As Minnesotans, we can lay claim to
some of the best this country has to offer. In the arenas of education, the
arts and enterprise, our state has contributed a lot to the success of our
nation over the last 154 years.
One of the brightest spots in our state's
identity is our propensity for ingenuity and innovation in the development of
life-improving and life-saving medical technologies. We may be the land of
10,000 lakes, but we are also home to
more than 400 medical-technology companies that are responsible for more than
35,000 jobs.
We have all come to know the titans
of the device industry -- like Medtronic,
which began in a Minneapolis garage in 1949. With just a small amount of seed
capital from his mother, Earl Bakken started a medical equipment repair shop
that would go on to create the first battery-powered external artificial
pacemaker, and grow into the largest
medical-technology company in the world.
Almost every week I get the
opportunity to tour medical-device innovators -- large or small, established or
new, profitable or upstarts. Many of them only have five or 10 employees, but
it's exciting to see these engineers, doctor, and entrepreneurs passionately
developing new products to improve lives and restore health to millions of
Americans. The stories are all different, but they share a common theme: a
drive to research, develop and innovate.
Unfortunately, this Minnesota success
story is under attack by a looming tax on an industry that accounts for 423,000
American jobs.
Unless Congress or the Supreme Court
steps in by the end of the year, a new $29 billion tax on American medical
devices will be triggered. This tax is part of the president's health care law
and includes all types of medical devices, from heart stents and implantable
defibrillators to artificial hips and wheelchairs. Suddenly, our medical-device
industry will face one of the highest tax rates of any industry in the world.
This is not a tax on profit; it's a 2.3 percent excise tax on revenue,
regardless of whether a company is profitable.
This is nothing more than a tax on
U.S. medical innovation, and it will hit states like Minnesota hard. These
medical-technology companies will be forced to reduce investments in the
industry's lifeblood: research and development.
Recently, I visited BridgePoint
Medical, which produces state-of-the-art medical technologies for removing
life-threatening cardiac blood clots and has grown from 15 to 45 employees in
the last 14 months. However, as an early-stage company with high-growth
potential, BridgePoint Medical does not project profitability for at least six
more quarters.
The company's CEO, Denis Harrington,
is frustrated. He's building a company, adding high-paying jobs and saving
lives -- but with the new tax looming, Denis is pausing to consider what cuts
must be made to address this financial burden. Job creators like Denis should
be able to focus on patient care and the growth of their business.
After hearing countless stories like
BridgePoint's, it's evident that this new tax is putting our state's global
leadership in this important industry in serious jeopardy.
Some studies estimate the new tax
will cost our nation as much as 10 percent of the medical-device industry's
workforce -- including thousands of jobs right here in Minnesota.
At a time when our economic recovery
is still fragile, we should not be placing extra burdens on entrepreneurs and
startups that have the potential to grow from a garage, a back yard or a
laboratory into the next generation of Medtronics. We should be encouraging
these courageous innovators to ensure that Americans have access to new,
potentially life-saving technologies well into the future.
Soon, Congress will take up the
Protect Medical Innovation Act, my bipartisan legislation to repeal this
onerous and wrong-headed tax. With 239 cosponsors from both sides of the aisle,
now is the time to stop this tax on innovation and defuse this ticking time
bomb before it's too late.
--------------------
Erik Paulsen, a Republican, is a
member of the U.S. House. He represents Minnesota's Third Congressional
District.
Joleen Chambers June 7, 2012
The medical device
industry lobby argues for no taxes and no oversight. Congressman Erik Paulsen is in a district that is rich with
medical device companies. The electorate
must examine what is best for the U.S. economy. Right now, the #1 expenditure of Medicare is joint
replacement. July 29, 2011 the
Institute of Medicine announced that the FDA 510(k) system of approving these
devices is fatally flawed and allows for failed devices to continue to be
marketed and implanted. Taxpayers
are often accountable for continuing care of these difficult/expensive cases
when victims are placed in medical and legal purgatory. The tax is reasonable to help fund the
regulatory system that can provide post-market data to patients so that they
can make an informed decision.
Left to the medical device industry, all that information would be
'proprietary'. Patient harm is
ignored in favor of stockholder interests.
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