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Devicemakers: Excise tax, budget battle could cripple industry

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Leaders from the medical device industry took to Washington on Tuesday, restating their call for a repeal of the 2.3% excise tax and urging lawmakers to hammer out a budget deal so that the FDA can keep its word.

Over the summer, Congress passed a new FDA user fee agreement, effectively doubling what the device industry pays for approvals in exchange for the promise of faster results and a more transparent process. However, because lawmakers can't come to an agreement on a new budget, the FDA can only spend at 2012 levels, unable to implement its promised reforms.

This is doubly frustrating for the device industry, Zimmer ($ZMH) CEO David Dvorak told the Indianapolis Star, as companies are paying higher fees that the FDA can't touch, thus getting nothing for their money. "The fees voluntarily paid by industry are not taxpayer dollars and should not be considered in the same light as appropriated funding," Dvorak said.

And then there's the device tax. The industry is pushing hard for a repeal, and Cook Medical Chairman Steve Ferguson testified before the Senate Budget Committee on Tuesday, saying the 2.3% levy on revenue is forcing devicemakers to ship operations overseas and slash R&D spending.

AdvaMed CEO Stephen Ubl told The Hill that his organization hopes a repeal gets attached to the coming sequester replacement bill, and there has been some support for doing away with the charge in an overhaul of the tax code. There are bills in the House and Senate aimed at repealing the Affordable Care Act-supporting tax, and while the effort has more bipartisan support than ever before, it still faces long odds of convincing President Barack Obama, who has said he would veto any repeal legislation.

- read the Star story
- check out The Hill's post

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