Health Care Reform: How It Affects Medical Device Manufacturers
On March 21, 2010, the United States Congress passed the Health Care and Education Affordability Reconciliation Act of 2010 (H.R. 4872). This legislation will reform the nation’s broken health insurance system by providing medical coverage to uninsured, vulnerable Americans who would otherwise not be able to receive adequate health care. Passage of this Act is truly a democratic success and a milestone in our nation’s history.
Such change does not come cheap. According to the Congressional Budget Office, health care reform will cost an estimated $940 billion over the course of 10 years. To offset the costs imposed on the government, the Act appropriately imposes tax increases on certain classes and industries. One such area is the medical device manufacturing industry.
Effective 2013, a 2.3% excise tax will be imposed on sales of medical devices. The medical device excise tax will apply to devices ranging from surgical instruments to bedpans. The provision is expected to raise $20 billion over the course of 10 years.
The Medical Device Manufacturers Association (MDMA) is very concerned about the tax’s impact on manufacturer profits. The MDMA argues that the tax will stifle innovation and cut into research and development (R&D) of medical devices. While the long term effect of the tax on manufacturers remains unclear, one thing is certain: proper R&D of medical devices is absolutely critical to the safety of patients and consumers. For manufacturers to threaten the imposition of such an excise tax with a reduction in R&D is nothing short of reckless and irresponsible.
Per the Supreme Court’s decision in Riegel v. Medtronic, Inc., 552 U.S. 312 (2008), injured patients are barred from bringing tort law claims against manufacturers of Class III, FDA approved, medical devices (devices which sustain/support life, are implanted into the body, or pose serious risk of illness or injury). If manufacturers are in fact considering cutting into R&D of their products, consumers will find themselves in a position of greater risk without opportunity for legal recourse. For this reason, passage of the Medical Safety Device Act should be made a priority in 2010.
