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New Medical Device Taxes Raise Concerns

Medical device technology experts say a new tax in the Affordable Care Act will force companies to move their operations overseas.

Members of the Indiana congressional delegation held a forum in Indianapolis Monday to hear testimony on the issue. Beginning in 2013, an excise tax of a little more than 2 percent will be placed on the sale of medical devices in the United States.

The tax is expected to bring in more than $20 billion in revenue to help pay for the Affordable Care Act.  But medical device manufacturers say the new tax is a significant economic burden.  Dane Miller is on the board of directors at Biomet, a company based out of Warsaw, Indiana.  He says the tax will limit innovation and expansion in the United States.

“I’ve hear it said that venture capital and private equity dollars are drying up,” he says. “I don’t believe that to be the case; I think they’re sitting on the sidelines.”

A bill currently in Congress would eliminate the tax.  But Miller and others say the new excise tax isn’t the only problem.  Bloomington-based Cook Group is the world’s largest privately-held medical device manufacturer.  Chairman of the board Stephen Ferguson says the Food and Drug Administration’s overly restrictive and slow approval process has driven business to Europe.

“We used to introduce 100 percent of our new devices in the United States first,” he says. “Now, we introduce almost 100 percent outside.”

One of the solutions presented to the congressional delegation was for the FDA to shift its primary focus from the effectiveness of new devices to their safety.

WTIU’s Shameka Neely reports:

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