Healthcare reform bill passed by US House includes 2.5% devices tax
This article was originally published in RAJ Devices
The US House of Representatives has passed landmark healthcare reform legislation that, if enacted, would among other things impose a 2.5% excise tax on medical devices sold for use in the US1.
The Affordable Health Care for America Act, which was passed by a vote of 220-215 on 7 November, combines and updates the three versions of previous bills passed by the House committees of jurisdiction earlier this year, and is said to embody President Barack Obama’s key goals for healthcare reform (ie reducing healthcare costs, protecting and increasing consumers’ choices, and guaranteeing access to quality, affordable health care for all Americans2). Indeed, in a statement following the bill’s passage, the president commended the House and urged the Senate to follow suit so that he could sign the legislation into law by the end of the year3.
Medtech industry association AdvaMed has commended the House for moving forward with the legislation, but has also raised concerns about the excise tax and other provisions4,5. According to the industry association, provisions in the legislation that should be revised include:
- the 2.5% excise tax. AdvaMed says that small manufacturers (with less than $100 million in annual gross receipts) should be exempt, and protections should be put in place to make adjustments if the 2.5% tax rate generates more revenue than anticipated;
- comparative effectiveness research language. Provisions are needed to improve transparency and stakeholder input, and to ensure that the research focuses on clinical effectiveness rather than cost effectiveness, says AdvaMed;
- the national medical device registry. According to AdvaMed, the requirement that every device sold should be listed in a public registry by serial number would duplicate existing FDA authorities, would be costly and burdensome for both the FDA and industry, and would not improve public health;
- disclosure of payments to physicians. AdvaMed is pleased the bill would create a uniform, comprehensive national system for the reporting of industry payments to physicians. However, it is concerned with the partial federal pre-emption standard in the bill that would allow states to require companies to adhere to additional reporting standards;
- equipment utilisation rate assumptions. AdvaMed supports accurate payment for advanced diagnostic imaging, but says the bill’s proposals to increase the equipment utilisation rate assumptions for these services “would have a draconian impact on access to diagnostic imaging”; and
- centralised decision-making on benefits package. The bill would give the health secretary authority to require private plans in the health exchange to deny coverage for specific medical devices, drugs and procedures, even if they are safe and effective. This, says AdvaMed, would give too much power to the government.
The Senate is considering its own healthcare reform legislation, and the two chambers of Congress now have to find a way to reach agreement if any reform is to be enacted. According to the White House, “the level of agreement between the House and Senate versions of reform is remarkable”6.
Most recently, Senator Max Baucus (Democrat – Montana) introduced the America’s Healthy Future Act of 20097. Rather than proposing an excise tax, his legislation would impose an annual flat fee of $4 billion on the medical devices sector from 2010, with some exemptions. Industry is strongly opposed to that proposal8. The Senate legislation also contains provisions on comparative effectiveness research and physician payments, but does not include proposals for a national device registry.
References
1. Affordable Health Care for America Act, HR 3962, passed by House of Representatives on 7 November 2009, http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.3962:
2. House Speaker Nancy Pelosi, Affordable Health Care for America Act, www.speaker.gov/newsroom/legislation?id=0327
3. White House press statement, 7 November 2009, www.whitehouse.gov/the-press-office/statement-president-barack-obama-house-passage-affordable-health-care-america-act
4. AdvaMed press release, 6 November 2009, www.advamed.org/MemberPortal/About/NewsRoom/NewsReleases/PR-11809-Healthcare.htm
5. AdvaMed letter to US House of Representatives, 6 November 2009, www.advamed.org/NR/rdonlyres/5A38DE1D-0023-4287-AB8A-3F8511337A6C/0/110609LETTERTOHOUSEOFREPSFINAL.pdf
6. The White House Blog: Health Care, 9 November 2009, www.whitehouse.gov/blog/issues/Health-Care
7. America’s Healthy Future Act, S 1796, introduced on 19 October 2009, http://thomas.loc.gov/cgi-bin/query/z?c111:S.1796:
8. The Regulatory Affairs Journal – Devices, 2009, 17(5), 385-386