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Rx device firms hail Senate vote

See bipartisan support to ditch tax

The U.S. Senate’s endorsement for repealing the 2.3 percent tax on the sale of medical devices is considered only a symbolic victory for the industry.

Thursday night’s 79-20 vote advanced a nonbinding amendment to a nonbinding federal budget proposal. The repeal would require stand-alone legislation that replaces $30 billion in lost tax revenue over 10 years. And because the excise tax, which took effect in January, helps fund the health care law, President Obama seems unlikely to sign off on its elimination.

But repeal proponents sound encouraged. Mark Leahey, chief executive officer and president of the Medical Device Manufacturers Association, stressed that “clear majorities” in both the Democratic Senate and the Republican House have now approved the elimination of the tax.

“While we have more work to do, MDMA applauds this important step towards ensuring that the United States remains the leader in medical technology innovation,” Leahey said in a statement about the Senate vote.

Tara DiJulio, communications director for Sen. Dan Coats, R-Ind., said Friday in an email that “the overwhelming bipartisan vote sends a strong message to the president and builds momentum toward a final repeal of this costly and unfair tax.”

The repeal amendment had 29 co-sponsors, including Coats and Joe Donnelly, D-Ind. With more than 20,000 jobs in the medical device industry – many at orthopedic manufacturers in Warsaw – Indiana is among states with the largest numbers of device companies and workers.

Of the Senate’s 55 Democrats and independents, 34 of them, including those from Minnesota and Massachusetts, states with tens of thousands of medical device jobs, joined 45 Republicans in voting for the repeal.

IPFW political scientist Michael Wolf noted the lack of an organized interest group to counter lobbying efforts by the medical device industry, which claims the tax will curtail innovation and hiring .

“The imbalance of interest group pressure makes supporting this (repeal) sensible no matter your party, especially when so many senators have big players in the field in their states,” Wolf said in an email.

However, non-binding votes give members of Congress “the ability to highlight their position on an issue with no revenue consequences,” he said.

“We will see whether Democrats would oppose their president and find money to offset the revenue loss if it shows up in binding legislation – that is a tougher political battle,” Wolf said.

The Obama administration contends that medical device makers will see millions of new customers for their products under the Patient Protection and Affordable Care Act, more than offsetting the cost of the tax.

In a party-line vote Friday, the Senate rejected a GOP amendment to repeal the health care law.