KALAMAZOO GAZETTE: Stryker praises progress of Healthcare Costs Reduction Act; bill would block medical device tax
Jun 8, 2012 -
By Al Jones
KALAMAZOO, MI – Stryker Corp.’s top executive praised the progress Thursday of legislation to repeal a 2.3 percent excise tax facing medical device makers in the U.S.
“Stryker appreciates House passage of legislation to repeal the medical device tax,” Curt Hartman, interim CEO and chief financial officer at Stryker, said in a press release. “This tax is anti-competitive and decreases the money available for jobs and innovation.”
Hartman responded to passage Thursday in the U.S. House of Representatives of the Health Care Costs Reduction Act (H.R. 436), which seeks to prevent a new excise tax from being imposed on the gross U.S. revenues on some medical products starting in 2013.
The measure is included in President Barack Obama's health care reform law, the Patient Protection and Affordable Care Act, which he signed into law on March 23, 2010.
Stryker makes a wide range of medical devices, from hospital beds and patient transport gurneys to minimally-invasive surgical devices and replacement hip joints.
The Healthcare Costs Reduction Act, which was co-sponsored by U.S. Rep. Fred Upton, R-St. Joseph, next heads to the U.S. Senate.
According to Upton’s office, the tax, “would directly cost U.S. medical device manufacturers billions of dollars per year – not including costs of compliance – to the detriment of American jobs and medical innovation.”
Stryker has opposed the tax since its inception and former Stryker CEO Stephen P. MacMillan estimated that the tax, which is intended to help pay for universal health care by generating $20 billion over the next 10 years, would cost Stryker about $150 million.
The company announced plans in November to reorganize its operations and reduce its worldwide staff (of just over 20,000) by 5 percent, in part to help absorb the cost.
The staff reductions were to take place before the end of this year, but Stryker has not announced any major layoffs or described how they will occur.
“The administration’s impending tax on medical devices is a ticking time bomb for manufacturing jobs and innovation across the country, especially in Michigan which is why we need to repeal it and pass this legislation.” Upton said in comments on the House floor prior to Thursday’s vote.
Saying Stryker’s situation reinforces the harmful impact the tax will have on the state, Upton, who is chairman of the House Energy & Commerce Committee, said, “Stryker employs about 2,500 workers in Kalamazoo County. They tell me that the tax is going to cost their company alone, $150 million. And that number does not include the millions of dollars and thousands of man hours that they will have to expend ensuring that they are in compliance with that tax."
He said those are dollars that could be better spent on wages, research, development and investment in more life-saving technology.