Medical device trade group remains upbeat on tax repeal prospects

WASHINGTON – With the implosion of the Republican plan to repeal and replace the Affordable Care Act, the nation's medical device industry is looking for another legislative conduit to permanently repeal a sales tax on medical devices.

"Whatever vehicle this can ride on, we'll take it," Scott Whitaker, CEO of the Advanced Medical Technology Association, or AdvaMed, the nation's powerful device trade group, told reporters in a call Wednesday.

Killing the device tax has been job one for the medical device industry since it passed into law as part of the ACA. The device industry came close last year, but only succeeded in getting collections of the tax suspended for 2016 and 2017.

The Republican American Health Care Act of 2017 included repeal of the device tax. But its other provisions drove a wedge between Republican moderates, who felt the plan was too punitive, and conservatives, who felt it was not frugal enough.

While a new GOP healthcare proposal may emerge after Congress' current two-week recess, Whitaker said the device industry is keeping its options open.

"We feel pretty good that if we move to another vehicle, whether it is tax reform, [State Children's Health Insurance Program] reauthorization or tax extenders, that leadership in the House and Senate will support moving it," Whitaker said.

He speculated that bipartisan opposition to the tax could get repeal passed as stand-alone bills in the House, which has already voted for repeal, and the Senate, which temporarily suspended collection of the tax for 2016 and 2017, the last time the issue arose.

Still, Whitaker said he has not received promises from House Speaker Paul Ryan that the device tax will be part of overall tax reform, a strategy mentioned prominently the past couple of years.

But he added Ryan understands the importance of getting rid of the tax, which requires device makers to pay a 2.3 tax on sales of certain products.

The tax was supposed to generate $29 billion in revenue for the government over a decade, but collections ran well short of projections for the short period of time in which it was collected.

Nevertheless, the device industry has branded the tax a job killer.

The American Action Forum, a center-right think tank co-founded by former Minnesota U.S. Sen. Norm Coleman, recently used Commerce Department data to claim that device makers and related industries lost 28,000 jobs while the tax was collected between 2013 and 2015.

In any case, Whitaker believes the end is near for the tax. "I'm pretty confident it will get done this year," he said.