Industry lobbying for med device tax change

The medical devices industry is lobbying heavily to reduce a projected $4 billion annual tax on medical device makers included in the Senate Finance Committee healthcare reform bill, according to media reports.

Bloomberg.com has reported that an analyst at JP Morgan Chase, in a note to investors, said that industry members have authorized its Washington trade group, the Advanced Medical Technology Association (AdvaMed), to negotiate with the Finance Committee and the Obama Administration to reduce the proposed tax. The Wall Street Journal reported yesterday that AdvaMed is trying to reduce the tax—which is projected to raise $40 billion in fees over 10 years—to about $15 billion.

AdvaMed isn’t commenting on those press reports, but Wanda Moebius, a spokesperson for the trade group, said yesterday: “We’re working hard to educate members of Congress about the onerous nature of the $40 billion tax. It will impact companies tremendously as they work to expand or maintain their employee bases, fund research and development and somehow manage to keep the lights [on] while paying this tax.”

The legislation unveiled by the Senate Finance Committee—chaired by Sen. Max Baucus, D-Mont.—imposes an annual fee on any entity that manufactures or imports medical devices offered for sale in the United States. The tax is projected to be about $4 billion payable annually, beginning in 2010.

Last week, the Senate Finance Committee voted 13-10, along party lines, to strike down an amendment proposed by Sen. Jon Kyl, R-Ariz., that would have eliminated medical device tax language. Despite that split along party lines, opposition to the medical device tax has been on a bipartisan basis.

A group of 20 U.S. representatives from California—11 democrats and nine republicans—last week sent a letter to Baucus protesting the proposed tax.

“We agree that health reform is needed and should be paid for, but this proposal threatens to crush the very industry that could save billions of dollars in the healthcare system,” the letter stated, “This $40 billion tax would hamper R&D investment, slow innovation, and cut jobs at a time when unemployment in California is 12.2 percent. We cannot afford these losses.”

Other legislators and governors have gone after the proposed tax. Sens. Amy Klobuchar, D-Minn., Evan Bayh, D-Ind., Dick Lugar, R-Ind., and Al Franken, D-Minn., wrote a joint letter to Baucus opposing the tax. The joint letter came on the heels of a letter from Minnesota Gov. Tim Pawlenty asking Franken and Klobuchar to fight the tax.