Device Companies Paid Millions in Lobbying Fees, Campaign Contributions to Combat Controversial Tax

Leading up to last month’s congressional vote to repeal the medical device tax—a 2.3% levy on all sales that had been in place since 2013—manufacturers spent millions of dollars in lobbying fees and campaign contributions to eliminate it.

Journalists from the Star Tribune describe the pricey “repeal campaign” undertaken by large device companies like Medtronic and St. Jude Medical since the tax was enacted as part of the Affordable Care Act in 2010. Late last month, both houses of the US Congress passed a 2-year suspension decision.

Successfully passing 7 House bills since 2012 to repeal the medical device tax, Representative Erik Paulsen also pulled in about $97,000 in campaign contributions from the industry, the Star Tribune reports. Senators Amy Klobuchar and Al Franken also received $90,000 and $55,000 in their respective most recent reelection cycles via device industry donations. The former has fought against the tax, which helps finance Obama’s health plan, since its inception.

The report calls the tax’s demise a “windfall for device companies.” Medtronic paid about $135 million in excise taxes in fiscal year 2015 while spending only $10 million on lobbying in 2013 and 2014, the Star Tribune story notes. Likewise, St. Jude spent about $795,000 on lobbying in 2014, and the Advanced Medical Technology Association—a trade group serving the industry—paid more than $2 million in lobbying costs over the last 2 years.

The main argument over the tax stems from the manufacturers’ claims that it is eliminating jobs and stifling innovation, but if the suspension becomes permanent, approximately $29 million will be added to the national debt over the next decade unless another source of replacement income is found, according to the paper. 

The story also cites data from a 2014 survey of US device company executives. Among those who responded, 14 percent said they had cut jobs because of the device tax, whereas double that number raised prices to compensate for the tax and 57 percent of companies did nothing.