"Yes," Votes Senate on Device Tax Repeal Amendment

On March 21, the U.S. Senate voted “yes” on an amendment to repeal the medical device tax. The amendment, written by Sens. Orrin Hatch (R-Utah) and Amy Klobuchar (D-Minn.), was attached to the Senate Democrats’ fiscal year 2014 budget resolution. The vote, which was 79-20, was largely symbolic, as passage of a non-binding amendment such as this does not result in enforceable law. It was merely aimed at gaining a sense of the opinion of the Senate. Though the amendment passed, the budget resolution did not.

Sen. Hatch introduced the measure early Thursday morning with the support of nine Democrats, including Sen. Elizabeth Warren (D-Mass.), who made up her mind to co-sponsor the amendment earlier this week due largely in part to the persuasion of MassMEDIC (Massachusetts Medical Device Industry Council). Massachusetts, like Minnesota, is medtech rich, their economies heavily dependent on the wealth of in-state medical device manufacturers.

Speaking on the Senate floor on Thursday, Sen. Klobuchar explained how she had opposed the 2.3 percent excise tax from its inception, despite the fact that it would help fund the Affordable Care Act by raising $29 billion over the next 10 years. “It still isn’t right because it creates too much of a burden,” Klobuchar said, arguing, as Sen. Al Franken (D-Minn.) reportedly did earlier this week to President Obama, that the tax will not generate enough new customers to offset the costs for medical-device companies.

“Today’s action shows there is strong bipartisan support for repealing the medical device tax, with Democrats and Republicans uniting behind our effort,” Klobuchar said in a separate statement. “I will continue to work to get rid of this harmful tax so Minnesota’s medical device businesses can continue to create good jobs in our state and improve patients’ lives.”

Though Klobuchar and Hatch have worked together to fight the medical device tax, they are of opposing viewpoints when it comes to the ACA in general. True to their party affiliations, Klobuchar supports healthcare reform, while the Senator from Utah views device tax repeal as one step toward defunding the ACA altogether. However, the Hatch/Klobuchar amendment did include wording for something to offset the money lost if tax repeal is passed.

“[The tax] is a drain on innovation, on job creation and on our ability to provide ground breaking medical technologies to patients,” said Hatch, who also serves as the ranking member on the Senate Finance Committee. “The importance of this vote cannot be overstated. For the first time, Democrats and Republicans have come together in recognizing how bad this tax is. We cannot stop here—we must continue the fight to get rid of this tax and I look forward with continuing to work with Senator Klobuchar and the other backers of this amendment and our bill to repeal this tax once and for all.”

“While the amendment’s passage does not affect the current implementation of the tax, it does illustrate widespread concern over the impact that the tax is having on medical device company operations by Senators,” said Thomas Sommer, president of MassMEDIC. “Passage also serves as a propellant for further work in this session of Congress. MassMEDIC will continue to advocate for full repeal and will call on its members again in the months ahead to connect with their members of Congress to voice their opposition to the tax.”

Cook Medical, a medical device OEM based in Bloomington, Ind., also weighed in on the encouraging news. “Work still needs to be done, as the vote for repeal of the tax was non-binding,” said Cook Group Chairman Steve Ferguson. “This tax on gross sales threatens regional economic vitality, badly needed jobs and patients’ hopes for new, life-saving products and treatments. Thousands of lay-offs in the U.S. have already occurred because of this tax.”