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OEMs call Obama's medical device tax stance 'mistaken'

by Brendon Nafziger, DOTmed News Associate Editor | December 14, 2012
Medical imaging manufacturers said President Obama was "mistaken" in saying medical device companies would ultimately benefit from the new device excise tax as it's part of a health reform package that will bring them millions of potential new customers.

The 2.3 percent excise tax on device sales, scheduled to go into effect in January, was created by the Affordable Care Act. Device companies have long railed against it, and this week more than 16 senators, led by Amy Klobuchar, a Democrat who hails from industry hub Minnesota, called on Obama to delay the tax.

But Obama is standing his ground. In an interview with CBS affiliate WCCO in Minnesota on Thursday, the president defended the medical device tax, saying it would actually benefit medical device companies as expanded insurance rolls would give them 30 million new customers.

"It's going to be great for business and they're doing really well right now and they're going to get 30 million more customers as a consequence, so this additional tax essentially comes back to them as new customers," he told Frank Vascellaro during the interview.

He also said other groups in health care were making sacrifices and device companies should do their part.

"It's not just medical device folks, hospitals are doing a little bit more because they know now they're not going to have uncompensated care in emergency rooms, everybody's going to have some kind of insurance. Doctors, same kind of thing. So this is not unique to the medical device industry. The idea is that when you have 30 million more people coming in, you're going to make money, you can do a little more to help facilitate and make sure people are getting the health care they need," he said.

It almost goes without saying, but Obama's sentiment is not shared by manufacturers of medical imaging equipment. The Medical Imaging & Technology Alliance, a trade group, said the tax would be a burden, not a boon.

"In no way is a $30 billion tax over the next 10 years helpful for medical device companies," said Gail Rodriguez, MITA's executive director, said in a statement. "This tax threatens jobs, investment in research and development, and patient access to innovative technologies."

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