January 23, 2014

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Sen. Hatch, BD Medical Leaders Discuss Woes of Medical Device Excise Tax

By Rachel Madison

January 23, 2014

Sen. Orrin Hatch, along with medical device industry leaders, held a press conference Wednesday to discuss the Medical Device Excise Tax and why they believe it should be repealed.

The Medical Device Excise Tax went into effect in January 2013 and is 2.3 percent of the sale price of the taxable medical device. Gary Shearer, vice president of manufacturing at BD Medical, said the tax is assessed against the majority of his company’s products. This tax takes away approximately $55 million from BD Medical annually.

Hatch said he’s impressed with Utah’s innovative and growing medical device industry, which is just one reason why he feels the tax is appalling.

“We have one of the best medical device industries in the world here,” he said. “[Obamacare] has imposed this tax so that $30 billion can be raised to patch up a hole in the ACA. This isn’t only a stupid tax, but it really does injure all the innovative companies that do medical devices. A lot of companies are moving their operations overseas. We’re losing big time so [the government] can make that money and make Obamacare self-sufficient.”

Hatch said there’s a huge percentage of Congress that wants to get rid of the tax.

“We had 79 votes to repeal the tax, but it didn’t make it through the Senate,” he said. “But there’s a real bipartisanship. [They understand] how useless this tax is.”

Kimball Thompson, president and CEO of BioUtah, said the battle over the tax doesn’t respect whether or not a company is profitable. Utah has about 120 medical device companies. Thompson said he isn’t sure how much each company is impacted in terms of money and numbers, but anecdotally, every company he talks to says they are being affected.

“It’s a tax on gross revenues,” he said. “For innovative companies such as we have in Utah, it makes zero sense to almost anybody who is well informed about these issues.”

Because of his work to help medical device companies stay profitable, Thompson presented Hatch with the inaugural BioUtah Public Service Award during the press conference.

“This is going to be presented annually for unfailing commitment to improving the business, legislation and regulatory climate in Utah,” Thompson said.

“We appreciate Sen. Hatch’s leadership in encouraging his colleagues to reconsider imposing a tax on the sale of medical devices,” Shearer said. “We look forward to continuing our work with Sen. Hatch.”

Hatch also toured BD Medical in order to see the types of products being manufactured and shipped worldwide in the Sandy facility. Several products, primarily IV catheters, are produced in the Utah facility and used by hospitals and medical professionals around the world.

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