MedTech Letter to New York State Senators Regarding Medical Device Tax

Friday, July 31, 2015

Dear Senator,

Following the strong, bipartisan vote in the House of Representatives this summer to repeal the medical device tax, MedTech Association (MedTech) and the more than 350 medical technology companies across New York urge you to encourage your colleagues to put an end to this onerous policy once and for all. We recognize that the Senate has a busy schedule, but ending a policy that is hurting patient care, job creation and innovation remains a top priority for MedTech and New York State’s med tech innovators.

Implementation of this excise tax – now estimated to collect approximately $25 billion in taxes – is adversely impacting patient care and innovation, and continues to compromise patient access to cutting edge medical technologies. As you know, the medical device industry is a unique American success story – both for patients and our economy. The United States is the world leader in manufacturing life-saving and life- enhancing treatments, and the industry is an important engine for economic growth. The 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 (R&D) annually. The industry is fueled by innovative companies, the majority of which are small businesses with 80 percent of companies having fewer than 50 employees and 98 percent with fewer than 500 employees.

Furthermore, this tax on innovation threatens over 13,000 jobs and $4.6 billion in economic impact to New York alone. New York ranks high with the 8th most significant medical device industry cluster in the country, driven primarily by Upstate New York. The medical device industry plays a vital role in the Upstate New York economy, with a large and specialized device sector that is 26% more concentrated relative to the national average and employs 8,400 residents across 141 Upstate New York business establishments. However, since 2001 the industry has seen a more than 11% decline in employment in New York. Without repeal of the device tax, the State’s industry position is in real danger, as well as the Upstate NY economy, as these medical device and manufacturing jobs continue to get eaten away at. This is especially true in the Central New York and Capital regions where the bioscience and medical technology industry is highly concentrated and any impacts are particularly felt.

The tax continues to have an adverse impact on R&D investment and job creation, jeopardizing the U.S. position as a global leader in medical device innovation. If this tax is not repealed, it will continue to force innovators and entrepreneurs in New York to cut manufacturing operations, research and development, and employment levels to recoup the lost earnings due to the tax. It will also adversely impact patient access to new and innovative medical technologies.

Now that the House of Representatives has overwhelmingly voted to put an end to this punitive policy by a vote of 280-140, it is our hope that the Senate can quickly take action as well. MedTech looks forward to working with you on this important issue, and to help ensure that the United States remains the world leader in medical technology innovation.

At a time when the federal government is working to promote investment in U.S. industries of the future, it is inconsistent that a tax of this magnitude is placed on the medical device industry. We must do all we can to encourage and promote research, development, investment and innovation.

Sincerely,

Jessica Crawford

President, MedTech 

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