Yesterday two Indiana senators announced their support for bipartisan legislation reintroduced that would repeal the medical device tax. U.S. Senator Joe Donnelly, along with fellow Hoosier representative, Senator Dan Coats (R-Ind.), joined U.S. Senators Orrin Hatch (R-UT) and Amy Klobuchar (D-MN) and seven other senators from both parties sponsoring the Medical Device Access and Innovation Protection Act, the same legislation they introduced in 2013.

Donnelly said: “It is past time to repeal the medical device tax. I am pleased to continue supporting this bipartisan legislation and am hopeful that the Senate will act quickly to consider it. We must encourage continued job growth in our manufacturing sector, including the medical device industry. Indiana is home to many innovative medical device companies, which together employ about 20,000 Hoosiers. Repealing the medical device is a top priority because it would make a difference for Hoosier businesses, workers, and patients who use their products.”

The medical device industry accounts for more than 40 percent of the jobs in Indiana’s life sciences industry, making Indiana the fifth largest state in the country in percentage of medical technology sector jobs, according to a 2012 BioCrossroads report. The same report found that the state’s medical device industry generated more than $10 billion of annual economic output.

A 2.3 percent medical device tax went into effect on Jan. 1, 2013, under the Affordable Care Act. Currently, the tax is levied on the sale price of any medical device as defined by the Food and Drug Administration. Products subject to the tax include items ranging from surgical drapes and catheters to advanced imaging equipment.

“This tax is costing jobs and preventing new economic growth in Indiana,” said Coats. “Since its implementation, the tax has hurt Hoosier employers and resulted in canceled plant expansions. Rather than encourage medical innovation for health care consumers, it is limiting research and development of life-enhancing and lifesaving devices. Hoosiers want this misguided policy fixed, and I am committed to playing a leading role in the bipartisan effort to eliminate this tax.”

A study by the Advanced Medical Technology Association (AdvaMed) found that the tax impacted approximately 33,000 American jobs in its first year, either through layoffs or forgone jobs that would have been created. “With over 155 medical device companies located in Indiana and many more contract manufacturers supporting those companies affected by this tax, Senator Coats’ efforts will help protect this vibrant industry and over 20,000 jobs here in Indiana,” said Kathy Heuer, executive director of the Indiana Medical Device Manufacturing Council.

Donnelly has long been a strong supporter of repealing the medical device tax and has heard firsthand about the effects of the tax on Indiana, where a number of companies have foregone expansion or contemplated moving jobs outside the United States. Donnelly was an original cosponsor of S. 232, the Medical Device Access and Innovation Protection Act in 2013, which would have repealed the medical device tax. In March 2013, Donnelly voted for a bipartisan budget amendment in support of repealing the medical device tax.

Members of the medical device community reiterated their support for repeal in a letter today signed by nearly 1,000 corporations and associations.

Coats and Donnelly are joined in introducing the Medical Device Access and Innovation Protection Act today were Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Senators Amy Klobuchar (D-Minn.), Pat Toomey (R-Pa.), Richard Burr (R-N.C.), Al Franken (D-Minn.), Rob Portman (R-Ohio), Bob Casey (R-Pa.) and Jeanne Shaheen (D-N.H.).

Source: Office of Senator Dan Coats; Office of Senator Joe Donnelly