medical devices and
equipment, pharmaceuticals and consumer healthcare, diagnostics and
research products, testing and research services, and clinical
research. MichBio members include biosciences companies, academic and
research institutions, biosciences service providers, and related
organizations. For more information, visit