Rejoice! The Medical Device Tax is a Thing of the Past!

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December 2019

3 min reading time

Barring the completely unforeseen, the medical device tax will be permanently repealed before Christmas 2019.

There was no debate.

Instead, as Andre DiMino explained on MDG Premium, tax repeal was swept up into the second of four omnibus bills, overwhelmingly passed by the House and the Senate. Now we wait for resolution for bills three and four, at which time all three or four go to the president for his all-but-certain signature.

I think of an omnibus bill as a “kitchen sink” approach to ‘everything we didn’t have time to address properly’ and a simple yes or no with so much pork in there that there’s something for everyone – so everyone says yes.

DiMino, who designs, engineers, and manufactures electronic, therapeutic, and diagnostic med devices, agreed.

“That’s a good summary. They want to avoid the shutdown going into Christmas, like last time. This spending resolution, with the Med Dev repeal and lots of pork-barrel issues, should be a quick and nearly unanimous vote. We avoid debate and, if not for the omnibus spending urgency, who knows what would have happened.”

From Forbes,

The widely criticized 2.3% excise tax on medical devices has faced criticism from the medical industry since its inception. On December 5, 2012, the Internal Revenue Service (IRS) issued final regulations on the tax that manufacturers and importers pay on sales of specific medical devices. In 2015, Congress issued a two-year moratorium on the tax: it was slated to begin after December 31, 2017. But on January 22, 2018, the reprieve was extended (retroactive to January 1, 2018) for another two years, scheduled to run out on December 31, 2019. If the current spending bill remains intact, there will be no more extensions: the tax will be permanently repealed.

So there.

I just let out an audible sigh.

It’s nice to be the bearer of good news for a change!

It’s been eight weeks. Did you miss me?

I wrote my 390th weekly message in October, explaining I believe we now need more than newsletters and discussion groups, reminding everyone they can search more than 1,000 discussions in our archives.

Technology now lets me “just chat” with subscribers to MDG Premium, a modestly priced service where I can join your team – virtually, and give you direct access to my network, resources, and to experts I personally use and recommend.

I changed the entire look of the MedicalDevicesGroup.net homepage to emphasize it.

But this one screen shot tells you all you need to know.

So apologies for my relative silence here, but I’ve been quite talkative over at MDG Premium.

I warmly invite you to give it a try with this link that entitles you to a free week’s trial and a discounted price.

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Joe Hage
Medical Devices Group Chairman

P.S. Check out the new MedicalDevicesGroup.net homepage! Tell me what you think.

