BY PATRICK HOPE, MARK LEAHEY AND SCOTT WHITAKER
The New Year is a time for fresh starts and new beginnings — to set goals and commit to meeting them. In Washington, it is a time for renewed focus on the issues that affect millions of Americans. It’s clear that health care reform is a top priority for the new Administration and Congressional leaders, and it is our hope that policymakers on both sides of the aisle will come together to support health care policies that allow patients worldwide to live longer, healthier and more productive lives — starting with an immediate and permanent repeal of the burdensome medical device tax.
We have already seen how collective leadership and collaboration can have a positive impact on health care policy. Late last year, for example, Congress passed the 21st Century Cures Act, which was subsequently signed into law. When fully implemented, the legislation will advance medical innovation for the benefit of patients coping with a myriad of diseases and health conditions. Similarly, the agreement reached last summer between industry and the U.S. Food and Drug Administration (FDA) on the Medical Device User Fee Act (MDUFA) promises to be a big win for patients, as it will allow FDA to continue to improve its performance and fulfill its mission of protecting the public health and promoting innovation. We look forward to working with Congress to reauthorize this program.
Still, there is work to be done. The medical device tax — a 2.3 percent excise tax that was enacted as part of the Affordable Care Act (ACA) – placed a heavy burden on the medical technology industry, slowing the pace of medical innovation and costing thousands of U.S. jobs. Unlike any other part of the ACA, the medical device tax was put in place strictly to raise revenue, and not to support any health care policy. Instead of advancing patient access to care, the tax threatened to bring our nation’s most innovative industry to a standstill, forcing companies to delay or defer hiring as a means to pay the tax and reducing R&D investment used to develop the next generation of life-changing medical technologies.
Fortunately, the tax was suspended in December 2015 for two years and since then many companies have not only reported an increase in hiring but also have revitalized their research and development pipelines, and reinstated delayed projects. The suspension of the medical device tax has enabled OrthoPediatrics, for example, a small Indiana-based company that develops implantable orthopedic devices for children, to resume hiring aggressively and substantially increase the development of new products for our nation’s youth. However, surveys continue to show that an overwhelming majority of medical technology innovators are reluctant to make additional investments in jobs and patient care due to the temporary status of the suspension.
With the suspension set to expire at the end of this year, the innovation ecosystem — including thousands of high-quality U.S. jobs — are still at stake. The American medical technology industry directly or indirectly supports roughly 2 million jobs across the country. What’s more, medical technology companies annually invest nearly $10 billion in research and development to advance patient care in the United States and around the world. But these hiring decisions and investments in multi-year research projects require long-term certainty to proceed.
If Congress fails to provide a permanent fix, they are severely limiting the ability of manufacturers large and small to invest in jobs to develop the next wave of medical technologies and bring them to market. In the end, patients who depend on these technologies for the diagnosis, monitoring and treatment of life-threatening diseases are the ones who suffer.
One cannot dispute that the medical device tax is a drag on innovation, creates unnecessary hurdles for both established manufacturers and startup companies and jeopardizes good high tech manufacturing jobs here in the United States. Congress must immediately abolish this onerous tax once and for all. Americans deserve smart policies that encourage, rather than inhibit, investment in medical technology.
Patrick Hope is the executive director of the Medical Imaging & Technology Alliance (MITA). Mark Leahey is president and CEO of the Medical Device Manufacturers Association (MDMA). Scott Whitaker is president and CEO of the Advanced Medical Technology Association (AdvaMed).