DVORAK: Make repeal of medical device tax permanent

October 1, 2016
Hip stems are among the many products made by the thousands of workers in Warsaw, Indiana, employed in the medical device industry. (AP photo)

Last December, the medical device industry earned a hard-fought but temporary victory when President Obama and Congress approved a bill that included a two-year suspension of the medical device excise tax. Indiana’s medical device industry—more than 300 companies strong—welcomed the reprieve. Industry appreciated the collective leadership and tireless support of Sens. Joe Donnelly and Dan Coats and Republican members of the Indiana House delegation to make suspension a reality.

The medical device industry, which employs 400,000 Americans and indirectly supports another 2 million U.S. jobs, is responsible for medical technologies that improve the quality of life for patients around the world. In fact, many of modern medicine’s technological marvels—including artificial joints, advanced diagnostics and cardiac technologies—are developed and made here in Indiana. More than 20,000 Hoosiers are directly responsible for these technologies.

Since it was imposed in 2013, the 2.3 percent tax forced medical device companies to deal with the financial impact of the tax, which in many cases translated to lower spending on research and development. R&D is essential to the success of the medical device industry, where growth is determined by constant innovation and a steady introduction of new technologies for patients.

DvorakWith the temporary tax suspension, device companies are once again reinvesting in development of the next generation of life-changing medical devices. At Zimmer Biomet, the savings from the tax suspension are allowing us to reinvigorate new and existing R&D projects that will improve musculoskeletal health care across the globe.

Permanent repeal of the tax would allow our company to move forward confidently with longer-term reinvestments, much of which would be focused on R&D projects within Indiana. Zimmer Biomet, which employs 4,500 highly skilled and dedicated workers in Warsaw, is built on a legacy of innovation established by our founder, J.O. Zimmer, who discovered the first X-ray-visible aluminum splint in 1927. Innovations like these redefine health care and reinforce our country’s leadership in developing technologies that help people live more fulfilling lives.

Unless it is permanently repealed, the medical device excise tax threatens to slow the pace of U.S. medical innovation and undermine the global competitiveness of the medical device industry, including Indiana’s medical device companies.

Work remains to secure repeal. Zimmer Biomet, with the continued engagement of the Indiana congressional delegation, will continue to support the medical device industry’s efforts to permanently repeal the anti-innovation device tax.•


David Dvorak is president and CEO of Zimmer Biomet, past chairman of the Advanced Medical Technology Association, and a current member of the AdvaMed board of directors.

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