Pawlenty urges no tax on medical device industry

  • Article by: JILL BURCUM
  • Updated: September 14, 2009 - 6:14 PM

The medical device industry got another high-profile advocate Monday  --  Minnesota Gov. Tim Pawlenty --  in opposing a new tax proposed in the influential Senate Finance Committee bill. The committee, led by Democrat Sen. Max Baucus of Montana, calls for a $4 billion a year tax on devicemakers to help pay for health care reform. On Monday, Pawlenty sent a strongly worded letter to Minnesota Sens. Amy Klobuchar and Al Franken, arguing that the new tax would place a “significant and damaging burden” on the industry, which directly employs 60,000 Minnesotans.

The legislation calls for levying a tax on insurers, medical laboratories and pharmaceutical manufacturers, as well as device makers. Klobuchar issued this response on Monday: "As I said last week when this proposal first surfaced, I am working with the medical device industry to improve this bill since the current proposal unfairly penalizes this industry. Medical device manufacturers are critical to our economy and to the development of cutting edge medical technology for the nation.''

Click here to read the letter on the governor's website, or begin reading the text below:

September 14, 2009

Dear Senators Klobuchar and Franken:

I write today to express my strong opposition to the $40 billion tax on the medical device industry in the United States Senate Finance Committee health care reform proposal. In order to protect thousands of Minnesota jobs, maintain our innovation leadership, and protect America's position in this globally competitive industry, I ask that you work to remove this provision from the bill.

Minnesota is home to many of the world's leaders in the design and manufacture of life-saving medical devices including Medtronic, Boston Scientific, 3M, and St. Jude. Together these companies directly employ 60,000 Minnesotans, with an additional 200,000 employed by hundreds of other companies that are vital to this economic sector. These high-paying jobs (average of $60,000/year) are an essential part of our economy.

Additionally, during the past 6 years, the University of Minnesota and the Mayo Clinic have initiated a bio-science initiative backed by tens of millions of state dollars. The more than 1,400 expected jobs involved in this effort and Minnesota's leadership in this area are now in jeopardy.

The proposed market-share based tax would be a severe burden on this industry, costing jobs and draining away funds needed for innovative research and development. Likewise, it would apply not just to medical devices such as pacemakers and heart valves, but 80,000 other products including wheelchairs, thermometers, blood pressure monitoring equipment, diagnostic imaging equipment, and others. Taxes on these items would increase health care costs for families, businesses, and government.

The global nature of the medical device industry means this proposed tax would place a significant and damaging burden on Minnesota and U.S. companies.

Health care reform is needed, but the focus must be on cost containment and affordability, improving quality, and protecting patients. The proposed tax on the medical device industry in the Senate proposal would add to patient cost, lead to job losses, and slow the advance of medical innovation. I ask that you oppose any efforts that will jeopardize this important industry.

Thank you for your service to our great state.

Sincerely,

Tim Pawlenty

Governor

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