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Posted by Joe Hage

Asked on December 18, 2019 2:18 am

1007 views

	Private answer Joe Hage A Medical Devices Group subscriber wrote me, I've been receiving your e-mails for several years now and I generally find them to be interesting, useful, and often humorous. I've never responded before, but I was really put off by this e-mail about the device tax repeal. I'm not sure if it was intentional, but I found your message to be incredibly cynical. First, I find it sad that so many people in the medical device industry fight and rage against the tax while never mounting any serious reason for the fight except not wanting to pay money out of their pocket. Yes, I'm familiar with many arguments that have been made against the tax, but none address the root issue that our current health care system is unsustainable and needs to be overhauled. Bringing more people into the healthcare system will result in greater device usage, and that expenditure needs to be paid by someone. Why can't the industry be part of the solution instead of just an entrenched enemy of change? If we don't become better stewards of the healthcare system, greater and more disruptive changes will likely be forced upon us. I don't know of any jobs that have been lost because of this tax (even the ones that were publicly declared to be due to the tax) that weren't truly because of some other underlying problem in a particular company or industry segment. So back to the original point of your message - the tax bill is being repealed - but what are we celebrating, exactly? Because the corporations are 2.3% richer? The second thing that I found so discouraging about your message was the characterization of the omnibus bill that the tax repeal was a part of. Actually, its not the characterization itself (which I agree with), but I just don't see anything to celebrate in this kind of legislative act. This is the worst example of bad governance in which no one really cares for the greater good or prudent use of tax dollars as long as they get their piece of pork. So, in summary, I come away from your message feeling like legislators just slapped a bunch of crap together to fund their pet projects and, oh by the way, we just got out of our tax so yay and screw the taxpayers. That is not exactly a happy holiday message to me. Stepping off my soapbox... Marked as spam Report spam
	Private answer Joe Hage I replied, Thank you for writing me. Oftentimes I wonder who’s reading this and did it have any impact at all. I’m certainly glad my previous ones were well received. Agree. Our healthcare model is unsustainable. Disagree. I’m fine with industry paying taxes. But an excise tax on total sales of medical devices? No, not appropriate. Relative to other goods and services in our national economy. Most excise taxes are sin taxes (alcohol, tobacco, oil, highway, air). Relative to international competition. Agree. ow many jobs are actually lost? ¯_(ツ)_/¯ But I am aware of real-life cases of job losses among Medical Devices Group members from it. Agree. Greed abounds. Will some corporations enjoy the windfall? Absolutely. Disagree. …but innovation gets stifled. You pay taxes before you even have a profit. It’s hard enough bringing a medical device to market! This tilts the balance even more in favor of the Medtronics of the world. Agree. Very cynical. The state of our politics disgusts me. It seems reasonable debate has given way to Us versus Them. In sum, yes, I’m glad the tax is gone. It’s better for the industry, better for innovation, and – would I have preferred reasonable legislators coming to the same conclusion – yes. But yes, I got the outcome I sought, and yes, I celebrate it. Does that sound fair? Marked as spam Report spam
	Private answer Joe Hage He simply replied, "Thanks for the thoughtful reply. I do think this is a good debate and happy to let you post/share it on your site but I prefer to remain anonymous." Marked as spam Report spam
	Private answer Joe Hage Marc Silver, MD Heart Failure Expert/Author, Consultant and Screenwriter Thanks Joe for the updates. Great work this year. Marked as spam Report spam
	Private answer Joe Hage Lev Melinyshyn CEO at Uresil, LLC Cleared the Senate - Whoot! One more signature to go Marked as spam Report spam
	Private answer Joe Hage Arthur A. Retired from Becton Dickinson & Co. 1982-2012 Incredible! People are claiming 2% of of profit was the cause of thousands of people being laid off. Ridiculous! One of the reasons there was a tax was to help pay for pre existing conditions. 1 out of 7 will women wii have breast cancer. 1 out of 3 people will have cancer in their lifetimes. Having spent 34 years out of my initial 55 years in the industry, I retired. I could have moved up in the corporate world... BDX. My wife was diagnosed with breast cancer at stage 3. I instead put my ambitions on the back burner to tend to my wife and then 6 year old son. If a corporation can’t survive with losing 2% profit then they deserve to be bought out or go out of business. The industry is littered with medical device industries.....Marquest, Sorensen, Seamless, Sherwood medical, Deknatel, phaemaseal, AS Aloe, Argyle, Deseret, Martell, Devon, Airlife, IBM Medical, Marked as spam Report spam
