Mass med device council protests proposed tax

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The Massachusetts Medical Device Industry Council (MMDIC) has sent a letter to Sen. John Kerry, D-Mass., protesting a proposed tax on medical devices and diagnostics products currently being considered as part of healthcare reform legislation.

According to the MMDIC, which represents the 225 medical device companies operating in Massachusetts, the proposed tax would be levied on all manufacturers of medical devices and diagnostics products as defined by the FDA. The proposal, the MMDIC said, would assess all manufacturers at a rate that, based upon their U.S. sales, would be enough to generate $4 billion in revenue annually beginning in 2010.

In the letter, MMDIC President Thomas J. Sommer said that independent estimates indicate that the domestic market for medical devices accounts for sales of $131 billion annually, which would translate into a tax rate of about 3.1 percent under the proposal before the Senate Finance Committee.

This would amount to an “income tax surcharge of between 10 to 30 percent depending on the company,” Sommer wrote. “Such a rate would dramatically increase our overall effective rate, and, in turn constrain resources used for research and development, investment in physical manufacturing capacity, and jobs.

“There are better ways to reform the system than through taxing the roughly 80,000 products necessary to treat every patient who walks through the doors of a physician’s office, hospital, or nursing home,” he noted.