The Protect Medical Innovation Act

May 31, 2012

The U.S. medical device industry is an economic star, but its success is threatened by a looming provision of the Patient Protection and Affordable Care Act (PPACA) -- the medical device tax.

The medical device industry is a high tech industry employing 519,000 workers and investing billions into research and development (R&D). Specialized materials, state-of-the-art electronics, and innovative manufacturing techniques go into devices like MRI, cardiac defibrillator, and prosthetics. This is an export-driven industry. In 2010, $40 billion in medical devices were shipped overseas, producing a $3 billion trade surplus. As the world population grows in size, wealth, and age, the American medical device industry is in a position for growth and job creation.

However, that promise could be squelched by a medical device tax scheduled to go into effect in 2013. A Wall Street Journal editorial reports that the “2.3% levy applies to the sale of everything from cardiac defibrillators to artificial joints to MRI scanners.” The tax applies to gross sales and not profits meaning “companies at make-or-break margins could be taxed out of existence.”

This looming tax threatens up to 43,000 U.S. jobs with a wage base totaling $3.5 billion. Further, this impending tax hike threatens the medical device industry’s track record of innovation. A Pacific Research Institute report estimates that the medical device tax would lower industry R&D by $2 billion annually. Fewer dollars for research means fewer medical device breakthroughs.

Allowing this tax to take effect prevents medical device companies from competing on a level playing field. It will put U.S. medical device companies at a competitive disadvantage to global competitors. Jobs, economic output, and medical innovations will be lost.

Congress has a chance to stop this job-killing, innovation-reducing tax. H.R. 436, the "Protect Medical Innovation Act," would repeal the medical device tax, preserve Americans' quality of life, protect American jobs, and defend American innovation. Tell your Congressman to support H.R. 436.

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