	Private answer Joe Hage Charles Bue Delivering Telecom, Merchant Services and Small Package Shipping Savings of 23%-34% With No Up-Front Cost or Risk Arthur : The medical device tax was a 2.3% tax on the value of products sold, NOT the profit thereof. That's a huge bite out of a device manufacturer's revenue. With razor thin margins compared to the pharmaceutical industry this punitive tax did indeed alter the business trajectory of many companies and the careers of their employees. If you're going to argue at least know what you're arguing about. Marked as spam Report spam
	Private answer Joe Hage Glenn Jacobs Mechanical Design Engineer at ? Another thing President Trump has done for America Marked as spam Report spam
	Private answer Joe Hage Arthur A. Retired from Becton Dickinson & Co. 1982-2012 If you were or are NOT involved in Medical Devices, I would be be quiet....one of the pillars of Obamacare was taking care of folks with pre existing conditions......thus the 2% tax on medical devices to help offset this cost. People here clutching their pearls about a 2% tax and people losing their jobs are clueless. The Medical Device Industry has a 100% turnover every 2 years. The reason I know, is that my former employer, hired the Alexander Group to conduct a year long study. My company had an average of 12 years tenure, and they announced at a NSM they wanted to be “like everyone else.” 2 years and outta here. Marked as spam Report spam
	Private answer Joe Hage Glenn Jacobs Mechanical Design Engineer at ? Arthur A. I am involved. Having worked in Medical device design for over 35 years. (How's that ?) For Obama Care, How would you like to pay taxes for something you did not buy or want to buy? I did. It was actually cheaper for me to pay the penalty than buy the insurance. $3K a year vs $2K /month Marked as spam Report spam
	Private answer Joe Hage Michael Kren Award winning Sales professional I Helping companies drive revenue growth and account acquisition. Glenn Jacobs do you pay taxes for roads and highways? You don’t want to buy or own those- right? Used for the greater good.. Marked as spam Report spam
	Private answer Joe Hage Glenn Jacobs Mechanical Design Engineer at ? Michael Kren you are confusing being taxed so things may be used for all vs being taxed for not buying something that someone else says you need. So with that, I guess you have no problem with sending me a "tax" on my requirement that you buy a 56 foot boat? Marked as spam Report spam
	Private answer Joe Hage Michael Kren Award winning Sales professional I Helping companies drive revenue growth and account acquisition. Glenn Jacobs not confusing anything.. Marked as spam Report spam
	Private answer Joe Hage Anthony Leo Global Account Manager at Covestro Great news in a thriving market with excellent innovation. Marked as spam Report spam
	Private answer Joe Hage Lev Melinyshyn CEO at Uresil, LLC It just cleared the House. Senate up next. Then beer. A lot of it. Marked as spam Report spam
	Private answer Joe Hage Charles Bue Delivering Telecom, Merchant Services and Small Package Shipping Savings of 23%-34% With No Up-Front Cost or Risk Great news and it's about time. I personally saw the devastating effects of this ridiculous and punitive tax in the form of layoffs and ruined careers. May it never come back! Marked as spam Report spam
	Private answer Joe Hage Michael Kren Award winning Sales professional I Helping companies drive revenue growth and account acquisition. An excuse.. Companies have done well for most part..Record profits .. Marked as spam Report spam
	Private answer Joe Hage Charles Bue Delivering Telecom, Merchant Services and Small Package Shipping Savings of 23%-34% With No Up-Front Cost or Risk Michael Kren Yeah, an excuse Michael. I'll tell that to myself and the hundreds of people laid off from high-paying jobs and decades-long careers that the medical device tax was just an excuse. I'll also tell the people who had their high-quality American made products substituted with cheap, unreliable Chinese-made crap about your "excuse." Marked as spam Report spam
	Private answer Joe Hage Michael Kren Award winning Sales professional I Helping companies drive revenue growth and account acquisition. Charles Bue are you in the med device segment? Ive been in it for quite awhile.. products have been outsourced before the tax was even thought of.. (edited) Marked as spam Report spam
	Private answer Joe Hage Arthur A. Retired from Becton Dickinson & Co. 1982-2012 Charles Bue You are not even in the medical device industry....just as an FYI, medical devices have been made outside the USA since the 1980’s......Medline Industries was one of the first to manufacture in China. I had a Medline iv Cather inserted a month ago.....Made in India. Stick to Telecom and shipping small packages. Marked as spam Report spam
	Private answer Joe Hage Charles Bue Delivering Telecom, Merchant Services and Small Package Shipping Savings of 23%-34% With No Up-Front Cost or Risk Arthur A. I was. For 15 successful years. Our products were entirely made in the US until the medical device tax forced us to shutter domestic production lines and lose bids in favor of low cost products made in China Most were defective and our customers paid the price. Stick to what you know Arthur. You're embarrassing yourself. Marked as spam Report spam
	Private answer Joe Hage Charles Bue Delivering Telecom, Merchant Services and Small Package Shipping Savings of 23%-34% With No Up-Front Cost or Risk Michael Kren Not the ones I sold. Marked as spam Report spam
	Private answer Joe Hage Arthur A. Retired from Becton Dickinson & Co. 1982-2012 Charles Beu You are not even in the medical device industry....just as an FYI, medical devices have been made outside the USA since the 1980’s......Medline Industries was one of the first to outsource... Marked as spam Report spam
