MITA Urges Congress to Take GAO Report on Medical Device Tax Impact as Further Evidence in Favor of Repeal

07.31.15

Washington, D.C. – The Medical Imaging & Technology Alliance (MITA) today urged Congress to take the recent Government Accountability Office (GAO) report on the impact of the medical device tax as further evidence of the need to repeal the tax.

“The findings of the latest GAO report underscore that the medical device tax is having an impact on manufacturers,” said Patrick Hope, MITA’s Executive Director. “While the GAO could not establish a “causal relationship” between profits and the impact of the device tax, medical device companies were consistent in their concern the device tax is already having on research & development budgets and hiring practices. In light of this new evidence, we encourage policymakers to seize on the sustained momentum for repeal to ensure continued investment in medical innovation for the benefit of patients, their families and the national economy.”

The GAO analyzed information on net sales and profits for 102 medical device companies before and after implementation of Affordable Care Act (ACA) provisions, and found that more than half of these companies reported that the medical device excise tax had an impact on their business.

The impact of the device tax on manufacturer investments has been documented by multiple other sources. According to an analysis by Ernst & Young, venture capital investment in medical devices in 2013 fell 17 percent from the previous year. Moreover, more than half (53 percent) of medical device firms responding to a recent industry survey reported cutting R&D funding as a direct result of the tax, while 85 percent said they would reinstate foregone R&D projects if the tax is repealed.

“Based on reports from manufacturers, it’s clear the medical device tax is a drag on the national economy,” said Hope. “How can we expect this important industry sector to continue to grow and innovate without the necessary resources to invest in research and development? Policymakers across the political spectrum support repeal because, like MITA and its industry partners, they are keenly aware of the well-documented harmful effects of this tax.”

Patients, research organizations, and advocacy groups, such as The AIDS Institute, United Spinal Association, Alliance for Aging Research and Research!America, have also publicly opposed the medical device tax.

The American medical technology industry is a true economic success story: employing more than 400,000 workers, generating approximately $25 billion in payroll, paying out salaries that are 40 percent more than the national average ($58,000 vs. $42,000) and investing nearly $10 billion in research and development annually. The industry is fueled by innovative companies, the majority of which are small businesses, with 80 percent of companies having fewer than 50 employees.

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The Medical Imaging & Technology Alliance (MITA), a division of NEMA, is the collective voice of medical imaging equipment, radiation therapy and radiopharmaceutical manufacturers, innovators and product developers. It represents companies whose sales comprise more than 90 percent of the global market for medical imaging technology. For more information, visit www.medicalimaging.org. Follow MITA on Twitter @MITAToday.