Medical device makers express concern over upheld tax


Several medical device manufacturers were watching the Supreme Court closely in advance of last week’s ruling upholding the Affordable Care Act.

The manufacturers had hoped the ruling would strike down a tax on medical devices that industry representatives say would do serious damage to the industry.

But, with the high court finding the health-care law constitutional, the industry’s hopes were dashed.

“Obviously, if they found the whole act unconstitutional, that would have solved the problem,” said Steve Ferguson, chairman of the board at Cook Medical. Cook is the world’s largest privately owned medical device company with 10,000 employees worldwide and has lobbied hard against the tax.

Device makers will have to start paying the 2.3 percent tax in January on sales of devices such as pacemakers and CT scan machines.

Aurora is home to several biotech startups that manufacture medical devices and will be impacted by the device, including several in the Fitzsimons Life Science District adjacent to the Anschutz Medical Campus.

But with the health-care law still a controversial political topic, several companies contacted after the decision declined to comment for this story.

At the Colorado BioScience Association, CEO Holli Reibel said officials are hopeful Congress will repeal the tax.

“We are working hard to repeal the medical device tax, absolutely,” Reibel said.

Device makers have been one of the fastest-growing sectors in the state’s bioscience scene, Reibel said, and many are worried about what the tax could mean for their future.

“It’s a huge impact to our companies,” she said.

Legislation repealing the tax passed the House of Representatives a few weeks ago, but its prospect in the Senate looks dim.

Reibel said there was bipartisan support for repeal in the House, but many in Congress oppose repeal because the tax is aimed at paying for many provisions in the health-care law.

At Cook, Ferguson said industry officials have been frustrated in recent months because the tax has largely flown under the radar during the larger health-care debate.

“There is some frustration and it makes you feel an obligation to get out and educate people on what the tax means,” he said.

As for what the tax will mean for the industry financially, it’s unclear whether increased sales down the road will offset it.

Les Funtleyder, health-care fund manager at Poliwogg, a private equity fund for small investors, doesn’t foresee a big jump in device sales: “People who need a pacemaker already were getting one.”

But Leerink Swann analyst Richard Newitter, wrote that he expects more doctor visits and hospital procedures to increase sales of devices.

Either way, one trade group for the industry, the Medical Device Manufacturers Association, said that Congress and the president must repeal the tax, arguing it would make it harder for companies to develop innovative new devices.

“It is clear that this misguided policy has already led to job losses and cuts to research and development,” Mark Leahey, the group’s president, said in a statement.


The Associated Press contributed to this report.


0 0 vote
Article Rating
1 Comment
Newest Most Voted
Inline Feedbacks
View all comments
Richard Clark
9 years ago

You might want to explain the problem to those mindless zombies holding the signs in favor nof obamacare…the one’s that know nothing about bussiness and need to count fingers and toes when doing math problems.