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House Votes to Repeal Medical Device Excise Tax

NEW YORK (GenomeWeb News) – The US House of Representatives yesterday passed a bill to repeal a tax on the sale of medical devices that is set to take effect in 2013 under the Affordable Care Act.

The bill would repeal the 2.3 percent excise tax on sales from medical device manufacturers and importers, which is intended to bring in revenue to pay for the health insurance reform.

The Health Care Cost Reduction Act of 2012 (HR 436), which was introduced by Erik Paulsen (R – Minn.) passed on a vote of 270 to 146, drawing the support of all voting House Republicans and yea votes from 37 Democrats.

According to an estimate by the Congressional Budget Office prepared for the bill, the tax would raise approximately $29.1 billion over 10 years.

"This new ill-conceived tax would force many of our nation's bright medical technology innovators to lay off workers, move jobs overseas, or worse yet, close their doors altogether," Paulsen said in a statement.
In a press conference yesterday on Capitol Hill, Paulsen and other Republicans suggested that the tax would result in a loss of 43,000 jobs in the medical devices sector.

The medical device industry pressed hard for the repeal of the tax, and a handful of trade groups representing the industry including the Medical Device Manufacturers Association and the Advanced Medical Technology Association circulated a letter to House leadership earlier this week with over 700 signatories arguing that the tax will hinder innovation and result in fewer jobs and higher healthcare cost, and will hit small medical device firms hard.

"The [medical device] industry employs more than 400,000 workers nationwide; generates approximately $25 billion in payroll; pays out salaries that are 40 percent more than the national average ($58,000 vs. $42,000); and invests 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 less than 50 employees and 98 percent with less than 500 employees," according to the letter.

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