WASHINGTON – A proposed fee on the makers of medical devices – the economic backbone of northern Indiana counties – should be stripped from legislation to overhaul the health insurance system, the state’s senators told the author of the bill.
The Senate version of the bill, unveiled Wednesday morning, calls for makers of artificial hips, heart stents and other devices to pay $4 billion a year, with payments based on each company’s share of the U.S. market.
Sens. Richard Lugar, R-Ind., and Evan Bayh, D-Ind., said the fees would “seriously threaten thousands of American jobs and deter innovation in the industry.”
Bill Kolter, spokesman for Biomet, one of three medical device makers in Kosciusko County that collectively employ about 6,000 people, said the fees would lead to higher costs that are passed on to patients and less money available for research and employment.
Zimmer spokesman Brad Bishop said the effect of the fee “would be especially onerous for Warsaw, where local companies account for approximately one-third of the world’s orthopedic device market. Our company alone employs approximately 2,800 workers in Warsaw.”
Biomet, Zimmer and DePuy are among the five largest medical device makers in the world and collectively generate $11 billion in revenue in Warsaw. About 15,000 Hoosiers work in the industry, making Indiana the third-largest employer in the medical device industry.
Along with the senators from Minnesota, where medical device companies are also headquartered, Bayh and Lugar asked Sen. Max Baucus, D-Mont., to drop the fee, which is one way Baucus proposed to pay for the legislation.
The Advanced Medical Technology Association, the industry’s trade association, warned that the measure would raise the cost of care and cut into research.
“The device industry is already making substantial contributions to the cost of health reform through billions of dollars in cuts to our major customers such as hospitals, clinical labs, durable medical equipment providers and imaging services that will be passed on to manufacturers,” said Stephen Ubl, president of the association.
He said the fee would “sharply cut the resources available for research and development of life-saving medical treatments.”
Rep. Mark Souder, R-3rd, added his complaint to the proposed fee.
“Our area is home to one of the largest concentrations of medical device companies in the country,” Souder said. “These vital employers provide well-paying jobs for hundreds of Hoosiers across our area. This tax, if passed, will not only hamper crucial developments in medical device innovation but could cost our area jobs in a time of economic recession.”
Bayh and Lugar said the fee “could translate into an annual income tax surcharge of between 10 percent and 30 percent on medical device manufacturers. The amount of capital that these companies would have available to reinvest in product development and innovation would be threatened, dramatically reducing both the number of jobs in the industry and the types of devices available to patients.”
