Medical device tax disappears, capping decade of industry lobbying

UPDATE: Dec. 23, 2019: President Donald Trump signed the permanent repeal of the medical device tax into law late Friday.

Dive Brief:

A years-long push to permanently repeal the medical device tax is set to culminate with President Donald Trump slated to sign on Friday a wide-ranging spending bill containing the provision before government funding runs out.
The House of Representatives passed the spending package 297-120 Tuesday, and the Senate followed suit Thursday, voting 71-23 to approve the so-called appropriations minibus.
AdvaMed CEO Scott Whitaker and Medical Device Manufacturers Association CEO Mark Leahey told MedTech Dive that while the inclusion of the repeal in the package quickly came together near the end of appropriations negotiations, it represents 10 years of lobbying efforts to garner bipartisan support from congressional leaders.

Dive Insight:

While the ACA imposed many taxes on different parts of the healthcare industry, the device sector was arguably the most vocal, and successful, in gaining bipartisan backing early on to nix the levy. Their campaign lured in non-traditional allies in blue states where big manufacturers as headquartered, like Massachusetts and Minnesota, and succeeded in holding off the tax over several years.

In the end, Whitaker and Leahey pointed to support from Majority Leader Mitch McConnell, R-Ky., and Minority Leader Chuck Schumer, D-N.Y., as key.

"That's how these things get done, when you have enough leaders who are behind it," Whitaker told MedTech Dive. "I think McConnell was really important, candidly. This is an incredibly bipartisan moment because Schumer also felt strongly. He's been saying for a while now, 'let's get to full repeal.'"

Still, it did not appear permanent repeal was going to be included in the spending package until the last minute.

"In any negotiation there are fits and starts," Leahey told MedTech Dive in an interview. "I think for the entire year, leading into the end, we felt good about our chances. We were in the room and there was recognition that while we were appreciative of the two-year suspension, given the three- to five-year life cycle of devices, a longer suspension was needed."

Whitaker said the biggest question mark over the appropriations bill was how much spending it would contain.

"And so when it opened up, and it opened up at the last minute, [the medical device tax] was at the top of the list and we were pleased about that," Whitaker said. "That's the way this thing played out in a very traditional end-of-year way."

Still, the repeal of the 2.3% medical device tax, first passed to help support Affordable Care Act costs, represents money the government will now not be taking in. The Congressional Budget Office and the Joint Committee on Taxation estimated in December 2018 the elimination of the tax would cost $1.6 billion in 2020 and $2.2 billion in 2021.

Whitaker said the passage of the device tax would allow AdvaMed member companies to move forward on projects and hiring they planned to suspend.

"There's no uncertainty for them, they can continue what they hoped to continue. Every company will be different depending on their size and the focus of their work," Whitaker said.

Moving forward, AdvaMed will focus on medical device reimbursement issues, and begin to consider the next round of user fee negotiations, according to Whitaker.