The Honorable Harry Reid
United States Senate
Washington, DC 20510
Dear Majority Leader Reid,
As members of the Patient, Consumer, and Public Health Coalition, we strongly support the Patient Protection and Affordable Care Act (ACA) and oppose efforts to undermine this essential program that will benefit millions of Americans. In the upcoming negotiations over the budget and debt ceiling, we urge you to reject the repeal of the 2.3% excise tax on medical devices.
We support the excise tax as one of several new levies included in the ACA to help pay for affordable health insurance. The ACA will greatly benefit medical device manufacturers, because more patients and consumers will have coverage that will enable them to afford medical devices, such as screening tests, antiseptic wipes, ultrasound, mammography, cardiac devices, and hip implants. Like the other levies in the ACA, the device tax was designed to ensure that the companies that will benefit from the ACA will do their part to help support it.
Repealing the excise tax on medical devices is a direct assault on a key funding provision of ACA. A repeal of the excise tax on medical devices would cost the U.S. Treasury $1.7 billion in the first year alone. According to the Joint Committee on Taxation, repealing the excise tax on medical devices would cost more than $29 billion over 10 years, which would certainly undermine the ACA’s fiscal integrity. This would set a terrible precedent that could encourage others to try even harder to undo crucial funding provisions in the ACA.
In short: a repeal of the medical device excise tax would be unacceptable to those of us who strongly support the Affordable Care Act.
The medical device industry already pays less than its fair share to the FDA or the federal government compared to the pharmaceutical industry. For example, in FY 2014, the largest pharmaceutical companies pay a user fee of $2,169,100 for each application for a new prescription drug requiring clinical data and $1,084,550 for new drugs not requiring clinical data, no matter how basic the product. That same large company would pay only $258,520 when it submits an application for a new and very complex medical device. That same enormous company would pay a user fee of a mere $5,170 if the application is for a moderate-risk but still life-sustaining device such as a blood clot filter or an artificial hip. Smaller device companies currently pay much lower user fees, and the smallest companies have their first user fee waived completely for an application for a new and very complex medical device.
Congress designed the excise tax so that it applies equally to imported and domestically produced devices, and does not apply to devices produced in the U.S. for export, so there would be no benefit for manufacturers to shift production overseas. The tax will have little impact on consumers because taxable medical devices represent less than 1 percent of total personal health expenditures. Even if the manufacturers pass on the cost of the tax to consumers, it would have almost no impact on the cost of health insurance.
As a strong supporter of the Affordable Care Act and a champion of fairness, we urge you to strongly oppose efforts to repeal the medical device excise tax. Please do everything in your power to ensure that the ACA is not undermined by powerful special interests.
American Medical Student Association
American Medical Women’s Association
Annie Appleseed Project
Breast Cancer Action
Community Access National Network
Connecticut Center for Patient Safety
Jacobs Institute of Women’s Health
National Consumers League
National Research Center for Women & Families
Our Bodies Ourselves
The TMJ Association
- Joint Committee on Taxation (May 29, 2012). Description of H.R. 436, the Protect Medical Innovation Act of 2011. https://www.jct.gov/publications.html?func=startdown&id=4431
- Federal Register (August 2, 2013). Medical Device User Fee Rates for Fiscal Year 2014. Docket No. FDA-2013-N-0007.