Colorado is home to a bustling medical device community, with nearly 300 companies focusing on the research, manufacturing and development of new medical technologies. Employment in this sector alone grew roughly 11 percent between 2007 and 2012, with the average salary at roughly $75,000, more than $25,000 above the average wage in our state.
Yet there is one primary issue that threatens the industry and its continued success: the medical device excise tax.
On average, it takes 12 years and $50 million to bring a new medical device to market. To make that kind of investment, medical device manufacturers rely on sound policies that allow companies the flexibility and predictability to build out their ideas, create jobs and improve the quality of life.
The medical device tax has been a dark cloud over Colorado’s innovators since it was signed into law in 2010 and implemented in 2013. The 2.3 percent tax is levied on medical device manufacturers even if the company is pre-revenue. With roughly 75 percent of Colorado’s medical device industry being early-stage companies that have fewer than 10 employees, the negative impact this tax has on our community is significant. The innovations being developed in our backyard have the potential to change the face of health care by reducing costs and prolonging human health and they should be encouraged, not hindered by imposing a tax before the company has even become profitable.
Medical technology innovation is responsible for some of the most cutting-edge advancements in health care today. Many have seen the viral videos where adults and children alike hear for the first time due to advancements in cochlear implants. New exoskeletons are allowing men and women who have been paralyzed in combat to walk again and regain independence through the use of robotics. These amazing inventions build on the proud history of more commonly known medical technologies such as pacemakers, stents and artificial joints that so many of us depend on.
When we look at the infinite potential medical technology innovation can have in the 21st century health care ecosystem, it becomes frustrating that a policy exists that diverts billions of dollars away from additional research and development, the engine that drives advancements in health care. Surveys have shown that if the medical device tax was repealed, approximately 80 percent of innovators would increase investments in the treatments of tomorrow.
Thankfully, this past summer, the House of Representatives voted to repeal the medical device excise tax, and there’s a growing appetite in the Senate to do the same. We need to look no further than our own senators to illustrate how this commonsense policy has broad bipartisan support. Sen. Michael Bennet voted to make repeal of the device tax a top priority during the last Congress, and Sen. Cory Gardner has been a longtime supporter of these efforts.
Congress needs to do away with the Medical Device Excise Tax in 2015, and put an end to a policy that has unintentionally hurt job growth and innovation.
Mark Spiecker is chief executive officer of Sharklet Technologies and board chairman of the Colorado BioScience Association.
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