	Private answer Joe Hage Michael Kren Award winning Sales professional I Helping companies drive revenue growth and account acquisition. Arthur A. Yep!! Those in the med biz know this Marked as spam Report spam
	Private answer Joe Hage Arthur A. Retired from Becton Dickinson & Co. 1982-2012 Charles Bue 15 years ? I sold medical devices for 34 years, starting when I was 22, and was able to retire at 55. The medical device tax was only around from 2013 to 2015. You sound very bitter for being fired from Abbott. I DO know what I’m talking about. Just look at my resume. Marked as spam Report spam
	Private answer Joe Hage Michael Kren Award winning Sales professional I Helping companies drive revenue growth and account acquisition. Arthur A. Yep.. most of it went to Mexico. Marked as spam Report spam
	Private answer Joe Hage Charles Bue Delivering Telecom, Merchant Services and Small Package Shipping Savings of 23%-34% With No Up-Front Cost or Risk Arthur A. Quit lying Arthur. I wasn't "fired" nor am I "bitter." Trolls like you are better suited for Twitter and Instagram. Marked as spam Report spam
	Private answer Joe Hage David Schneider Assistant Portfolio Manager/Analyst at Hoover Investment Management A rare case of rationality from Washington. Marked as spam Report spam
	Private answer Joe Hage Joe Hage Chairman at Medical Devices Group I'm as happy with the result as anyone, but "rationality?" No. This was a "kitchen sink" approach to governing. They threw 52 weeks worth of misspent time into a list of 'something for everyone' so no one would vote against the bundle. Marked as spam Report spam
	Private answer Joe Hage David Schneider Assistant Portfolio Manager/Analyst at Hoover Investment Management It could have been a lot worse Marked as spam Report spam
	Private answer Joe Hage Arthur A. Retired from Becton Dickinson & Co. 1982-2012 Marissa Marsala.....the problem with CareFusion was that they had ZERO sales overseas.....you can’t expand market share nor increase sales by just relying on the USA. The future, as well as the present, relies on Overseas growth. That is why CareFusion was acquired by my previous employer.....BDX. I spent 30 years & 6 months with them. Quit blaming the 2%tax when poor management was the problem. Marked as spam Report spam
	Private answer Joe Hage Marissa Marsala Recruiter & HRBP Building World-Class Teams \| Marketing Strategist \| Career & LinkedIn Coach \| Motivational Speaker See above, Arthur. I listed 3 reasons. In April 2009, 800 positions were eliminated. This was due to expense ratios being way out of alignment as compared with our peers (to the tune of 3-4% higher than all others in our category). This certainly ties to management and spending. Agreed. This was openly publicized by industry analysts as it impacted shareholder value and caused that round of layoffs. The excise tax came years later.) After Cardinal Health split off, CareFusion was named as the "spin-co." I was in a marketing leadership position at that time and asked at a Town Hall meeting how the med device tax would impact our innovation calendar. (I was directly involved with one such project. 8 of 15 were killed. The numbers did not bear out against the tax and new FDA guidance on clinical trials which also came at about the same time as the tax. Double whammy. Marked as spam Report spam
	Private answer Joe Hage Marissa Marsala Recruiter & HRBP Building World-Class Teams \| Marketing Strategist \| Career & LinkedIn Coach \| Motivational Speaker< This is great news! I recall when I was working at CareFusion, this tax -- coupled with FDA Guidance on Clinical vs. Market trials caused the demise of a large number of innovation projects. These two factors coupled with our expense ratios also triggered a large sequence of layoffs. I suspect that other companies were similarly impacted... and in turn, advances in patient care and safety. Marked as spam Report spam
	Private answer Joe Hage Joe Hage Chairman at Medical Devices Group Carefusion's team was the single greatest contributor to the no2point3.com effort we initiated for the Medical Devices Group. I still remember! Marked as spam Report spam
	Private answer Joe Hage Marissa Marsala Recruiter & HRBP Building World-Class Teams \| Marketing Strategist \| Career & LinkedIn Coach \| Motivational Speaker Joe Hage I'm thrilled that the clouds are parting and that this tax is being sun-setted!!! Marked as spam Report spam
	Private answer Joe Hage Kristin B. Charlton Development Professional - Sales - Fundraising - Major Gifts - Marketing - Alumni Solicitation, Business Development Well,this just means we have to come up with the money to plug the giant hole in the ACA. Either way somebody has to pay for it unfortunately. Marked as spam Report spam
	Private answer Joe Hage Charles Bue Delivering Telecom, Merchant Services and Small Package Shipping Savings of 23%-34% With No Up-Front Cost or Risk The ACA doesn't need tax money to "plug the giant hole..." The ACA needs to be relegated to the ash heap of history. Marked as spam Report spam
	Private answer Joe Hage Kristin B. Charlton Development Professional - Sales - Fundraising - Major Gifts - Marketing - Alumni Solicitation, Business Development That will not happen. Marked as spam Report spam
	Private answer Joe Hage Gary Austin CEO at OneCare, LLC Good for everyone! Marked as spam Report spam

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