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Wanda Moebius
February 26, 2013

AdvaMed "Doubles Down" on Device Tax Repeal

Deficit Reduction Should Not Harm Patient Access, Medical Progress

WASHINGTON, D.C. – The leadership of the Advanced Medical Technology Association (AdvaMed) today unveiled the association’s 2013 agenda, effectively doubling down on the need to repeal the damaging $30 billion medical device excise tax and to prevent further cuts to Medicare that would harm patient access to life-changing, life-enhancing medical technology.

“The device tax is already having a toxic effect on innovation, jobs and U.S. leadership of the medical technology industry. We are very pleased the repeal effort is gaining strong bipartisan support in both the House and Senate,” said Stephen J. Ubl, president and CEO of AdvaMed.

“This issue is critically important to companies large and small that already are living with the real-world harmful impact this tax is having – including layoffs, cuts in R&D and delayed expansion plans. While we understand and support action to address the deficit, the negative impact of the tax is compounded exponentially by the repeated cuts to the industry and the customers it serves,” said Ubl.

“Recent policy changes have already put a heavy burden on large sectors of our industry – including successive Medicare cuts impacting diagnostic lab tests, imaging, durable medical equipment and diabetes test strips – on top of hospital cuts which have also had an adverse impact on our industry,” said Ubl.

Device manufacturers are now required to pay an estimated average of $194 million per month in medical device tax payments – money that could be going toward investment in R&D for the next generation of medical innovations and spurring American job growth.

Advancements in medical technology are driving more efficient and cost-effective care. For example, hospital stays dropped by more than 50 percent between 1980 and 2000. Meanwhile, spending on medical technology accounts for only six percent of national health expenditures, a figure that has remained constant over the past two decades.

“We can’t be penny-wise and pound-foolish with short-sighted Medicare cuts that will have a long-term negative impact on innovation and our industry. Chronic disease imposes a crushing cost on patients and health care systems, and our industry’s innovative, life-saving technologies can provide real solutions to these challenges,” Ubl said.

As the 113th Congress works to address the federal budget and reform the tax system to make it fairer and more competitive, AdvaMed’s top priorities include working to ensure that Congress considers the impact of all proposed policies on the medical technology industry and the patients it serves.

As part of this effort, AdvaMed stands with FDA on the need to prevent limitations on the agency’s ability to access 100 percent of the user fees it collects, which could reduce FDA’s ability to provide timely reviews and approvals of new products.

With the March 1 implementation of sequestration, the 2013 impact will amount to an across-the-board cut of between 5.1 to 5.3 percent in federal funding that applies both to FDA’s appropriated budget, as well as industry user fees. The current federal budget continuing resolution, unless corrected, also limits FDA’s ability to access user fees.

“The fees voluntarily paid by industry are not taxpayer dollars, and should not be considered in the same light as appropriated funding,” said AdvaMed Chairman David C. Dvorak, president and CEO of Zimmer. “FDA should have full access to fees paid by the industry, and the agency should be properly funded to meet its commitments under the new user fee agreement.”

In addition to shaping policy at home, AdvaMed’s top priorities include increasing its international presence in key markets such as China, Brazil and India to address the growing regulatory, payment and advocacy needs of its members, and to meet the demand of governments and patients around the world seeking advanced medical technologies to solve their health care challenges.

“These nations are experiencing rapid economic growth, and their burgeoning middle-class populations are demanding the best treatments that modern health care can deliver,” said Dvorak. “It is crucial that AdvaMed members have the opportunity to fairly compete in these markets.”

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AdvaMed member companies produce the medical devices, diagnostic products and health information systems that are transforming health care through earlier disease detection, less invasive procedures and more effective treatments. AdvaMed members range from the largest to the smallest medical technology innovators and companies.